State Water Heaters alters approach to stay in NASCAR

(By Greg Engle)

Posted: Thursday,April 30th, 2009

(By Michael Smith, Sporting News NASCAR Wire Service)

State Water Heaters, a NASCAR team sponsor since 2006, went into this season wanting to maintain the benefits of its marketing and hospitality program while trimming expenses.

After visiting just about every NASCAR team as a free agent, State went in a markedly different direction. It decided to sponsor no one at all.

Instead of spending the $5 million to $7 million a year for a low-level, often noncompetitive car, as it had done before, State opted for a unique program conceived by North Carolina-based 919 Marketing with former driver Ward Burton.

It’s a plan that has allowed State to keep its vibrant hospitality program at the track despite axing the costly sponsorship.

Burton, a five-time winner and one of the sport’s elite drivers from 1999 to 2002, essentially serves as State’s NASCAR ambassador for anywhere from 30 to 100 of the company’s guests on race day at a Sprint Cup event. He guides them on pit and garage tours, explains the race to guests in a suite and even talks sales on State’s behalf.

“We wanted to provide customers with a great race-day experience, but that required more creative thinking without our name on a car,” said brand manager David Chisolm from State’s headquarters in Ashland City, Tenn. “As we evaluated how to move forward in a tough economy, our top priority was to increase the touch we have with our customers. This program gives us the chance to offer customers the experience of a lifetime.”

Until this year, State Water Heaters was known in NASCAR circles as a loyal sponsor of low-level teams such as Morgan-McClure Motorsports and Haas CNC Racing.

Those teams rarely competed for wins, but for State, race day was more about creating business-to-business opportunities with current and prospective distributors, the people who get State’s product in the hands of contractors. If a State Water Heaters car performed well and picked up a little TV time, that was icing for a NASCAR program built largely on hospitality.

Burton enables State to deliver that race-day experience at the track with a noted driver, even though State’s white, blue and orange car no longer competes.

State’s Chisolm wouldn’t say how much State will save this year, but the company is not writing a hefty sponsorship check and it will be entertaining at about 10 races this year instead of 36, so the savings will be in the millions.

“With a car sponsorship, you get a limited amount of time with the driver,” said David Chapman, CEO of 919 Marketing. “With Ward, State gets him all day. It’s like instead of going to watch Michael Jordan play basketball, you get to sit next to him during the game. The customers are watching the race unfold and they get to hear Ward talk about what’s happening.”

In addition to the race-day activities, State puts on driving and ride-along excursions. During one such event on April 18 at Las Vegas Motor Speedway, Burton took State guests on trips around the track at 160 mph, using cars from the Richard Petty Driving Experience.

“I think it’s smart,” said Trip Wheeler, president of The Wheeler Co., a Charlotte-based motorsports agency. “The car sponsorship gives you national exposure; it makes you look big. Alltel wasn’t available everywhere, but you thought it was because of its sponsorship. If you don’t need all that, it makes a lot of sense to be more efficient with your money.”

919 Marketing, which has worked with sponsors such as Unilever on its NASCAR programs, came up with the idea to take this program to State. Burton drove a State Water Heaters car for Morgan-McClure Motorsports in 2007, so both sides went into the deal with a level of familiarity.

But the absence of a car on the track can also sap the authenticity from a race-day experience, said Tad Geschickter, who owns JTG/Daugherty Racing and fields the No. 47 car.

“What you miss with the sponsorship is a level of legitimacy to being in the sport,” Geschickter said. “Race fans are smart, and they know who’s in the sport and who’s not.

“But it does beg an even bigger question about the way sponsorships were sold a year ago and how they have to be sold now. You’ve got to keep reinventing yourself to add value for the sponsor, whether it’s B2B sales opportunities, Internet applications, whatever.”

Michael Smith is a reporter with SportsBusiness Journal.

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