NASCAR Marketing entering the digital age to meet fan expectations

The CMO.com Interview: NASCAR EVP Steve Phelps

Growing up in a sports-centric city in Vermont, Steve Phelps often dreamed of a career in the business of professional sports. After obtaining his undergrad degree from the University of Vermont and an MBA from Boston College, he was soon on the fast track to success.

In fact, Phelps has twice been named to Sports Business Journal’s “Forty Under 40” list of influential executives in sports.

Phelps began his marketing career working brand management at American Home Products, followed by a role as a brand manager for Guinness Import Co. However, his 14-year tenure with the National Football League is where he truly scored points in the biz. From 1990 to 2004, Phelps was vice president, corporate marketing, at the NFL, where he was responsible for bringing numerous new sponsors to the league, managing key sponsor accounts, and instituting a philosophy focused on developing mutually beneficial partnerships.

Executives at the National Association at Stock Car Auto Racing (NASCAR) took notice and persuaded Phelps to join their team. Phelps joined NASCAR as vice president of corporate marketing in July 2005, was named CMO the following year, and in January was promoted to executive vice president.

Based at NASCAR headquarters in Daytona Beach, Fla., Phelps oversees all NASCAR efforts in integrated marketing communications, corporate marketing, brand/consumer marketing, licensing, automotive group, business development, NASCAR’s digital and social media efforts, broadcast, and NASCAR Productions.

CMO.com recently spoke to Phelps about his road to NASCAR, how his marketing approach has evolved, digital’s role in engaging customers, and future brand plans.

CMO.com: Growing up, how much did you know about NASCAR and the racing game?
Phelps: I grew up in Vermont near Burlington. It surprises people how much I knew about NASCAR. Where I grew up, there was a short track about 20 minutes away, and my dad brought me there as a young man. That was fun. I have always been a NASCAR fan. In fact, when I worked at the NFL, Paul Tagliabue was commissioner at the time, and he was meeting with one of the [owners of NASCAR]. I did a tutorial for him on NASCAR. I love sports, and I love working in sports, and to have my job here truly is a dream job. There’s such a great community here, and it’s exciting.

CMO.com: Many people dream of working in the sports world in some capacity. How did you orchestrate your way in?
Phelps: I knew I wanted to be in sports in some fashion while I was in business school. Sports marketing was a fledgling industry at that point, and now it’s a legitimate way to hang your hat. . . .When I was at Guinness, I saw the transition of a more lifestyle brand that would help me transition to sports. An opportunity came for me to work at the NFL, and once you are in sports, it’s fairly easy to stay in sports because you are in the fraternity and community. . .There is glamour in it, but it’s hard work, and that’s what’s expected of you.

CMO.com: What goals did you set upon taking the job at NASCAR, and how have they changed in your years on the job?
Phelps: I wanted to accomplish the growth of our sport. I want it to continue to grow. When I came here, that was my interest, and that remains my interest today. It’s just very different how I looked at it eight years ago and how I look at it today. A lot of it was the change that needed to happen: the way companies were spending, the way the rest of the ecosystem was reacting. We acted swiftly and with significant resources that effect real change.

CMO.com: In what ways has the sport changed, and how has your marketing approach changed along with it?
Phelps: The first five years I was here, it was a very different time than it is today–partly driven by economy, partly driven by changes that needed to happen in our sport. The first five years were marked by real change in how companies were using NASCAR, and the past three years. . .as the economy started to get more difficult, everyone looked to pull back, and that meant on the marketing side and sponsorship. NASCAR makes a lot of its revenue stream on the sponsorship side, and there was a pullback that happened in the amount people were spending in sponsorship and the activation.

That caused NASCAR to look at things differently. We commissioned a number of studies that looked at how we were going to grow our sport moving forward. One of the things we did was look at how our communications function within the industry really changed. We staffed up significantly–doubled the amount of staff at the sanctioning body, where I work. We are organized differently than the stick and ball sports: They own themselves and are franchised. . .We enter into agreements with tracks that are independent of us. We do annual agreements where they pay us a fee, and we bring the race to the track, and they collect revenue from tickets, parking, etc. Then we have a second agreement with individual race teams and drivers. We don’t own teams or racetracks. For us, we saw weakness on the overall system, and we looked at five key areas.

CMO.com: That seems a significant amount of change. Talk about those five areas and what the plan was to turn things around.
Phelps: [The five areas are] the next generation of NASCAR fans, where we were on the digital and social front, where we were with our drivers and how they were being viewed (driver star power), what was happening at the event itself and how we were doing in absolute standpoint, and how we were doing relative to other entertainment opportunities.

Another thing we looked at was product relevance. What changes do we need to make within our sport to make it more appealing to our existing fans and future fans? We did a study on all those things–we had never done anything remotely to the size and scale of what this was, spending millions of dollars on it. From there, we developed an industry action plan, which essentially mirrors the different areas: a plank for the next generation of fans, a plank for digital and social, a plank for driver star power–and within each plank, [we came up with] a number of different tractable things or what we call action items.

CMO.com: Can you talk about some of the positive results you are seeing?
Phelps: When you think about our industry, most key metrics people think about are ratings, general interest level in the sport, and attendance. [In 2013] we had a modest ratings increase year-over-year, and to me we’re moving in the right direction. It’s important to look at the long horizon and continue to see modest growth in 2014, and even greater growth in 2015 when we bring on a new television partner. The interest level continues to grow, sponsorship has rebounded greatly from 2010–we had seven new partners at the sanctioning body alone in 2013, including two Fortune 500 companies [HP and Sherwin-Williams]–so that piece is feeling very strong.

The one place we continue to lag, but I think will change as the economy gets better, is on the attendance front. We were down 3 to 4 percent this year, but I believe it will get better. On the “next-generation” side, we separate that into youth, Millennials, and multiculturals. We saw ratings increasing on 18 to 34, up 5 percent.

We saw our drivers being utilized on television, radio, and very strongly on the entertainment side. We wanted to put our drivers in places it might be unexpected and have some good successes on that front. We used drivers in our own creative. Ogilvy [which handles NASCAR’s advertising] developed creative that’s award-winning in the sports world. It really drove our drivers’ star power significantly. We are working with tracks and helping them to understand the need to create as strong a race day presentation as we can.

CMO.com: Describe your league’s digital marketing philosophy.
Phelps: We view digital and social media as a tool to engage our passionate and loyal fan base and ultimately bring new fans to our sport. The reclamation of our digital rights, effective January 2013, and recently partnering with social and digital conglomerates, like Twitter, Google, and HP, on cutting-edge initiatives are just a few examples of how we are innovating in the digital world in an effort to be thought leaders who provide the best available experience to our fans. We strongly encourage those across the entire landscape of the sport to embrace digital and social media–from drivers and teams to tracks and corporate partners.

CMO.com: So NASCAR didn’t control its digital rights? Can you explain why that was important for the brand?
Phelps: We had a third party [Turner] handling that, but we took our digital rights back in 2013 and built out a 70-person team on the digital side. It was important for us to have a one-to-one relationship with our fan base. Turner did nothing wrong. They operated the site for 11 years–it was a fine site and drew 6.5 million uniques a month. Our fans liked the site, but we had no way to talk to our own fans. They also controlled all the digital and social rights that were NASCAR overall, so if we wanted to create a partnership on the social media side with Twitter, we wouldn’t have the ability to do that. Turner could. . . . We obviously are interested in engaging with our fan base and growing the sport. We believe buying those rights back two years early was of strategic importance to us.

Looking at video views alone this year vs. last year, NASCAR.com went from 1.1 million to 60 million. For us, we certainly want people to come to NASCAR.com, but we also want strategic relationships elsewhere–relationships with Yahoo, with YouTube, with Twitter, with Sporting News, with USA Today, things that provide opportunities for casual fans or nonfans to experience NASCAR.

CMO.com: Describe your working relationship with NASCAR chairman/CEO Brian France.
Phelps: Brian is a tremendous leader. The biggest driver of innovation and change in our organization is Brian himself. I think that’s fantastic. He gives me the opportunity to take risks and not do things because we did them last year or five years ago. He challenges everyone on his management team to think differently, to drive change where change needs to be taken. That’s what he expects of me and his management team. He is an entrepreneur at heart and challenges the status quo all the time. To have someone who does that as CEO is so important to us as a sport.

CMO.com: Another success of NASCAR has been its “green movement.” Talk about some of what you’ve accomplished there.
Phelps: We’ve really made big strides and are the No. 1 sport in this country, if not the world, from a green standpoint. We have the largest recyclable program in all of sports; we have a massive tree-planting program around all our racetracks, and one racetrack [Pocono] is powered by solar. We run on a 15 percent-blended ethanol fuel made from American corn. On the corporate side, we’re not just bringing in sponsors who are green, but also other major companies understanding what we’re doing and supporting our efforts.

CMO.com: Looking ahead, what goals have you set for yourself and the NASCAR brand?
Phelps: I believe the goal for NASCAR is really about modest growth. That will come from executing the strategic plan, our action plan, and making sure the industry is aligned on it, understands the direction, and what is working and what needs to pivot on to make new opportunities and, ultimately, lead to metrics that continue to increase from a ratings standpoint and attendance standpoint. I think we’re absolutely posed to be able to do that.