For Red Bull, It's Here, There and Everywhere
Wednesday, August 23, 2006
The drink claims to defy gravity. The company's sports business strategies try to defy convention. While sports marketing and the attachment of corporations to teams and events continues to grow at a significant pace, Red Bull has managed to stake its claim with a sense of rebellion.
Today, there are few gasps of disbelief when it comes to sports and corporate sponsorship. Fans have grown used to hearing the Sugar Bowl referred to as the Nokia Sugar Bowl. The halftime show must be preceded by a title presenter, and a 30-second ad during Super Bowl XL in February reportedly cost $2.5 million. David Gilliland's NASCAR stock car is covered by representations of larger-than-life M&Ms.
Seemingly on its own little island lies Red Bull. The company that produces the highly caffeinated energy drink of the same name has managed to push into the sports business world in a way that could be either just consistent with its corporate philosophy or a trend soon to be adopted by others.
Red Bull's approach lies in the ownership of teams and events rather than just the sponsorship of them; this gives the company not just exposure but also control. Founder Dietrich Mateschitz estimates spending $300 million, or about a third of his company's annual marketing expenditures, on sports sponsorships.
The most well known, and the costliest, are the two Formula One teams. In March, Mateschitz -- who is based in Austria -- bought the New York MetroStars of Major League Soccer and renamed them the New York Red Bulls.
In 2007, Mateschitz will expand that sports budget by starting a two-car NASCAR team not surprisingly named Team Red Bull. There also are the smaller events: Alpine skiing, BASE jumping, sailing, BMX freestyle dirt and skateboard vert.
David Carter, the executive director of the USC Sports Business Institute, said the energy drink industry has made strides in sports marketing, in part because the brands transcend their immediate demographic category. Red Bull has branded itself a lifestyle product and has aligned itself with the lifestyle associated with action or extreme sports and motorsports.
"Clearly, sports have become entertainment, and in many ways, Red Bull has become a lifestyle product linked to entertainment in its own right," Carter said. "Red Bull's brand is more robust than a lot of other brands in that category."
To date, Red Bull has relied on few conventions to brand its product, eschewing them in favor of letting the product develop a cult-like status through the underground. Despite the company's preference for hosting an event where people create their own human flying devices rather than a traditional magazine ad, Red Bull is still very interested in conquering the American beverage market. Sports, and specifically auto racing, has been its primary avenue. In the United States, entry into NASCAR is the next obvious step.
While Red Bull does not disclose its financial data, a primary sponsor of a single stock car averages about $15 million to $20 million annually. What makes the NASCAR project of interest is Red Bull's approach. Unlike most companies that elect to sponsor a car, Red Bull has chosen to own its teams, an uncommon decision in modern day NASCAR.
"They're really, in their own way, turning the NASCAR model on its ear," said Mike Bartelli, senior vice president for motorsports at Millsport. "It's not just the fact that they'll own the team as a sponsor, but their marketing approach is certainly going to be different."
Red Bull will have the 83 Car (there are 8.3 ounces in a can of Red Bull) driven by Brian Vickers, currently with Hendrick Motorsports. The second car, which may be aligned with another sponsor, is still to be determined.