IRL widens advertising base

October 29, 2007

The Indy Racing League will roll out category sponsorship deals with soft drink, energy drink and motor oil brands in the next two months.

IRL officials declined to divulge which companies the deals are with, but said each are multiyear, multimillion-dollar deals.

Sources close to the series said Frank's Energy Drink will be one of the category sponsors. The Austrian-made drink is huge in parts of Europe and throughout Canada, with a healthy marketing budget and ambitious U.S. expansion plans.

Former rocker Gene Simmons, who was hired in 2006 to help market the IRL, has an affiliation with Frank's and was said to be instrumental in the deal.

IRL officials said these agreements are the biggest sponsorship deals they've inked in more than five years. They all represent category sponsorships the IRL has never had.

The soft drink deal is with one of the world's largest soft drink makers, industry sources said. Sponsorship experts said they're intrigued by the deal, which they said could be the catalyst for big growth for the racing series.

"A one-year deal is an experiment," said Mel Poole, president of SponsorLogic, a North Carolina-based motorsports marketing consultancy. "A multiyear deal is a commitment. It takes time to develop ... promotion strategies and this shows their new corporate partners are ready to do that."

IRL officials said all three deals will come with significant "mandated" activation components, meaning the sponsors will likely spend as much in advertising and promotion as they pay to the league in cash.

The motor oil company has promised a promotion through 9,000 auto-parts stores, and the soft drink and energy drink makers have deals to place IRL-related advertising and promote the product and its racing affiliation through convenience and grocery stores, IRL officials said.

"We have an unprecedented level of sponsorship activity and opportunity in the Indy Racing League right now," said Terry Angstadt, president of IRL's commercial division. "We have a level of aggression and professionalism that we simply haven't had before."

An internal reorganization this year of the IRL's sales and marketing department has bolstered the effort, Angstadt said.

The first announcement will come Oct. 31 at the SEMA Show in Las Vegas. Since SEMA is an automotive-related show, industry experts said IRL officials would likely use it to unveil the league's official motor oil.

League officials denied rumors that Lucas Oil, which has a stadium-naming-rights deal with the Indianapolis Colts, is a new category sponsor.

The second category sponsor will be unveiled sometime in November or December, with a third announcement coming in conjunction with the launch of a new national consumer product either on or shortly after Jan. 1. The platform for the latter two announcements is still being determined.

The second announcement, Angstadt said, will also include a component involving the Indianapolis Motor Speedway. One of the announcements, he added, includes a race title sponsorship.

Since Coca-Cola is the official soft drink of the Speedway and Indianapolis 500, there is speculation the soft drink behemoth is involved. One of the announcements, Angstadt said, is a "very recognizable worldwide brand."

Zak Brown, whose locally based Just Marketing firm was hired to help the IRL's staff with sponsorship in May, promised these three announcements would not be the last before the green flag drops on the 2008 season.

"This is just the beginning," Brown said. "We're still in the selling season, and with the amount of activity going on and from the feedback I'm receiving, I'm confident there will be more deals for the series."

While Brown said these deals are cornerstones in helping the IRL land a much-coveted title sponsor for the racing series, he doesn't expect that to happen until 2009.

"You create buzz, then you create deals," Brown said. "Those deals create more buzz and more awareness of your product. You have a snowball effect. But a deal the size of the title sponsorship we want takes time.

"I'm personally spending a lot of time, as is the [IRL] staff, on landing a title sponsor. That's the one I really want to bring to the table. But it has to be the right partner."

While Brown said one of the upcoming category announcements involves a "massive company," he added that much of the IRL sponsor search effort would focus on companies looking for a high-end demographic as opposed to the broad NASCAR demographic.

"We're not going to get Kellogg's selling corn flakes in the IRL. We're looking for lifestyle products, electronics, technology and things that involve affluent, discretionary spending," Brown said. "This is not about competing with NASCAR. The IRL has a different consumer than NASCAR."

Brown and Angstadt said momentum for the sponsorship sales has been building throughout the 2007 season. While television ratings for IRL races were mostly flat in 2007, attendance was up at 12 of the 14 races the series held in 2006 and 2007, with major increases coming at races in Florida, Kansas and Ohio.

Web traffic for the league's site increased 38 percent from 2006 to 2007, with the time each Internet visitor spent on the site increasing from 1 minute 24 seconds to 6 minutes 25 seconds. Series officials credit additional video streaming for the jump. Merchandise sales also increased 71 percent in 2007, IRL officials said.

Brown also helped form a Business to Business Council, a group of executives from series sponsors who promoted networking opportunities among themselves and collectively promote the league to other businesses.

A healthy sponsorship market has likely aided the IRL, said William Chipps, senior editor of IEG Sponsorship Report, a Chicago-based trade publication following the sponsorship industry.

The $14.9 billion sponsorship market increased 11.7 percent this year, according to IEG research. Motorsports sponsorships increased 11 percent, to $3.2 billion, with NASCAR taking the lion's share.

Though Chipps has seen increased sponsorship activity at recent IRL races, he said corporate interests and those following the sponsorship industry will remain skeptical of the series' growth prospects until series officials prove themselves.

"They say it's a big deal, and we've heard that before," Chipps said. "They have people's attention, but we'll wait to see what the announcements are."

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