IT Supercharges Nascar

As the 2006 season begins this month at Daytona, Nascar is the nation's number-one spectator sport. And IT is playing a big role in revving its marketing engines.

BY MERIDITH LEVINSON

Christopher Rogers is a self-proclaimed liberal Democrat born in the commonwealth of Massachusetts. He listens to National Public Radio (his favorite show is Morning Edition). He holds a bachelor's degree in English literature and a master's in journalism and works in the marketing department of a Pennsylvania software company. He's 33, single, loves Broadway shows and...

...stock car racing.

He loves the rumble, the roar and the vrooom.

"These cars are fast!" Rogers enthuses. "They're clipping around, depending on the track, at 195 miles an hour, and they're six inches apart from each other and they'll be three cars wide, 10 cars deep, traveling that way for three and a half hours. It's amazing!"

Turning Rogers onto stock car racing (he attends an average of five races a year) is another victory for the National Association for Stock Car Auto Racing (Nascar, the sanctioning body for the Nextel Cup, Busch and Craftsman Truck series of races). Rogers represents the type of person Nascar increasingly has been trying to attract in an aggressive effort to shed its Bubba image and grow the sport. During the 1990s, under the stewardship of second-generation Nascar president Bill France Jr. (whose father "Big Bill" France founded Nascar in 1948), the sanctioning body jump-started a campaign to attract fans from outside Nascar's traditional southern base and in so doing become America's most popular spectator sport.

And Nascar has succeeded to an extraordinary extent. This month, as the 2006 season kicks off Feb. 11 at Daytona International Speedway, Nascar racing is second only to the National Football League (NFL) in television ratings. Last year, 75 million fans went to the track to watch the cars go round and round, making Nascar the nation's most-watched sport. Indeed, Nascar has grown so popular that five television networks, including Fox, ABC and ESPN, signed a contract in December valued at $4.48 billion to broadcast Nascar's various races for eight years beginning in 2007. That's almost double the estimated $2.4 billion deal Fox, NBC and TBS signed with Nascar in 1999, which expires this year.

It's hard to overstate how Nascar has grown during the past 10 years. From 1995 to 2004, its estimated fan base ballooned 19 percent, from 63 million to 75 million; the number of Nextel Cup series events that take place above and beyond the Mason-Dixon line doubled from nine to 18; retail sales of licensed Nascar merchandise rose more than 250 percent, from approximately $600 million to $2.1 billion. And today, more Fortune 500 companies sponsor Nascar than any other sport.

And Nascar doesn't believe it has peaked.

"We're going after those avid sports fans that are not yet Nascar fans," says Roger VanDerSnick, Nascar's vice president of marketing, noting that Nascar traditionally has been most popular in the South where wily moonshine runners souping up their cars to evade federal tax agents on moonlit back roads provided a compelling creation myth for what eventually became modern-day stock car racing. Without that regional mythology, metropolitan markets such as Boston, New York, Los Angeles and Chicago (where so many of those avid sports fans live with so many of the dollars that sponsors seek) have never really embraced the sport. (For more on the history of Nascar, see "From Moonshine Runners to Dale Earnhardt Jr.")

That's changing now, and technology—the Internet, CRM, data mining, wireless, GPS—is driving (so to speak) that change. And like all things Nascar, it's driving it fast.

But the road is bumpy. Nascar's efforts to reach new fans have been hampered by the fact that it doesn't control much of the data it needs to identify who those people are, let alone market to them. VanDerSnick anticipates the organization will encounter considerable technical and political challenges as it contemplates building a single fan database to which all sponsors—some of whom, like Home Depot and Lowe's, compete with one another—would have access. And Nascar's Managing Director of IT, Brad Lovell, with his lean, mean IT staff of 30 souls, has had his work cut out for him, doing everything from setting IT standards, beefing up virus control, automating manual, paper-based business processes and implementing technologies at race tracks to enforce new rules.

Even with all its success, Nascar hasn't yet hit the checkered flag.
The Green Flag: Getting Started

Christopher Rogers visits Nascar's website, www.nascar.com, several times a week. He reads the news and checks the schedules to plan which races to attend. During the 2004 season, he subscribed to a Web-based service called Track Pass, available through Nascar.com, that told him on Fridays which drivers had qualified for Sunday's races and which let him listen to conversations between drivers and their pit crews during races. It also allowed him to follow the cars in real-time with GPS technology and gave him access to exclusive interviews. Rogers says Nascar.com and Track Pass fueled his passion for racing.

But it's only over the past five years that Nascar has begun to understand how technology can help grow the sport. Before that, IT was viewed as a back-office function—not something central to running races, marketing or managing relationships with business partners (the sponsors, licensees, race tracks and racing teams that make up the extended Nascar family). When Lovell joined the sanctioning body in 2003 from Jack Daniels manufacturer Brown Forman, the IT department consisted of no more than 20 employees. There were no standards, and tracks weren't outfitted with technology to transmit race data effectively. When Lovell first began meeting with Nascar executives and managers, asking them what they wanted from IT, "A lot of the time people would say, 'I'd like another color printer,'" he says. "That's how they viewed IT." 

That's changed since Nascar began recruiting executive talent from the Fortune 500, from major sports bodies like the NFL and Major League Baseball, and from broadcasting companies. VanDerSnick joined Nascar from Procter & Gamble in 2000. Dick Glover, vice president of broadcasting and new media, previously worked for ABC and ESPN. Nascar's VP of Corporate Administration, Ed Bennett, came from Bank of America. Along with their business expertise, these men also brought a sensitivity to and a knowledge of IT and what it could do for an enterprise. And Nascar's sponsors, many of which (like P&G, The Home Depot and Ford) are known for their IT, also helped push the organization into the 21st century.

But before Lovell could launch an IT-enabled business transformation, he had to do some basic blocking and tackling, such as ensuring that Nascar had a stable, scalable IT infrastructure, a standardized desktop computing environment (to reduce support costs) and a plan for virus control. Once he had those fundamentals in place, he was able to start the transformation in 2004.

"When I got here, the entire race process, from getting credentials for sponsors to payouts for drivers and their teams and everything in between, was an extremely manual process and pretty much paper-oriented," says Lovell, adding that the automation of these processes will be finished this year. A number of documents—including the forms that drivers need to fill out to enter races, the forms that sponsors need to fill out to get credentials for guests, and the contracts Nascar draws up with the race tracks that outline the conditions and money involved in running a race—will be available on a portal for Nascar's business partners. Lovell says the goal of the portal, which will be launched early this racing season, is to make it easier for Nascar's business partners to do business with the sanctioning body. The easier it is for companies to interact with Nascar, the more sponsors and licensees the sanctioning body can attract. The portal will also provide a forum in which sponsors can network with each other and learn about the new sponsorship opportunities Nascar is developing.

Technology is also playing a role in making the sport more accessible to fans. For example, using data gathered electronically during each race, Nascar is developing stats about driver performance, such as the number of laps a car led during a race and the number of cars passed. The idea is to get fans more involved in the sport in much the same way that baseball uses batting averages, RBIs and strikeouts to tell stories about individual games, teams and players.

"When you look at a newspaper story about a Nascar race, you see the order in which the drivers finished and the prize money the winner earned, but that doesn't tell you what happened during the race. We want to create something like a box score with data that in a quick glance will tell you how your favorite driver performed throughout the race," says Lovell.

To this end, tracks are now laid with antennae, a.k.a. detection loops, at the start/finish line, along pit road and every 100 yards along the track. The antennae pick up signals from a transponder in each car that transmits the driver's speed and position to a decoder, which in turn sends race data to the timing and scoring system where it's aggregated and recorded. The new stats, which Nascar was in the process of developing as this story was being reported, will be unveiled at the beginning of this season.

Since attracting new fans means making the sport more mainstream, and since making the sport more mainstream means smoothing Nascar's rougher edges, Nascar has established new regulations to ensure safety and fairness on the track, and it's using technology to enforce them. For instance, with transponders in all the cars and antennae along the track and pit road, officials can now monitor the cars' speeds as they enter the pits, where drivers are not supposed to exceed 45 miles per hour. If a driver does exceed that limit, he faces penalties that could put him at the back of the pack. Nascar uses the same technology to determine the position of cars on the track when the caution flag is flown, which signals an accident or another sort of problem on the track. In the past, when officials waved the caution flag, drivers raced back to the start/finish line in an effort to improve their position, which sometimes led to wrecks. Now Nascar uses technology to track the order of cars when the caution flag flies to enforce the rules about maintaining the cars' respective positions.
The Caution Flag: Marketing Risks

Mike Anderson, CIO of Cosmetic Essence, a provider of outsourced manufacturing and distribution services to the personal care industry, says he identifies with the "simple, masculine, good ol' boy" elements of Nascar racing. Like him, many men see Nascar as a way to experience and assert their masculinity in an increasingly gender-neutral society. But in making the sport more mainstream, Nascar risks alienating its loyal longtime fans and sanitizing itself to a point where it no longer appeals to men wishing to get in touch with their inner good ol' boy. Also, new fans may not be as likely to support Nascar's sponsors with the same fervor as traditional Nascar fans, who are three times more likely than average consumers to buy products from Nascar sponsors. That in turn may dampen sponsor enthusiasm for Nascar.

While Nascar clearly has benefited from all of its new sponsorship deals (in 2004, 97 Fortune 500 companies were involved with Nascar; in 2005, that number jumped to 106), fully realizing their marketing potential remains a distant finish line. For example, although Nextel pays Nascar $75 million a year to sponsor the Nextel Cup Series of races (Nextel took over the sponsorship from cigarette-maker Winston) and provides the technology that enables fans to listen to conversations between drivers and their crews during races, Nascar hasn't been able to use Nextel's vast customer base to bring new fans into the racing fold mainly because of the privacy concerns that arise around sharing customer data, says VanDerSnick. Nor has it been able to reach out in any comprehensive fashion to any of its other sponsors' consumers, such as Allstate, The Home Depot and Exxon/Mobil. VanDerSnick says Nascar hasn't yet figured out how to market itself to Nextel customers while respecting Nextel's customer privacy agreements. He admits that database marketing is an area where Nascar is playing catch-up. Until recently, Nascar thought database marketing was up to sponsors or to the tracks as part of their ticket selling efforts. 

As the 2006 season gets under way, VanDerSnick says Nascar will begin exploring the possibility of consolidating all the disparate databases in the stock car racing industry that contain fan information so that it and its partners can market to those fans. "All the drivers have their own fan clubs; Nascar.com has its own database; the Nascar members club has a database," says VanDerSnick. "We want to, as best we can because we don't have complete control here, consolidate all those databases so everyone can leverage it and target existing Nascar fans to improve marketing program execution."

The idea behind the database consolidation effort is that if Nascar has a better understanding of its fans—their demographics, behaviors and preferences—it can provide them with compelling offers for, say, opportunities to meet drivers at races, Nascar-branded jackets, or deals on products and services from sponsors. Not only would that bring in revenue, it would increase fan loyalty (one of Nascar's biggest selling points), which will in turn please and attract new sponsors while convincing existing ones to increase their spending.

VanDerSnick knows that consolidating all those databases won't be easy. He anticipates that Nascar will find that fan data hasn't been collected in a consistent way that enables easy aggregation or sharing across platforms, so cleaning and structuring the data will pose a significant technical challenge. That challenge will be left not to Nascar's internal IT department, but to Stoneacre Partners, the company that developed the technical infrastructure for Nascar's loyalty program, the Official Nascar Membership Club. (The club rewards fans who pay $59.95 a year toward a membership with free Nascar-branded gear, discounts from Nascar sponsors, and opportunities to meet drivers or hang out in the pits at races.)

Stoneacre has built what its CEO, Pat Brady, calls a "central fan management utility," which is essentially a best-of-breed CRM system that contains the 411 on fans. Stoneacre uses a relational database, data models and business rules to identify club members and loyalty program participants.

VanDerSnick realizes that Nascar and its partners will have to establish rules for using such a consolidated database because everyone will want to access it on their own timetable and Nascar does not want its fans bombarded with marketing appeals. Developing guidelines for how often each party can access the database will surely be thorny as several sponsors are competitors. And competitors aren't going to want to share the proprietary customer information they've collected. Finally, Nascar will have to respect the privacy agreements that racing teams, drivers and sponsors have established with their own fans. Consequently, Nascar might not be able to access those databases at all. VanDerSnick says Nascar is simply going to approach each partner one at a time, beginning with Nascar's 44 official sponsors, to sell them on the benefits of participating in such an effort and making them feel comfortable populating such a database.

"Getting a reasonable number of sponsors on board will go a long way toward creating a viable marketing tool for Nascar's partners," says VanDerSnick.
The Checkered Flag: Fan Loyalty

Rogers says that because he's a Nascar fan, he's on "a thousand" mailing lists. He says he gets so much e-mail from Nascar sponsors that he deletes more than he reads. But even though he doesn't necessarily do business with companies just because they're Nascar sponsors, his new set of wheels speaks volumes about his loyalty to the sport. Last September, Rogers replaced his Dodge Neon with a limited edition Dale Earnhardt Jr. Signature Series SS Chevy Monte Carlo for $23,000.

"It's the street version of the car Dale Jr. drives," he says. His pimped-out ride features a supercharged V-6 engine that packs 240 horsepower at 5200 rpm, leather bucket seats, Jr.'s number "8" logo on the sides of the car and his John Hancock on the back, a 280-watt, eight-speaker stereo and a fire-engine red finish.

And, like Nascar, it goes vrooom.

Senior Writer Meridith Levinson can be reached at mlevinson@cio.com.