Mercedes abyss - 2014 & Ciro's Comedian Backalley

[FoxHound]

Their approach to selling AMGs: they took their in-house tuner and made it to a brand. So instead of having a handfull of one-offs they have configurable, comfortable, even luxurious products now (abr the black series - they just brutal!), which are much easier to sell worldwide. In addition, they left the high power market solely to AMG, so there is no internal competition. They are also profiting from Mercedes' strategies, i.e. car design & marketing, so why shouldn't they grow? F1? No, they'll probably be flogging that horse until they fall off their well-deserved throne, but after that their car sales will continue to rise - Mercedes has returned to their old glory, and after accomplishing this truely unbelievable turn-around, are reaping the benefits.

I'm loathe to continue contribution to this thread, as the "abyss" and Mercedes strategies are not mutual!

However, if Mercedes resurgence is due to a change of stratagem, how can you separate F1 from one niche sub brand(AMG), when F1 adds cachet to hyper product ranges?

[GitanesBlondes]

Here's the thing Fox, using F1 to sell any vehicle designed and developed by the AMG division still is aimed at such a niche market. Most people cannot afford an AMG car, so the whole thing is aimed a super small segment of people. Surely an excess of a billion USD spent at this point on the works team since 2010 can't justify an uptick in sales for a niche brand?

Even if some AMG car purchasers are buying the AMG division cars because of seeing what they see in F1, the numbers are incredibly small. Emerging markets in Asia would have a lot to do with with sales increases as there are plenty of newly wealthy Chinese looking to achieve status by way of material possessions. Driving a Benz is just one thing in a long list of items that will do that for them there.

Bigger question becomes is Mercedes hanging on as CBeck mentioned because they desperately need to save face --to the point they are willing to disregard their integrity code-- so they can leave without their tale between their legs the way Honda, Toyota, and BMW did? I wouldn't be all that surprised as I've heard this from a few people in Germany now that has a lot to do with why they haven't left F1 just yet. It's all about creating the perception that they left on their own terms.

The marketing benefits of F1 are tremendously overstated these days in my estimation as no manufacturer to date has reaped any sort of massive payoff from the whole thing.

[i70q7m7ghw]

Does Red Bull sell enough cans of sugar drink to pay for it's F1 team?

Perhaps, and this is a crazy idea, these teams are here to compete and the marketing benefits etc. are a bi-product? Nobody competes in Formula 1 to make money, there are much quicker, safer and easier ways to make a quick buck.

The spending is just a result of having the money available. Any team will use everything it has at it's disposal to be competitive. With these global brands in the sport, that means buckets of money.

At the end of the day, what good is several billion dollars if it's just sitting in the bank? Why not do something with it? Why exist just to make money? Where's the satisfaction in that? Surely being able to say "we competed, and we won" is much more satisfying than being able to see "I've got more money than you".

[GitanesBlondes]

Does Red Bull sell enough cans of sugar drink to pay for it's F1 team?

Perhaps, and this is a crazy idea, these teams are here to compete and the marketing benefits etc. are a bi-product? Nobody competes in Formula 1 to make money, there are much quicker, safer and easier ways to make a quick buck.

The spending is just a result of having the money available. Any team will use everything it has at it's disposal to be competitive. With these global brands in the sport, that means buckets of money.

At the end of the day, what good is several billion dollars if it's just sitting in the bank? Why not do something with it? Why exist just to make money? Where's the satisfaction in that? Surely being able to say "we competed, and we won" is much more satisfying than being able to see "I've got more money than you".

Except if the company is publicly traded, they have to answer to both the shareholders and the board. The shareholders want to be getting a ROI on the shares of stock that they are holding, and frivolously spending money is a good way for a number of people to be sacked from the company.

[FoxHound]

Gitanes,

Daimler spent 18 million euros on advertising in the UK alone.
http://www.campaignlive.co.uk/news/1218633/

Publicis Groupe have recently taken on the Daimler advertising campaign, with an anual euro-wide spend budget of circa 100 million euro's.
http://www.finanzen.net/nachricht/aktie ... ts-3740998

Mercedes-AMG F1 team has taken 51.1 million out of the Daimler coffers. The rest of the 448.9 million has been paid for by the team itself from prize money and sponsorship.

In context, this is peanuts for Daimler to revive the silverarrows. It also has the added benefit of buffing AMG's global image.
Brixworth were also involved in the development of the A45 engine, a turbo unit that can crack 0-60 in sub 5 seconds and still manage 40mpg. Tangible evidence of cross pollination between AMG and their F1 operation.

And it's not a 30 second advert that costs 10 million dollars at the superbowl. Far from questioning Mercedes, I actually applaud them for forging ahead with this.
Far better than dusting off old rally footage from the 80s and pertaining to have invented 4 wheel drive as a rival has done before, would you not agree?

[Gaz.]

Gene Haas also thinks F1 is worthwhile as a mobile advertising board:

http://www.motorsport.com/f1/news/crunc ... d-in-2016/

[Richard]

I've not seen this many strawmen in one place since the Kettlewell Scarecrow Festival. o lets look at the three main strawmen:

• Mercedes justify their expenditure in just the same way as every other team on the grid. It's not just the teams but the sponsors and engine suppliers too. Clearly each of them feel they get a return on their investment that can be justified to their investors and shareholders.
• How much money does Merc actually put into F1? How does that compare to others? The reality is that we don't know. Merc do have sponsors and prize money, so the idea that they fund the full budget is laughable.
• It is also fanciful to suggest that supporting motorsport has a direct causation with consumer purchases. If people are going to argue about that then the sponsorships of Johnny Walker, Boss, Santander is even more tortuous. How many people walk into a bar and choose a drink because a small logo was on a McLaren? Or choose a shirt because a logo was on a drivers overalls? Who chooses a bank account because Santander arranged to have their logo all over an F1 circuit? This sort of sponsorship is about brand value and creating a halo effect. That is as true for Merc as it is for Renault, Inifinti, Boss, Johnny Walker ... and every other sponsor.

So can any of the protagonsts highlight why Merc is any different to any other team? Otherwise this argument stinks of an unhealthy obsession.

[marcush.]

Porsche .
they are now involved in sportscar racing again but apart from a little bit of Porsche Cup (making lots of money with it) there was not much in terms of Porsche to be seen in international motorsports yet the company was selling roadcars for rediculous moneys like sliced bread.
I once heard one of the sales people saying :nah put on a Porsche logo and we will sell it anyways for double its worth.... it does not matter how good it is..


The Benz and Daimler names
It might have occured to some people here -no car is called a Daimler -at least officially -IF it is build by Daimler.Simple this.
Daimler sold the name to use on cars early on to the british..
Benz is the Mannheim Branch of the company -unloved by the guys from Stuttgart -So never they were happy to have the cars named Benz ....The compromise is Mercedes ....
Funnily I was born near Mannheim -for me a Mercedes is a BENZ and nothing else ...now living near Stuttgart the name Benz is not even mentioned and a Mercedes is nothing else than a DAIMLER.You would never say Mercedes to a Mercedes here.
You read the letters but you call it Daimler.Not sure how that is in Cologne or Munich though.


Coming back to the win on sunday sell on monday thing ...Ifinity could not sell a single car becuse of Vettel...and I bet the cost for Renault are staggering compared to any advanatge they may be able to create from being involved..

But hell ..the day you are behind it all gets messy ..as you spend all those millions to dent your image which must be the worst thing in business.


The Best or nothing -This is a very good example of how sales and PR does ignore reality .The very day this started in advertising -inside Daimler this was and still is the running gag for everything going wrong .Make no bones about it ..Daimler ,BMW,Audi are too much in "lean" business to honestly believe their own propaganda.
sure the end user gets the perception of a high quality product ,but in reality this feel is more a result of a quality feel fatamorgana designed by some clever guys than it is a true quality in itself ....in the old sense of robustness and somewhat overengineneering things.....not happening anymore ..the clunk of the door is a design product ...the door itself is the same rubbish Renault uses for their cheapy vehicles...

[Ciro Pabón]

I fail to see a large number of people being "sacked from the companies" that advertise in F1. However, I can understand the question of this thread. For some years this was mesmerizing to me. Why on earth would those people throw money into a pit that returned nothing?

Then I got a girlfriend and his father was a prominent owner of a very large (actually, the first one in my country) advertising company. I married the girl, I gained a father.

Hernán Nicholls, the master of advertising in Colombia and my father in law for 30 years


Hernán explained to me the essence of advertising. He once told me that there were powerful motives behind advertising. He also said frequently that there were powerful words.

He once told me that the most powerful ones were "Free", "Now" and "Sex".

So, according to him, the ideal ad would be "Free Sex Now!".

I think he had a point.


He also explained to me that repetition was the key for a good campaign (not a good ad, but a good campaign).

So, another good example of a very nice brand would be

Mattress Factory "The Mattress". We make mattresses

It's not location, location, location but repetition, repetition, repetition.

It's now or never


I.e. Red Bull buying not one but two redundant teams that serve no purpose. It's not like they're going to use the experience you get in delivering water to the driver while he drives... but, boy, they're everywhere! There is NO WAY you can watch a sport channel without bumping into Red Bull, don't you? There is REDUNDANCY. Luxury = Redundancy

My mother had two breasts and I did not complain of redundancy... God bless her!


You know, GitanesBlondes, there is a theory to advertise luxury brands.

Perhaps you would like to read about it.

If you don't (yeah, I know nobody follows links), then allow me to summarize in my concise, succinct style.

Basis for investment in advertising of Luxury Brands

1. The Three Motivations

Self assertion
Differentiation
Appreciation for product excellence.

2. The 8 P's

Performance
Pedigree
Paucity
Persona
Public Figures
Placement
Public Relations
Pricing

If you are so kind as to follow me for a second and go through the previous list thinking of Formula One, I'd guess you would say "Check" after each point...

If you do not understand this, there is no way I can explain it to you.

You complain of waste? That's the point. That's precisely the point.

Only when you have more than what you need you can waste.

Darwin's theory of sexual display? Wasting! YOU WASTE IN USELESS THINGS AND YOU SHOW IT!


All I can say is that if you do not understand that "waste" I doubt seriously you will ever be in charge of Mercedes advertising... no offense intended.

I believe they'd have a guy like Hernán, an affectionate and smart genius that understood perfectly well the human (and animal) heart we all have.

[turbof1]

Ciro, I beg of you. Please...

...post more. We really need more of that.

[Ciro Pabón]

Thanks, turbof1, give the credit to GitanesBlondes, he's the guy that started this wonderful thread.

Nothing like basic questions to find good answers (if Marcush, FoxHound, Diesel, X, dans79, Moose, Blanchimont, Manoah2u and others have found some, and I think so).

[Tommorris747]

I like how some people in this topic get bent out of shape and are mad I made a lot of good points regarding the marketing aspect of F1 for manufacturers being a total sham..

You like how some people are getting bent out of shape? Maybe because you "points" are based on Christian Sylt BS.

Let me help you Gitanes. You created the thread on the flawed assumption Mercedes were out of pocket by 500 million.
They are in fact out of pocket 51 million after income has been added. So not an "abyss", merely a puddle.
Do you see your glaring error?

Fox, acting as if McLaren was getting the equivalent engines from Mercedes as the works cars was getting is a stretch even for you. It's funny how Ron started talking about the engine maps, then comes Sochi and suddenly the McLaren's seem to be performing better. In an era where everything is homologated and frozen, there is no reason for that to be happening, but when you're paying 20 MEUR for spec engines, and there is no equality, that is a sin.I hope Ron runs custom McLaren engine maps at the last race just to prove a point.

What is this thread about again?
Mercedes "abyss", or "lets debate customer engine parity"?

This thread is dead as a door-nail, and your last quoted text proves this emphatically.

If the figures are BS then why did you mention them in your other post? The BS that I can see is that the £51.1 million loss is not all Merc's responsibility. The article says that it owns 60% of the team which makes it responsible for £30.7 million of the loss. What it doesnt say is how much loss the engine part made and that is 100% owned by Merc...I dont think you went right to the source anyway which seems to be this one
http://www.independent.co.uk/sport/moto ... 92217.html

It also doesn't say is how much loss the engine part made but it does say its costs came to £133.9 million excluding the 2 engine deals at £16 million each. That gives a £101.9 million loss which makes a total loss of £132.6 million when you add in Merc's share from the team. Id say that's an abyss!

[xpensive]

...
All I can say is that if you do not understand that "waste" I doubt seriously you will ever be in charge of Mercedes advertising... no offense intended.

I believe they'd have a guy like Hernán, an affectionate and smart genius that understood perfectly well the human (and animal) heart we all have.

Strange, I have never seen any advertising for Lamborghini or Bugatti, why I guess there are different theories around "marketing"?

In Formula 1, you see none of this brave new IT era's giants like Microsoft, Apple, Samsung, ITC or Sony, gosh, I wonder why?

My 15 year old son is totally indifferent to F1, while I was completely hooked at his age, perhaps he would care a tad more if the competitors and sponsors were more relevant to his generation, Mercedes, Renault and a Spanish bank, come now?

The only one who got it right is Dieter Mateschitz and it won't be for much longer, now that he don't have a win every fortnight,
why do you think he let Vettel go, they can all see the writing on the wall, this show is over and done with, the race is run.

[J.A.W.]

The wild seeming flair & creativity of F1 2-3 decades back was exciting compared with today's tight orchestration..

However M-B's approach to GP racing, from over a century ago, has pretty much been the same..
"Crush-kill-destroy" - with methodical application of ruthlessly professional Teutonic efficiency, even at huge cost..
..& once dominance has been established & all opponents swept aside, then the silver arrows go back in the quiver..

[CBeck113]

...
All I can say is that if you do not understand that "waste" I doubt seriously you will ever be in charge of Mercedes advertising... no offense intended.

I believe they'd have a guy like Hernán, an affectionate and smart genius that understood perfectly well the human (and animal) heart we all have.

Strange, I have never seen any advertising for Lamborghini or Bugatti, why I guess there are different theories around "marketing"?

In Formula 1, you see none of this brave new IT era's giants like Microsoft, Apple, Samsung, ITC or Sony, gosh, I wonder why?

My 15 year old son is totally indifferent to F1, while I was completely hooked at his age, perhaps he would care a tad more if the competitors and sponsors were more relevant to his generation, Mercedes, Renault and a Spanish bank, come now?

The only one who got it right is Dieter Mateschitz and it won't be for much longer, now that he don't have a win every fortnight,
why do you think he let Vettel go, they can all see the writing on the wall, this show is over and done with, the race is run.

I don't see Red Bull jumping ship because of a lack of success. Quite the opposite; remember when RB started they got more attention for their parties than for their track success? It is for their brand identity, and I honestly believe that those actions (like their Monaco pool parties - David C. jumping in the pool after his win is the only reason I still know he won) helped them more than their four titles. Why? What are their customers interests? (Retorical question!). But, to run the best business, RB needed a piece of Bernie's pie, so they put together a team to turn the marketing excercise into a winning team. Now successful, they end up spending less because they are getting more money from the F1 show, while reinforcing their name in the sport world. But I firmly believe that there is no direct correlation between their four titles and teh number of cans of Red Bull they've sold. What it does come down to is brand recognition and the associations we make with these brands. Or would you by a Renault because of Red Bull? Didn't think so...