Aug. 27, 2012
by Joel Crews & Kimberly Clyma
During its sustained surge to becoming one of the most popular spectator and sponsor-rich sports for more than a decade, the National Association for Stock Car Auto Racing (NASCAR) has been a valuable marketing vehicle for plenty of food-related businesses, including meat and poultry processing companies. Admittedly, there has been a certain amount of attrition among sponsorships since NASCAR’s lucrative heydays in the early 2000s and some recession-induced ebbing and flowing of endorsement deals, especially among some meat companies. But some high-profile processors are rejoining the pack while others are merging their marketing efforts for the first time to tap into the loyal followers of auto racing.
In the past year, Smithfield Foods has been public about investing in a NASCAR-based marketing strategy to promote its three independent operating companies. Larry Pope, CEO and president, told analysts at BMO Capital Market’s 2012 Farm to Market Conference this past June why Smithfield jump-started its sponsorship of a NASCAR driver as part of what he calls the company’s “brand activation” activities. Last December, about three years after severing a partnership with Rensi Motorsports and the sponsorship of Bobby Hamilton Jr.’s No. 25 Ford, Smithfield announced a new NASCAR sponsorship – a three-year deal with Richard Petty Motorsports. This time the campaign is centered on the No. 43 Sprint Cup Series Ford, driven by Aric Almirola, in his first full-time stint driving in the Sprint Cup Series.
“One of the things our [marketing] people suggest is, ‘Go to NASCAR guys. You’ve done that before,’” Pope said. “NASCAR demographics line up with your demographics,” Pope said he was told by the marketing team. And so the negotiations began with NASCAR.
After signing with Petty’s team, Smithfield announced plans to sponsor the No. 43 car in 15 NASCAR Sprint Cup Series races, the first of which was the Daytona 500, this past February, followed by the Brickyard 400 this past month. Smithfield’s Eckrich brand had primary branding position in those two races, as it did in the Pure Michigan 400 in mid-August.
The branding message and color schemes featured on the car, Almirola’s firesuit and gear worn by his crew, varies depending on the location of the race. A mainstay in the Midwest, the Farmland brand will be showcased in races in that marketplace; in the upper Midwest, Eckrich will be the focus and in the East, the Smithfield name will be most prominent.
“Take our brands, put them on the side of a Richard Petty car, you get a lot of press coverage, you get a lot of air time,” Pope said.
Joseph Luter IV, executive vice president of Smithfield Foods, says the initiative is a substantial commitment for the company and requires a well-orchestrated strategy.
“We have a NASCAR ‘team’ that communicates about the campaign and how it is used to promote and grow Smithfield’s three independent operating companies,” he says, referring to Smithfield Foods, John Morrell Food Group and Farmland Foods.
Luter says unlike the previous sponsorship, the current campaign is very much a consumer-driven initiative.
“In this particular go-around, we had set some pretty finite strategies around 12 strategic brands about three years ago.” He says this was part of a fundamental commitment made back then, “that we are going to start communicating to consumers.
“We looked at various [marketing] vehicles and how we could most effectively connect with consumers,” Luter says, and it quickly became evident that NASCAR audiences “over-index” with Smithfield products. Another factor was bang for the marketing buck, he says, especially compared to NASCAR sponsorship costs in previous years.
“It is far more affordable today than it was,” Luter says. Cost, he adds, wasn’t the driving factor, but it was a consideration. Not unlike the meat and poultry industry, NASCAR has endured some well-documented challenges of its own over the past several years in the form of shrinking attendance at racetracks along with fewer sponsorships and endorsement deals. Not surprisingly, the company was approached by multiple racing teams.
“All of the teams have been trying to find sponsorships,” Luter says. “It’s been challenging for them the past three years.”
Three years ago, a couple years into marketing its new Blackwell Angus beef brand, Cargill started shopping around for marketing opportunities to help build its brand. The company was looking for a platform that could expand their brand from a business-to-business perspective as well as with consumers. Extensive research took Cargill right to the race track. “This idea seemed to be a glaring ‘yes’ for us,” says Tammy Shaw, Cargill Beef vice president of marketing and sales. “It just seemed an ideal fit for our business and what we wanted to accomplish.”
Starting in 2010, Cargill signed a year-by-year contract with Rousch Fenway Racing and the team’s No. 6 Ford Mustang driven by Nationwide Series champion Ricky Stenhouse Jr. Cargill renewed its contract again for the 2012 season for 15 races around the country.
During the first two years of the sponsorship, Cargill promoted its Blackwell Angus brand with its chosen paint scheme for the Mustang, as well as Stenhouse’s firesuit, the pit crew’s attire and the paint scheme on the semi-trailer that transports the car from race to race. For the 2012 season, Cargill shook things up a bit. “After each race and each season, we have asked ourselves what worked and what we needed to change,” Shaw says. “Going into this season , we learned that putting one specific brand on our car limited us with multiple customers, so instead we changed our paint scheme and our marketing goal.”
The new No. 6 Ford Mustang now features a Cargill Beef paint scheme, and the team has one primary goal – to drive beef demand. The individual Cargill beef brand names are also featured on the car.
The new marketing plan of simply pushing Cargill beef seems to be working. “When we have our Cargill Beef car at the track we can have multiple customer engagements at the same race at the same time,” Shaw explains. “We can have one of our Sterling Silver customers in our suite, and a Blackwell Angus customer somewhere else. We can have foodservice, distribution and wholesale all at one event – they wouldn’t even know each other were there. We’re all rooting for the same car.
“It’s a full day with a customer, which is priceless,” she says.
Ultimately, Smithfield jumped at the opportunity, Luter says, “to partner with the most-recognized name in NASCAR history, Richard Petty Motorsports.” While Petty isn’t the man behind the wheel these days, he is very much the face of the racing team and takes an active role in executing sponsors’ marketing strategies and interacting with Smithfield’s customers. Additionally, the shared culture and core values between Smithfield and Petty’s team helped seal the deal, as did the image and reputation of the driver, Aric Almirola.
“We had the opportunity to partner with other drivers,” Luter says, including one he says is very well known. “But when we did background research on some of the other drivers and when we consider core values and brand image, we felt good with Aric. He has been a terrific ambassador for our brands.”
Smithfield was deliberate in not committing to a full-season sponsorship of the No. 43 car, but rather targeting 15 races instead. Luter won’t disclose the company’s financial commitment, saying only it’s a three-year commitment (beginning in 2012) with the option to extend at the end of the term.
From a competitive standpoint, success on the track magnifies the exposure for sponsors. Almirola has had two top 10 finishes so far this year. Smithfield’s team looks forward to and hopes for even more success in the months ahead. Top 10 finishing teams and sponsors tend to receive the most air time on race day and of those, the top five or six garner the lion’s share of the exposure. Meanwhile, Luter is pleased with the benefits of the sponsorship so far.
Richard Petty’s team has earned a reputation for not only being sponsor-friendly, but successful on the track as well.
“Some race teams are good at one and not the other and Richard Petty Motorsports is very good at both,” says Charles Gitkin, vice president of marketing, innovation and R&D for Smithfield’s John Morrell Food Group. With plenty of fanfare, Gitkin’s John Morrell team unveiled the No. 43 Eckrich car on June 4 on the set of the Speed Channel, along with Almirola. With millions of viewers tuning in, the broadcast debuted the color scheme and logo of the Eckrich brand along with the logo of its non-profit partner, Operation Homefront, which aids the families of military personnel and those troops wounded during duty.
Cargill used a similar strategy when searching for a team to partner with. Rousch Fenway Racing is celebrating its 25th year in the business and is one of the biggest teams in the Nationwide Series. “Rousch is one of the teams that is always finishing up front, and that’s what really matters with sponsorships, finishing up front and getting seen,” Shaw says.
“Rousch Fenway has really helped us capitalize on our investment – they really know what they’re doing,” Shaw adds. “They expect a lot of themselves and have been a great partner to help us learn this business, while helping us to promote ours.”
Racing sponsorships and the level of exposure have evolved over the years, thanks in large part to the growing role of social media. Unlike the Smithfield-NASCAR campaign in the early 2000s, social networking, including Facebook and Twitter, is delivering an unprecedented amount of exposure in the 2012 season.
“The social media piece takes everything we’re doing and brings it to a new level,” Gitkin says.
For Smithfield, that also includes a grassroots campaign and a series of in-store communications related to the racing partnership. The arrangement is a marketing bull’s eye, Gitkin says.
“If you look at the demographics of NASCAR fans and the demographics of our target consumers who buy Eckrich Smoked Sausage and who buy deli meat, there is a very nice overlap,” he says. “These are the same people; the same parts of the country; the same income; the same hobbies and habits.”
Cargill Beef’s marketing department agrees. “The beef user demographic and NASCAR fan demographic match up,” says Fred Sousa, assistant vice president of Cargill Beef Marketing. “Most NASCAR fans are 30-49 year olds, and according to our research, 41 percent of NASCAR fans are medium- to heavy- beef eaters.”
Another statistic that bodes well for sponsors is that 71 percent of NASCAR fans say they will buy products from the sponsors of their favorite cars. “Fans are always asking, ‘Where can I buy your beef?’” Shaw says.
Communicating with these fans using social media is a huge part of Cargill’s current marketing efforts. Three days prior to the Nationwide Series race at Darlington Raceway in South Carolina in May, the company solicited “best burger” recipes from consumers via social media. More than 350 recipes were sent in, which were then narrowed down to the top four. Prior to the race, the president of Darlington Raceway, Miss Sprint Cup (who boasts thousands of followers on Twitter) and a NASCAR radio personality cooked the top burger recipes at the track and then voted on a champion, all while tweeting about the event and promoting it on Facebook. Stenhouse and the No. 6 Mustang took sixth place at Darlington Raceway, and the winning burger recipe is now the signature burger at the track.
Smithfield’s last NASCAR sponsorship was winding down when Morrell’s Gitkin first joined the company, about four years ago. In the fall of 2008, market conditions and the general state of the economy put the brakes on a four-year sponsorship of Team Rensi Motorsports’ No. 25 car. Citing spikes in corn prices and oil costs, Jim Schloss, then vice president of sales and marketing with Smithfield Foods, said at the time: “We have to cut out a number of programs and NASCAR is one of those.”
“The difference this time around is that we are really [focusing] on each market where we are having the races,” Gitkin says. For Eckrich, there are three races (the first two were at Kentucky Speedway followed by the Brickyard 500 in Indianapolis – the final race will be at Michigan Motor Speedway) that are the focal points of that brand’s NASCAR campaign.
“These are parts of the country where Eckrich is by far the No. 1 brand in its categories and really has a bond with its consumers. Rather than trying to do everything, everywhere, we’re trying to go where Eckrich is already important to our consumer base and give them something that piques that interest.”
While Cargill’s primary mission is to increase beef demand with its Cargill Beef car, the company also has two other car paint schemes that will race this season. One is a Sam’s Club themed car that will run in three races. Another paint scheme features the Rancher’s Reserve brand from Dominic’s/Safeway stores which raced at the Chicagoland Speedway in late July.
“For us, changing the paint schemes on our car is how we can partner with our most important customers,” Shaw says.
Partnering with a retailer or wholesaler allows Cargill to drive more excitement to its race car and in its brand. As a part of the Dominic’s campaign in Chicago, 100 of the store’s top customers (identified using the store’s frequent shopper card) were invited to a special event at the track where they got to see the car up close, and meet the driver.
“Nothing is better than that type of exposure. It gives us great consumer engagement and great customer engagement,” Shaw says.
Cargill plans to continue to reassess its program on an annual basis. One factor to consider is the recent announcement that Ricky Stenhouse Jr. will be moving up to the Sprint Cup series next season. Cargill can opt to keep its sponsorship and No. 6 car in the Nationwide series or move up with Stenhouse to the Sprint Cup. “Cargill has a significant investment in the NASCAR racing program,” Sousa says. Going up to Sprint Cup will require more of a financial commitment.
Regardless of which direction Cargill’s involvement heads in upcoming seasons, there have been no regrets, according to Shaw. “We are thrilled with the decision we made three years ago to get involved with NASCAR.”