The Races Are Digital, and So Are the Ads, but the Money Is Real
The Races Are Digital, and So Are the Ads, but the Money Is Real
It takes more than gasoline to make a racecar run.
It requires money. And money requires sponsors. And sponsors require spectators who they hope will become customers. Which became a problem for motorsports when Covid-19 shut down tracks worldwide early last year. The cash drought put teams, tracks and race series in danger of extinction.
The industry turned to an emerging phenomenon — simulated racing. In these highly realistic video games, cars obey the laws of physics and race on reproductions of real-life tracks that are accurate down to the last pavement seam.
In an experiment, NBC and Fox replaced the canceled races with sim races. No one knew if digital cars would draw viewers and pay off for sponsors. Traditionally, racecars served as high-speed billboards leading consumers to clamor for the engine oil proved superior by the winning car. Could a sim car sell engine oil, having neither an engine nor oil?
Ten months into the experiment, sim races seem to be paying off, as television and web audiences helped to salvage the 2020 season. And now sim racing gives teams a new source of revenue, gives sponsors a more accountable form of marketing and has interested a young audience that motorsports have struggled to capture. Soon sim racing will face the real test: Can it retain fans and sponsors when real cars are back on real tracks and real spectators are in the stands?
Racing video games aren’t new. You could play Indy 500 and Street Racer on Atari in 1977. By the ’90s, more sophisticated Formula One games — albeit with blocky graphics — flourished. Graphic refinement vaulted ahead in successive generations of game consoles from Xbox, PlayStation and Nintendo. Now, at a casual glance, you might not even notice the races are simulated.
Desktop computers also run highly complex networked games, like iRacing, which was the chosen platform of a number of race organizations, including NASCAR, IMSA, IndyCar and the W Series. Formula One chose its own commercial game by Codemasters.
Many pro racers privately used the games to train. At a minimum, the tracks’ fidelity lets drivers memorize the layout. Some teams use special simulator software to fine-tune the setup of their actual cars before a race.
Sim racing builds driving skill enough that some gamers, like William Byron, have graduated into real cars. Mr. Byron, a NASCAR Cup Series driver, now owns an eNASCAR team, which won a $100,000 purse in the 2020 eNASCAR Coca-Cola iRacing Series.
Pro drivers have sneaked unannounced into online competitions for years. For fans, it’s like joining a pickup basketball game and finding LeBron James on the court.
Carmakers see the brand-building value of games. Chevrolet made news when its simulated C8.R mid-engine Corvette joined iRacing’s IMSA series in September. Chevy, like manufacturers as varied as Mazda and McLaren, licenses its vehicles to dozens of games including Forza, Project CARS and Gran Turismo Sport.
Gamers may not be the prime market for a $60,000 Corvette, said Kevin Kelly, a Chevrolet spokesman, “but it’s a chance to become loyal to the brand.”
Sim racing was an afterthought until about three years ago, when technology, social media and real racing began to converge, said Bryan Cook, who was hired by Joe Gibbs Racing (JGR to fans) in 2009 to handle social media. He expanded into iRacing four years ago, beginning with a private league that pitted JGR pro drivers against “your average Joes,” he said.
A year before the pandemic, iRacing became an official part of the JGR marketing program, offering sponsors a younger audience and social media data — for a fee.
“You get to the point where drivers need to be paid,” Mr. Cook said. “There are equipment needs. We said we really need to cover our costs here.”
Sims got their big break on March 22, when both eNASCAR and virtual Formula One races were shown on TV in place of canceled races. The eNASCAR race drew 910,000 viewers, fewer than the three million typical for NASCAR but more than the 400,000 typical for a virtual race.
“We started realizing this could be a real replacement for those NASCAR races,” said Brad Zager, Fox Sports’ head of production and operations.
The first F1 replacement race, the Virtual Bahrain Grand Prix, drew four million total viewers on digital and TV, less than the 34 million average for an actual race, but ahead of the average 1.8 million viewers for pro digital races.
Last year “provided a new level of exposure for F1 Esports,” said Julian Tan, head of digital business initiatives and Esports at Formula 1. “We saw record digital numbers on engagement when we came back racing live in Austria and even our Esports content from our official virtual championship last winter saw record numbers.”
Though validating, broadcast TV is just part of sim racing’s reach. Livestreams may hit 400,000 viewers over YouTube, Facebook and Twitch, said Anthony Gardner, president of iRacing.com Motorsport Simulations. More valuable are the social interactions — tweets, likes, comments — during races.
“The social media touches are in the millions in a race,” Mr. Gardner said. Those interactions yield customer data and a chance to speak directly to consumers.
Suddenly the sim racing audience was big enough to demand attention, but too new for marketers to know how to capitalize on it. Sponsors took different approaches, but all aimed for an elusive new audience. NASCAR’s fan base has declined since 2005 as it ages. Sim racing attracts a younger and more racially diverse audience — attractive to both sponsors and leagues.
“It’s really hard to reach that 18-to-35 demographic,” said Patrick Daugherty, who manages sponsorships for Valvoline. “Gaming overindexes with young D.I.Y.-ers.”
The company signed with Parker Kligerman, a celebrity racer and an eNASCAR driver, before Covid-19 struck. “The viewership and engagement exceeded our expectations,” Mr. Daugherty said. “We got really lucky, and we are going to renew with those guys in 2021.”
Despite being the official grill of NASCAR, Pit Boss Grills couldn’t afford to sponsor a front-running racer, which is reported to cost up to $35 million. That changed with eNASCAR.
“This gave us the opportunity to jump in on a primary sponsorship,” said Carlos Padilla, director of brand partnerships. “It allowed us to be live on a broadcast on a car, if you want to call it that, at a price point viable for a company of our size.”
It cost four figures per race, he said, to be seen by a million TV viewers — a bargain.
Discouraging iRacing might seem to be in a racetrack’s best interest, but Richmond Raceway first sponsored a team about three years ago. It built a simulator inside a decommissioned racecar for fans to try. That innovation led Daytona International Speedway to borrow the car.
Not only did that raise Richmond’s profile, but sponsor cash earned a five-figure profit.
“Marketing was the original objective,” said Brent S. Gambill, a spokesman formerly for the track and now for NASCAR’s Mid-Atlantic Region. “When it started, we were spending money to be a part of something. By the second year, we were making money.”
Online audiences offer sponsors an ability to measure responses to specific offers, slogans and pricing in a way that TV doesn’t.
Yet a tsunami of data is not always helpful. “It would be fantastic to us if we can say one million people watched last week and 200,000 bought cars this week. I don’t know if we will ever be able to do that,” said Paul Doleshal, general manager for motorsports and assets at Toyota Motors North America. “We are kind of drowning in information now.”
Which makes it difficult to compare sim racing’s sales power with real racing’s. But it may be a moot question for a few reasons.
One is that the two worlds are intertwining — performance on the virtual track can have real-world repercussions.
When Darrell Wallace Jr., known as Bubba, quit a virtual race in frustration in April, the sponsor Blue-Emu dropped him, tweeting in part: “Bye bye Bubba. We’re interested in drivers, not quitters.” Kyle Larson, a driver, uttered a racial slur during a sim race, losing sponsors and earning a suspension from NASCAR and iRacing. He will return to NASCAR in October.
The second reason is that while winning helps, it’s not the sole reason a fan buys a car product.
“It’s not just about the literal oil,” said Eric Schwartz, a marketing professor at University Michigan’s Ross School of Business. “It’s about being a trusted brand, one that understands this world of racing.”
Finally, sim’s simplest appeal to brands is that it delivers viewers. “This is a way to get eyeballs for the brand, to stay top of mind,” Mr. Schwartz said. “If Valvoline doesn’t sponsor a team their competitor will.”
It will take time to know if sim race fans become real race aficionados and vice versa, but Fox has scheduled five sim races for its FS1 network this year.
“You have so many options with iRacing,” Mr. Zager of Fox said, envisioning a dirt track race one week and Daytona the next. “ESports became a very big buzzword when the pandemic hit,” he added. “But iRacing just went to the front of the field, and no one caught up to it.”