Q: Martin, you had one of your first jobs in Formula One racing looking after Jackie Stewart in 1968. Back then it was a less professional and more dangerous sport. For a few years now you have been on the F1 board. What’s your personal view on the ‘then’ and ‘now’?
Martin Sorrell: Yes, I was carrying Jackie Stewart’s bag! (laughs) Formula One was pretty much the same back then. Yes, it was not so intense and, yes, it was much more dangerous - what was definitely different back then was the level of safety. I remember that Jackie was the first driver wearing flameproof underwear! What it definitely was: it was much more flamboyant. But that doesn’t really make it better in my point of view. There is much romanticism about Formula One of the past. Today it has to be more of a family sport, not less. It is a fixture in the Sunday afternoon TV programmes, and probably flamboyance - those white silk suits and devil-may-care attitudes - would be outworn attributes today. What you want to see is a highly competitive sport - and the more equal it is the more exciting it is… the more volatile in the sense of results. If you have just one winner continuously it dulls the enthusiasm. It is entertainment and it competes with other entertainments - and not with other racing formats. It competes with people’s time on a weekend. So you have to deliver. In that - and that is my personal view - Singapore delivers the most value, as they think about it as a complete entertainment event, on and off track.
Q: Is that where you want to see F1 racing heading? A ‘complete entertainment event’?
MS: Personally, yes. Just take the lack of presence of F1 in the United States. In theory - and logically - you would have an East Coast Grand Prix, a West Coast Grand Prix, and I think you should have a street race in Detroit - it is still the motor capital of the US. You stay in the US for four weeks and could have two to three races, certainly two.
Q: As CEO of WPP which owns a number of advertising, public relations and market research networks, it is fair to say that most of the big global business players are your clients. Why don’t you bring more sponsors to F1? What does a global platform like F1 have to do to be more attractive to multinational companies?
MS: It is not just multinationals. It’s also about national players wanting to get global coverage. In fact, if you were interested in a global platform there are only three sporting events: probably the most powerful - or equally powerful - are the World Cup and the Olympics, and then Formula One. And there it gets interesting. If you look at the sponsorship yields, Formula One - because it happens every year - generates more sponsorship money for a four-year cycle than anybody else. So it is very powerful. If you look at the rights situation - what media companies pay - then you see that the rights prices continue to rise for powerful sports. Now what does that tell you? It tells you that the demand amongst global and local sponsors for these kinds of sports is immense, even if there is controversy attached to them like FIFA - who would definitely be number one on that list, though F1 has also been somewhat controversial. Bernie [Ecclestone] has not been shy to say one or two controversial things. The last person in the UK who described his product as being crap in public was one Gerald Ratner - and he was gone immediately. But not Bernie! What it tells you is that the demand for live sporting rights, the demand for global or regional events, is so powerful that you brush aside some things because there aren’t so many of these events. And despite streaming, despite the rise of tablets and smartphones - all the implications which in theory would make linear TV less important - live sporting events are extremely powerful. But it’s not the event alone - it’s also what’s surrounding it.
Q: You’ve established a bit of a reputation for predicting the ‘next big thing’. What do you see in the immediate future?
MS: Virtual Reality for Formula One could be fantastic - driving the car! In the Ridley Scott film ‘The Martian’ you can do that. I have lifted off in the space craft from the surface of Mars, walked in space and looked down into deep space and got terrified, with the headphones and the goggles. The technology is already incredible and will improve massively in the next few years. Think about what you could do. And there are some - Bernie and others - who are embracing new technologies. When Sky UK started to broadcast there was an argument that audience would come down because it is pay TV. But the actual quality of the production and the use of technology and the engagement of the viewer is much better than it ever was. The product is simply better. But in the end, getting a flat fee for broadcasting rights is not necessarily the answer in the long run. That might be the old model: to get a fixed fee. You have to start to think about other models and how they can generate interest - what it can do for a brand in the future - and about the fact that revenue can also be generated in many other ways… Just look at the one and a half million people at the free Rolling Stones concert in Cuba. And Cuba is not Central Park! So just use your imagination as to what kind of revenue can be made…
Q: But isn’t it easier to dictate a fixed fee from one party?
MS: Yes, but the world is changing. And a lot of people in Formula One are starting to understand this.
Q: What could Formula One racing do to advertise itself better? Any suggestions?
MS: Formula One gives a platform to companies like Rolex - and that’s just in media space, watching television or reading newspapers, digital or physical. You see the brand in the context of the competition and bring it to the attention of everybody on a regular basis. But you must not only focus on the consumer, but also on what it does to you internally - getting people aligned to the strategic mission of the company - what it does to the suppliers, governments, all your stakeholders… So you have to see it on a broader level. But you also have to activate it properly. If you pay 50 million for something, you probably pay another 50 to 100 million to activate it. And the more you spend, the better you do. There is no point in just buying rights.
Q: And where is the fan in all this?
MS: As I said at the beginning, it is a fight for people’s time. There are millions of options today for how to spend it. That is probably the biggest difference from 1968 to now. And Bernie understands that. It is always easy to criticize, as he is somebody with extreme opinions. I recently interviewed him in London. He had a go at women, said Putin should be running Europe and so on. He enjoys it - he’s been doing it for such a long time. He has an entrenched position. The truth be known, he is unique, right? And somebody who is unique - and this will get me into trouble - by definition cannot be replaced. By definition. Formula One does very well. It is a very interesting asset. Could it be run in a different way? Sure it could be. Could it be improved? I’m sure it could. But all I can say is, it seems to do pretty well. Monaco was my first race of the season and I spoke with a number of people and all seemed to be very optimistic. And one of the reasons why they are optimistic is that there is more competition. Red Bull has become more competitive, the races have become more attractive - and that is what fans want!
Q: So give us three good reasons why people should be watching Formula One racing.
MS: It is exciting, its values are attractive and it could be an even better family sport. And it is going places from a branding point of view. The fast growing markets - the BRICS and Next Eleven - are the key. The next billion consumers are not going to come from the US or Western Europe - they are coming from Asia, Latin America and Africa. Formula One follows our strategy: fast growing markets, data, and digital. All those three things Formula One has. And it involves a stunning array of companies. Now that doesn’t mean there can’t be more…
Q: Let’s test your predictive qualities again: what do you see for Formula One racing in ten years’ time?
MS: It will be very different - as the technology will be very different and that will make fans consume it in a completely different way. I said before that I believe that Virtual Reality will hit it big time. I know that some of my colleagues disagree, but I believe in it. Vodafone is building a digital stadium in Istanbul. It is really worth going to see that. The whole experience will change with the possibilities viewers will have. Technology will have moved on to an unimaginable level in ten years. What still amuses me a bit is that in F1 people see the race basically on TV screens. But I am sure new tracks will be built.
Q: Where should Formula One racing go next?
MS: If you run a country and want to put it on the global map you don’t have so many choices. You can get the Olympics, the World Cup or a Formula One race. And the first two are only every four years - and you have them only once. The arguments of waste are heavily overdone, because what you do is to accelerate the infrastructure that you have to build anyway, like airports and roads, and in this case it happens much faster. So speaking of a roadmap, without being specific, I would still go for Asia, Latin America, Africa and the Middle East - that’s what our clients are really interested in.
Q: So Formula One racing should stay in China, and go back to India…
MS: Yes, definitely. Now you force me to get specific. Why not look at Indonesia? It will be the third biggest country in the world in population in 25 years’ time - after India and China. Then you could think about Vietnam and at some point in time about Nigeria. And then you head to South America: Argentina, Columbia, Peru. Probably not all of them will have an F1 race, but they are definitely considering events.
Q: Many people will argue that F1 should not head to parts of the world that have no tradition of motorsport and should instead broaden its roots again in Europe. Do you agree?
MS: No, not at all. The challenges some European economies have are such that it makes it very difficult for them. You have to go where the growth is. That goes for my business, as it does for Formula One. When I think back to 2005, the fast growth markets - what we call the fast growth markets - were probably ten percent of our business. They are now 31 percent.
Q: Formula One has traditionally been a sport that lives on its heroes - take Jackie Stewart, James Hunt, Ayrton Senna, Nigel Mansell or Michael Schumacher. If you had to ‘make’ a driver personality today that appeals to a global market, what qualities would you breathe into him?
MS: That is again a romantic notion: the hero. I think people enjoy a much more levelled playing field where you have the ability for many people to become heroes. When you go back to the above names it was a very much narrower situation - the alternatives were far fewer. Today there is much more competition for the ‘hero stakes’! And if you think about all the alternatives you have today to spend your time on, the pool of heroes is much broader. It was very much less back then.
Q: You still haven’t told us how you would build a hero…
MS: The answer is: concept. I interviewed Kim Kardashian recently and had a conversation with her mother. A lot of people have various thoughts about Kim Kardashian, her mother and her sisters, but it is an incredibly well thought through concept and branding. Each of the daughters appeals to a different segment of the market. The natural urge is to dismiss it as being superficial - but it isn’t superficial. So finally the answer: you have to think about whom you are trying to appeal to. If you are a driver of a team and have a certain set of sponsors, who is the target market for those sponsors? But, of course, it is also a question of nationality.
Q: Take, for example, Max Verstappen - 18 years old image, untarnished image. What would you suggest to him?
MS: Think through whom you are trying to reach. Tailor what you do and how you do it to appeal to those communities. Donald Trumps’ senior advisor said on CNN that the US Presidential election was the ultimate reality TV show! Appeal to those you want to reach!
Q: So far we have heard from you that the sport has to embrace new technologies, that it has to be a family event, that it has to go where the markets are, and that its heroes have to think about their own marketing concepts. But what about the person who will pull that all together? If you were to give a job description of the person who should run F1 in the future, how would that read?
MS: All of Bernie’s qualities! Whatever people think they are. He is very entrepreneurial. He has created a 1.7 billion dollar a year business. He has created employment for a massive number of people. He has created an industry and pushed technologies. So yes - all these entrepreneurial qualities. Media is a critical area; entertainment is a critical area; digital is a critical area. Geography is important. He has to be able to deal at the highest levels politically. So by definition, he is impossible to replace. So whoever will do it in the future has to be different. Should two people run it? I disagree. When you have two people challenge for the same job and you keep them both and call them co-CEOs, or the whole fiasco of a ‘merger of equals’… there is no such a thing. So if there should be dreams of dual leadership, the chances of success are limited. But Bernie is still at the top of his game I have noticed. If I were to be super critical, I would say Formula One is too tactical and not strategic enough. And that brings us back to the digital issue: you may have to invest in order to gain - sacrifice some short-term effects in order to make high returns in the future.