Volvo is riding high as boats circle globe

Exposure: Volvo thinks media exposure will be worth several times the tens of millions it will have spent to promote the round-the-world race.

April 26, 2002|By Ted Shelsby | Ted Shelsby,SUN STAFF

By the time the final yacht crosses the finish line of the Volvo Ocean Race, the Swedish automaker estimates that it will have invested $40 million to $50 million over four years promoting the premier round-the-world sailing race.

The sponsor thinks it is money well spent.

"We will get back twice that amount - maybe three times that amount - in media exposure alone," said Anders Lofgren, commercial director for the Volvo Ocean Race, who formerly headed Volvo automotive operations in Thailand and Australia and was in charge of worldwide financing for both cars and trucks.

Yacht racing and auto advertising are, indeed, big money endeavors.

George E. Hoffer, a professor of economics and an auto analyst with Virginia Commonwealth University, notes that Volvo spent $94.3 million to advertise its cars in the United States in 2001. That was down slightly from the $97.2 million it budgeted for vehicle advertising in this country the year before.

He pointed out that Volvo captured only 1.5 percent of the total U.S. car market last year.

For the industry as a whole, Hoffer said, auto manufacturers spent $7.7 billion on advertising in the United States last year. Dealers spent another $6.6 billion.

Lofgren said Volvo paid $8 million in 1998 to acquire the rights to the yacht race formerly called the Whitbread Round the World Race.

"How do you put a value on so much worldwide media exposure?" he asked. "How do you put a value on a 30-minute special on CNN about the race? What's it worth when the Volvo name is being highlighted around the world? What's the value of Volvo owners taking pride in the race?

"We don't have all these answers, but we are very confident that our investment in the race is well founded."

Lofgren said the Sept. 11 terrorist attacks and the subsequent military action cost the company valuable exposure early in the race.

But, he said, "it does not seem to be interfering with the U.S. market, which is the hardest to penetrate. We couldn't afford to pay for the advertising to match the exposure we are getting in the U.S."

George Collins, the retired chief executive of T. Rowe Price who spent more than $6 million of his money to participate in the 1998 race, said yacht racing tends to attract more high-income spectators than either baseball or football. "This enables Volvo to target its promotion at potential car buyers," he said.

As part of its promotion, Volvo has come out with a limited edition Ocean Race cross country, four-wheel-drive station wagon.

Paul Anecharico, sales manager at Bill Kidd's Volvo in Cockeysville, said Volvo produced only 650 of the $41,000 station wagons for sale in the United States. They have plaques on the driver- and front-passenger doors designating the vehicle as the Ocean Race edition.

"They come with a trailer hitch, for towing boats, of course," said Anecharico. Other extras include Ocean Race-designated floor mats.

Anecharico said the race has increased showroom activity. And, not surprisingly, visitors to the Inner Harbor were able to view the Ocean Race-edition station wagon.

Not far away, at the Maryland Science Center, Volvo sponsored an exhibit in conjunction with the Goddard Space Flight Center near Greenbelt. Part of Volvo's investment was to install instruments on the boats used to check ocean water colors during the race.

"Ocean water colors are very important because they give a reading on microscopic plants living in the ocean called phytoplankton," said Gene Carl Feldman, a NASA oceanographer based at Goddard. "Phytoplankton is the source of half the oxygen we breathe."

Other instruments on the boats measure water temperatures that are critical for the nutrients needed for phytoplankton to survive.

Lofgren said the water-testing programs "are part of our promotion of Volvo as a company friendly to the environment."

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