Market Effectiveness Lessons from F1

Marketing Effectiveness Insights from One of the Biggest Marketing Stories of the Last 30 years and the Impact of Dietrich Mateschitz on Motorsport.

 The 2022 Formula One World Championship is about to be wrapped up. All the talk is about Max, Seb, Mick, George, Daniel, and, of course, Lewis. But the biggest story in F1 this year – in my opinion – was the death of Dietrich Mateschitz, Mr Red Bull himself.  He changed the world of sports marketing – and F1 – more than anybody recognises. I talked to a few folks who worked with Red Bull and Red Bull F1 to examine the legacy.

Let’s dive in and examine it.

Working in Marketing at Unilever to being one of the world’s Richest People

Like many others, I went backpacking in my 20s around Asia on my way to Australia for what I thought was going to be a couple of years (I ended up staying eight years!)  

 In every shop in Thailand, there were these small brown bottles called ‘Krathing Daeng’. It tasted like cough mixture with extra sugar. You tasted it once, and, thought, “never again will I drink that stuff”. I saw it as the sort of thing that would work in one country due to local tastes, but never catch on anywhere else.

Boy was I wrong.

Enter Dietrich Mateschitz.

Dietrich Mateschitz had an orthodox marketing background. He had a marketing degree, his first job was with Unilever, where he marketed detergents. He then worked in a sales and marketing role with a German cosmetics company that was bought by Procter & Gamble.

On a business trip to Thailand in the 80s, Mateschitz learned from a local toothpaste dealer that energy drinks like ‘Krathing Daeng’ were used by truck drivers and workers who needed to stay awake.

Mateschitz quit his job at the age of 40 and partnered with the local toothpaste dealer to sell ‘Krathing Daeng’. internationally.

The name ‘Krathing Daeng’ roughly translates as “red bull” in Thai – and that was the name used for the brand internationally.

Dietrich Mateschitz, founder of the Red Bull brand, died a few weeks ago as one of Austria’s richest people.

He made an extraordinary impact on the world of marketing and sport – arguable one of the biggest impacts ever in sport.

Mateschitz more or less created the category of ‘energy drink’ - a market that hadn’t previously existed.  

Mateschitz created a brand-new category and an innovative approach to brand marketing, and, apparently, even came up with the tagline ‘Red Bull gives you wings.’

In 2004, two billion cans were. In 2021, sales worldwide were 9.8 billion cans of Red Bull, 24%+ growth on 2020.

 Mateschitz owned two Formula 1 teams, numerous football teams and had someone jump from space with a parachute to promote his brand.

And it’s a drink that I think taste like cough mixture!

Mateschitz, Motorsport and Music

I’ve been a massive motorsport fan since I could talk. I’m not one of your Johnny-come-lately Netflix “Drive to Survive” bandwagoners.

No, I have always been a motorsport nerd. That makes it over 40 years as a fanatic.

Come and talk to me about whether Fangio or Lewis Hamilton are the best, and I will pontificate indefinitely. It is - with some bewilderment - that I see so many new fans come into the sports.

Like Grandfather Simpson, I wave my fist at the sky and ask where were you when we had to stay up late to catch a glimpse of an F1 race on a fuzzy TV screen with Murray Walker commentating enthusiastically with James Hunt adding quotable quotes as a former world champion?

But I digress

I think I can say categorically – without doubt - that Dietrich Mateschitz has transformed my beloved sport as much as the other two people who are synonymous with F1 – former F1 supremo Bernie Ecclestone and Enzo Ferrari.  (For motorsport nerds, I will put Colin Chapman and John Hogan in that list as well – I will wrote more about those two another time).  

It was not just Formula 1 that Red Bull revolutionised. In fact, Mateschitz revolutionised sponsorship with its ownership of teams and promotion of events like acrobatic flying, cliff-diving and skydiving. More than 8 million people watched Felix Baumgartner’s record freefall from the stratosphere to earth in 2013 – sponsored by Red Bull. 

Outside motorsport Mateschitz backed athletes across dozens of other sports, started his own TV channel and even ran a music ‘academy’. The Red Bull Music Academy ran for ten years. Young music-makers had to apply and the lucky few spent a week honing their craft and listening to greats from the world of music in different host cities. The Academy brought the old school and the up and coming together, learning from the masters and producing new music in the process.

Red Bull sponsorship can be found across the motorsport world, including German DTM, NASCAR, Rally, Motorbike GP, Rallycross.

Mateschitz bought not one but two F1 teams - Red Bull Racing and Alpha Tauri - as well as a motor racing circuit - Red Bull Ring, complete with giant bull sculpture.

 He gave a chance to dozens of young drivers, many of whom would not have progressed without Red Bull support. More than a quarter of current F1 drivers owe their place on the grid to Mateschitz’ love of racing and his marketing genius – including the 2021 and 2022 world champion, Max Verstappen and four-time world champion, Sebastian Vettel.

Is there anything marketers can learn from Dietrich Mateschitz – without falling into the trap of glib trivia like ‘7 Things You Can Learn from Red Bull Marketing’.

Yes, I think you can.

Why? Whether Mr Mateschitz knew it or not, he was an expert in marketing effectiveness. Mateschitz was following pretty much all the rules of effectiveness, but just with a more unorthodox approach to choosing media channels and what was put in those channels.

 How Brands Grow

Analysing the Red Bull brand is akin to reading a checklist of everything that matters in marketing effectiveness. Let’s remind ourselves of the basic ‘rules’ from Sharp, Romaniuk, Ehrenberg as well as Binet and Field:

·      Always reach all buyers of the category: avoid being silent in terms of communication (the fourth ‘P’ promotion) and distribution (the third ‘P’ place)

• Get noticed – aka ‘mental availability: Grab attention and focus on brand salience to prime the user’s mind. If you’re not noticed, you’re nowhere
• Drive physical availability - ensure the brand is easy to buy, widely distributed
•   Refresh and build memory structures. Make your brand first to come to mind. Respect existing associations that make the brand easy to notice and easy to buy, play on usage occasions and habits.
•  Create and use distinctive brand assets. Use brand assets like logo, fonts, imagery, colour or even taglines to get noticed and stay top of mind,
•  Be consistent: keep the brand fresh and interesting and avoid changing things unnecessarily.
•  Stay competitive: Keep the brand easy to buy and avoid giving excuses not to buy (price, alienating a particular group).

What else do we know, using the language of marketing effectiveness?

Brand growth comes primarily from penetration, as opposed to loyalty. Brands need the right mix of brand communication and sales activation: activation produces an immediate response, while brand building creates memories that influence future behaviour.

Long term, broad reach campaigns that are built around excellent creative, and emotion are much more effective. One of these campaign tactics that works particularly well is fame. Fame is one of the biggest drivers of commercial impact.

All of the above is difficult to achieve over a long period of time. Yet, Dietrich Mateschitz did this with Red Bull. Maybe he knew this from the outset as he was a marketer by trade.

The Original Insight Created the Strategy

Mateschitz insight was that the product was not just the product from the outset: “It’s not just another flavoured sugar water differentiated by colour or taste or flavour. It’s an efficiency product,” Mateschitz told Bloomberg in one of his rare interviews. “I’m talking about improving endurance, concentration, reaction time, speed, vigilance, and emotional status.”

 You might not agree with the insight, but as Les Binet once wrote: “One of the great lessons in marketing is that things don't always need to make sense."

You can see how everything flows from the ‘efficiency’ insight - including the creation of a captivating platform that could tap into ‘improving endurance, concentration, reaction time, speed, vigilance, and emotional status’

“In the very first year we started by sponsoring mountain-biking, snowboarding, paragliding and hang-gliding competitions,” Mateschitz said in a 2005 interview.

Formula 1 was part of his plans from the very beginning. “Gerhard Berger (1990s F1 driver) was our first opinion-leader sportsman drinking Red Bull. He survived on it.”

Mateschitz came to the conclusion that it would be more effective to actually buy teams and clubs instead of just sponsoring.

Creating and owning a sponsorship property is not a new thing in marketing. What was new was the number and variety – and the cost – of them. Even 20 years ago buying an operating a Formula 1 team was not cheap. Mateschitz bought not one but TWO! 

Separate to this was the creation of crazy – yet inspired events – that got participation from the target consumers.

For example, the Red Bull Flugtag has human powered flying machines that jump off a six-metre platform and plummet into the water below – and people do this voluntarily.

Yes, things don't always need to make sense.

Consistency and Commitment with Brand

The Red Bull brand today is very specific about what its stands for and its brand values: ‘giving wings to people and ideas’. How do these values flow through the business?

David Granger , Content Director, Cinch, and former Global Head of Editorial Content, Red Bull Media House and Social Media Manager at Red Bull F1 met Mateschitz a couple of times. He points out that Mateschitz was “incredibly focused on brand. The brand values ran through everything. You could tackle any event or sport but the way you did it had to resonate to those values, whether that was free falling out of a capsule in space to riding a donkey motocross derby in Greece.”

The whimsical, cartoon-based brand advertising is a case in point for Byron Sharp’s key effectiveness rules: keep the brand fresh and interesting and avoid changing things unnecessarily. It’s always been ‘Red Bull gives you wings.’

David Granger points out that the ‘cartoon’ marketing) was done by the same agency for the 30+ years of the company’s existence. 

The paid advertising has also done a double duty separate to the massive Red Bull sponsorship properties: it has created its own large, fame building assets to drive mental availability among consumers. They are simple and sometimes silly but always fun and enjoyable.

 Quoting Paul Feldwick , author of wonderful books on advertising such as: ‘Why does the Pedlar Sing’ and ‘The Anatomy of Humbug’ talking about TV advertising: ‘They don't have a lot to say, but why should they? People don't approach ads as puzzles to be solved’.

  Distinctive Assets

If there is one point that we can all learn from Red Bull, it is their use of distinctive brand assets – and using them as the trigger in category. A distinctive brand asset is a non-brand-name trigger for a brand name in category buyer memory.

 These can take verbal, visual or auditory form and are designed to be noticed and remembered by the buyer as Professor Jenni Romaniuk from the Ehrenberg Bass Institute points out.

From the familiar slim silver can with the two bulls and yellow disk, to the distinctive blue and silver used across almost all assets, Red Bull most definitely made it easier for the category buyer to identify the brand in any situation.

What does the #2 brand in the category do?

Monster aims to own black and green, and uses a much bigger can as a distinctive asset. Smart move, however, even the own label energy drink brands that Aldi or Lidl have use the slim aluminium can as the shorthand for energy drink. The Burn brand copies the size of Red Bull, and Rockstar copy the size of the Monster can.

 But there are multiple assets at play: the Red Bull F1 cars are not silver and use matte colours. Aside from the bulls and sun disk, there is no one asset more important than another. 

A lesson for us all comes from Professor Jenni Romaniuk , “if we treat ‘importance’ for Distinctive Assets as something that varies by context, and not assume there is one ‘winner takes all’ type of asset, we will make smarter long-term decisions about which assets to build and how we use them.”.

Other Lessons to Learn In Effectiveness From Red Bull

Are there are any other lessons that we can learn from Red Bull? Red Bull has built a reputation around great ‘content’ – and is used by lazy writers as an example of a brands who achieved success who used content to create a billion-dollar brand.

It’s a fallacy for a whole variety of reasons, with the most important being that the writer of such brainless insights is confusing marketing with advertising.

Back to David Granger : “One thing should be emphasised is that Red Bull can be a case study and an example of stellar marketing. However, you cannot really attempt to emulate without a proper budget and the complete buy-in of the brand team and leadership. For example, we were able to create content without a logo and put it out in the market and yet still have that content associated with Red Bull.”

Related to this is that – notwithstanding the headline grabbing aerobatic and F1 exploits, the Red Bull brand has got an integrated approach to using marketing channels – with each one building on each other. The company – under the direction of Mateschitz has made some specific choices such as the amount it spends on marketing.

Dietrich Mateschitz soon made no secret of the fact that Red Bull spends over 30% of its revenues on marketing. He has been attributed as saying “first and foremost, I want to further increase awareness”.

Red Bull marketing strategy also factors in premium pricing for its products. The price premium, in turn, helps it secure a higher profit margin, helping fund expensive marketing campaigns like F1 teams!

Finding the Right Talent and Having Faith in It: Horner, Newey, Vettel

Of course, Red Bull is not just about the marketing assets. Faith in talent, particularly young talent was also a key driver of success for Dietrich Mateschitz. David Granger points out that ‘he was very loyal to people’.

Mateschitz hired a very young Christian Horner to run the F1 team even when he had no experience running an F1 team. Horner proved to be a very effective leader and set about changing the culture.

At the end of 2005 with Mateschitz’ backing he persuaded the best race car designer in the world - Adrian Newey - to join as technical director.  Red Bull had not even won a race or troubled the podium for the first four years.

 Adrian Newey is the greatest designer in Formula One history, having won ten Constructors' Championships. Even more impressive, he did it three times - once for Williams, once for McLaren, and now numerous times for Red Bull.

The Red Bull move by Newey marked a turning point in the team's history. Prior to Newey, the team was considered a "party team," according to Team Principal Christian Horner.

Likewise, the move to promote a very young Sebastian Vettel into Formula One by Mateschitz was rewarded with Vettel becoming the youngest F1 race winner and the youngest champion ever with Red Bull.

Red Bull also hired Max Verstappen at age 16 – now a multiple world champion. 

What Next?

What will happen to the multiple athletes, football teams and motorsport teams that relied on Mateschitz? Red Bull was not publicly quoted: ownership is still shared by the original Thai Yoovidhya family and Mateschitz. Rumour has it that the Mateschitz shareholding will fall to Yoovidhya family. It remains to be seen if they are fans of F1.

At a cost of operating of about $500m per year for the Red Bull and Alpha Tauri F1 teams alone, aside from Red Bull Salzburg, Red Bull Leipzig or New York Red Bulls, you could see how a new owner could change strategy and still make a lot of money. Nevertheless, this does not diminish the impact that Dietrich Mateschitz has had on sport – and marketing.

For all you young marketer reading this, next time you are backpacking somewhere, keep an eye out for crazy local products that just might spin up into multi-billion dollar ideas. And, applying the rules of marketing effectiveness to a tee, perhaps you too can become a billionaire!