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Understanding Virgin Marketing

NEWS STORY
05/10/2010

Mat Coch writes:

The landscape of Formula One sponsorship and marketing has changed, according to Virgin Racing Marketing Director Jim Wright. Having revolutionised the way in which a Formula One car is developed, adopting a purely Computer Aided Design (CAD) based approach, Virgin Racing now believes a new financial approach to running a Formula One team is needed, specifically in respect to the expectation of potential investors.

After entering Formula One in 2009 with Brawn, Virgin left the championship winning outfit in favour of branding an entire team in its own identity. The 3.2 million investment in Brawn proved to be one of the most cost effective sponsorship deals on the grid, a fact not lost on Virgin's billionaire owner Richard Branson, who realised that to maintain the same level of exposure for the same investment was simply impossible.

Manor won the right to join the 2010 grid midway through 2009, looking to utilise the anticipated budget cap to allow the team to compete for a fraction of the money the existing teams had been spending. That regulation soon disappeared, a victim of the political wrangling by the Formula One Teams Association (FOTA) who, for the umpteenth time, threatened a breakaway series. The FIA backed down, scrapping the rule and forcing the three new teams, Lotus Racing, Hispania Racing Team (nee Campos) and Virgin Racing (having taken on naming rights for Manor), to compete against the financial clout of the existing teams without the relative protection a budget cap may have offered them.

Virgin's investment in the former Manor team is not quite what it appears. The team itself is reportedly owned by its designer Nick Wirth, team principal John Booth, chief executive Graeme Lowdon, Virgin representative Alex Tai, Virgin itself and Lloyds Bank, which lent the squad 6.4 million. Virgin has taken branding rights, which sees the team named Virgin Racing as opposed to a title sponsorship role which may have left the team as Virgin Manor Racing.

The Virgin brand is the result of Richard Branson's wheeling and dealing from the back of his car in London during the early 1970's. The business soon grew into a record store, then a record label (Virgin Records), before ultimately being sold (for 500million) to finance the Virgin Atlantic airline in the early 1980's. Since then the group has expanded into financial markets, telecommunications and retail outlets and has reached most major global markets.

By purchasing the branding rights Branson has given the Manor team an identity and a brand, in a pen stroke transforming the team from a no-name newcomer into a team which appears to have the financial clout and security a corporate giant like Virgin provides.

Explaining the team's marketing strategy in an exclusive interview with Pitpass, Virgin Racing Marketing Director Jim Wright emphasised that companies no longer buy space on racing cars to gain television air time. It's an old fashioned, out-dated approach, according to Wright, who believes there are more efficient ways to gain television air time. Sponsorship, he suggests, has moved on from a consumer driven ideology to that of business to business relationships, growing corporate partnerships and opportunities using investment in Formula One as the catalyst.

It's a notion Wright believes the Virgin Racing team can benefit from, building on the successful Virgin Group brand and gives its sponsorship partners leverage into other markets and, in some instances, access to a captive audience. Sponsored by FX Pro, a company specialising in foreign exchange the company benefits through Virgin Atlantic and Virgin Trains. "All the sponsors we've attracted are working with a number of Virgin Group companies," claims Wright.

"Look at FX Pro on the car. If you go on a Virgin Atlantic flight you'll see FX Pro advertising on the in-flight entertainment in the seat back magazine. If you go on Virgin Trains in the UK you'll see FX Pro through the business class travel magazine, you'll see them in the train stations, the Virgin train stations, in the lounge areas.

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