Companies Use $250M Sailing Race To Build Image

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The New York Sun

Sailing is an expensive hobby, but Volvo, the Swedish carmaker, figures it is also a sure-shot marketing opportunity.

The Volvo Ocean Race, a contest between seven corporate-sponsored yachts over a 31,250-mile course, held a pit stop in Manhattan yesterday. The race – which heads next across the Atlantic to Portsmouth, England, and bills itself as “the premiere ocean race in the world” – is “also big business,” the race’s CEO, Glenn Bourke, said. He said it will cost at least $250 million to mount – but that it will return three times that sum to Volvo and the companies sponsoring the boats. Those companies include Disney, Ericsson, and ABN Amro, the Dutch Bank, which is racing two boats.

Right now, ABN Amro One, skippered by New Zealand’s Mike Sanderson, has a commanding lead in the race. Its sister yacht, ABN Amro Two, set a new 24-hour world record for monohull sailboats, having logged 563 nautical miles across the Indian Ocean in a single day.

The race started in November of last year and figures to end about five weeks from now in Goteberg, Sweden, the Volvo Car Corporation’s hometown. The costs include building, outfitting, and sailing the boats. Each yacht costs roughly $4 million, and between another $8 million and $16 million to outfit, crew, and – above all – to publicize. (The yachts are all 70.5 feet long with 103-foot masts, but there can be some variation within defined design parameters.)

Additional costs come in organizing the competition, which is spread out between 10 ports around the globe, in holding festivals in various port cities (the one in New York was tiny compared to Melbourne or Baltimore), and in marketing the entire event. Volvo won’t say what it spends, but it does say that it will spend more than any individual team.

The payback comes from exposure in the press and schmooze time with customers. While Mr. Bourke concedes that most New Yorkers have no idea that the race is going on – New York is, after all, hardly a sailing town – he says it is well known in places like Brazil, and especially Australia. But any assessments of this type of return “have to be taken with a grain of salt,” Stephen A. Greyser, a professor at the Harvard Business School, who specializes in sports marketing, said.

“Let’s face it, banking and insurance isn’t something people get excited about,” Jan Berent Heukensfeld-Jansen, CEO of the ABN Amro team, said at a press conference at World Financial Center’s North Cove Harbor, where the yachts are moored. But the race helps “redefine” the bank’s brand and to motivate employees, he said. The racing teams use the most advanced technology and teamwork to reach a goal, which is what ABN Amro does in banking, Mr. Heukensfeld-Jansen said.

Of the contestants, only Disney’s Pirates of the Caribbean team has a product it is selling directly: theme park rides and the sequel to the 2003 movie starring Johnny Depp, which is due to be released this summer. Carol Nicolau, who is heading Disney’s marketing efforts, was confident that the entertainment giant will receive triple its investment back. Its boat, The Black Pearl, came back from a spate of technical problems early in the race and is now in second place. “It’s a great Hollywood comeback story,” Ms. Nicolau said.

The others – including Vivo, a Brazilian mobile phone company, and movistar, a Spanish mobile phone firm – are seeking vaguer brand associations from their participation in the race.

The benefits come in the form of exposure. The race has been seen by an astounding 1.2 billion television viewers, Mr. Bourke says. But that number, he admits, is divided between those who watched programs or documentaries on the race (generally produced by the race itself) and those who may have seen clips on the local TV news. He also says that 25,000 articles have been written about the race in 120 countries. That sounds like a tremendous figure, too. But as the race has been going on for six months, it works out to just 35 articles per month per country. Beyond traditional media, the race’s Web site is generating 40,000 hits a day. Ericsson, which is managing downloads of race reports to cell phones, says traffic is exceeding all expectations.

How does all this add up to $750 million, a three-times return on the marketer’s investment? It’s all based on standard sports-marketing formulas that put a price on exposure, Mr. Bourke says. That formula depends on an accurate count of those who are watching the coverage, and a proper sense of its effect. “One would always have to say that those kinds of measures are never very precise,” Mr. Greyser said. “Nor do they measure anything other than the opportunity for awareness.”

The New York Sun

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