Watching the car launches this past week and now seeing the action during the first test of 2017, I was reminded of how devoid of major sponsorships the cars seem be. Perhaps I’m just getting old and recall the logos of West, Marlboro, Elf, John Player Special, Parmalat and Martini—which is still on a Williams after a glorious return to F1—and others that now seem destined for the history books.
Much has been made of the EU law on tobacco advertising and how this ruined major sponsorship of F1 and while there is no doubt the exit had a major impact on the sport, the lack of major technology companies and other global businesses is still somewhat surprising.
I was reading an interesting article here about that very issue. Let me say, up front, that I don’t disagree with this article. They are experts in the field and are in the business. What I do want to focus on are a few of the concepts I found interesting.
The article quotes Force India owner Vijay Mallya regarding the lack of sponsors beating a path to Formula 1’s door:
“If the boss of Formula 1 says publicly that the sport is crap, what do you expect? Which sponsor wants to enter a business than speaks like that about itself? Bernie put off many sponsors with his comments, and those who did come went to the rights holders.”
We’ve heard this before from Vijay and other team bosses and specifically the smaller teams have always had an axe to grind about why they aren’t finding large sponsors. That doesn’t mean they are unfounded but then the teams are also responsible for the current formula—via the F1 Strategy Group—and if the product isn’t as good as it could or should be, Ecclestone’s not the kind of dog to lap it up. He’s always called a fig a fig and a trough a trough.
If you’ve listened to our podcasts over the last several years, you’ll have heard me question the teams and their role in the marketing and sponsorship efforts of their business. I’ve not been critical as I am not on the ground floor working with them but I do find it odd that the teams seem to have slowed their pace on major sponsorship outreach in favor of simply banking on Formula One Management prize money. There could be very good reason for this and one could be that FOM held the major sponsors for itself, as Mallya suggests, and if that’s the case, the major dollars only funnel through the prize money payout. I’m not completely convinced that’s the case.
I’ve spoken to new McLaren marketing guru, Zak Brown, a few times about this issue and he’s always felt that F1 is a terrific marketing investment and there are complicated reasons why the teams aren’t getting major deals these days. I recall former McLaren CEO, Ron Dennis, holding out for $20+ million deals and felt the team was certainly valued properly but according to their article, that may be a legacy way of looking at the shift in marketing programs.
“Teams are basing their sponsorship valuations as a proportion of the overall running costs incurred by the team, not based on the actual value of the sponsorship,” explains Wright. “For example, if a front wing end plate accounts for 3% of the overall cost, then a team will expect to get the same amount of money back from a brand sponsoring that position. The reality is that the actual value of that position is much less than 3%, and brands know this and therefore are not willing to shelve out the money to put their name on the side of the car. As costs are growing, media values are dropping, and therein lies the problem.”
I find this a very intriguing possibility and from what I’ve read from team bosses, the title sponsorship values have always hovered in that $15-30 million range or at least a significant portion of the team’s budget. Over the last few years, we’ve seen smaller logos and smaller parts of the car from organization such as Microsoft, UPS, Johnnie Walker and others.
To be fair, Force India have done a much better job of gaining sponsorship on their car than other teams including Sauber which has been in F1 much longer. Strange then that McLaren has no title sponsor and it will be interesting to see what Brown can do. He’s managed some of the biggest motorsport sponsorship deals in F1 and beyond so if he can’t get a title sponsor for McLaren, then there is truly something very wrong.
At the article points out, Liberty Media are on board now and I know they get it. They’ve hired a former ESPN marketing guru to grow the sport and monetize the product. I think they’ll succeed and what’s good for F1 will be good for the teams. I still believe the teams need to spend more on their sales teams combined with a fresher marketing approach. They are under the illusion that tweeting more and hosting Facebook live events is the answer. It’s not. It’s time to get out and sell things again. Time to brush off those PowerPoint presentations and start hustling for sponsors. Time to recalibrate your pricing schedule and find new ways to create sponsor value.
Hat Tip: Sine Qua Non
Good article.. the photo of the McLaren shows this up well – just a scattering of names, all of a similar size mostly black & white and (apparently) randomly placed on the bodywork! What happened to the much-mooted tie-up with Castrol? We thought there would be flashes of green/white/ red on the car, but no… can anyone spot the Castrol logo? (put yer glasses on!). That’s the difference.. a big title sponsor. “You don’t know what you’ve got ’til it’s gone” as the old Joni Mitchell song goes…….
Maybe there’s no real equivalence, but in the magazine publishing world of the 80’s the advertising (“sponsorship”) formula was pretty simple: you knew your readers better than anyone, you created a buzz among them with your magazine, and so advertisers clamored to get into your pages because that’s where their target customers hung out. Commercial profitability was almost an aftereffect of the shared “buzz” of the magazine, its readers, and its advertisers. I think that Bernie milked that same approach pretty well for a couple decades, and he had/has an intuitive grasp of the F1 fan and how to match… Read more »
It is indeed a bit strange. On the one hand you have companies spending big money: Red Bull going full in with its own team, Sponsors like Martini now for a couple of years as main sponsor of Williams. And I would think they still believe it is worth it. That they sell more of their actual products then they spend in F1. And then you have cars that are basically blank. Sure, it could be the price tag, but it is especially McLaren which seems very strange to me. They lost a lot of sponsors over the last years… Read more »
The sport never recovered from the end of tobacco sponsorship and Negative Camber himself have railed(in past podcasts) about the lack of high market evaluation brands like Apple and Google not found in F1(the answer is they don’t need F1 to advertise). I have always wondered why Coca-Cola has never involved in F1. I believe F1 sees itself as a premium marketing medium and not one to discount its rate card(a’la Ron Dennis and McLaren). The teams are facing competition for sponsors from its own broadcasting partner FOM: why don’t we see Rolex, Pirelli or Emirates on the cars, too?… Read more »
I guess you could always argue that you are going way retro…like the Lotus 49 when there was no sponsors on F1 cars…until Chapman solved that. :)
Yikes! Thats a great point Todd.
We’re so normalised to seeing advertising and sponsorship in every aspect of F1 that seeing the cars with paint schemes not dominated by a major sponsor looks wrong! Thanks Bernie you’re legacies are many and deep.
The legacy of Tobacco sponsorship runs deep. After all that’s how it all began in terms of commercial sponsorship in F1.
Quick question – Does anyone know when the first trackside sponsorship occurred in motorsport? I’m just curious.
We know Chapman and Lotus was the first to bring a commercial sponsor to the cars (Gold Leaf) in F1 in 1969 and that before that, plenty of teams carried supplier sponsors, as early as 1910 in the USA. They basically wrote ‘Firestone’ on the side of a car but hey, it was sponsorship :-)
I don’t see why in 2017 when F1 runs in countries right around the world in developing markets as opposed to the euro-centric series it was in the 1990’s, as well as the quality of tv graphics, we can’t have cars running in different liveries with different primary sponsors throughout the season, as in every other form of motorsport out there. If Red Bull wants to run its standard livery full season, sure, same as Ferrari and others, if someone wants to put the money down for the whole year, great but for the teams at the back or McLaren,… Read more »
Sounds like a good call to me Tom, and why do both cars in a team need to run identical livery?
With the new sharks fins, surely the teams could project adverts and logos onto the fins – the same way they advertising hoardings around football pitches scroll.
Agreed. I understood the reasoning for running identical livery on both cars back in the 90’s, both for identity purposes and uniform corporate looks but as times have gone on, the identity purposes aren’t a big concern anymore, because there’s 100 and 1 ways to identify cars today and the corporate looks of sponsoring two cars as well with the same livery just seems to limit potential sponsor opportunities today. If the teams want to run both cars with the same livery could still do so if they decided too. They’d hopefully be nothing preventing them, it would just help… Read more »
The drivers could have their personal sponsors on ‘their’ car, Hamilton would need a fin the size of a billboard, Lance Stroll would only need a gift card sized one, saying Thanks Dad ;-)
hehe
Sorry I didn’t reply to the other bit. I’m guessing the main issue with projecting adverts onto them, would be the speed they pass at, which is why FOM has used its virtual ad technology on static objects.
The technology is clearly improving though, because those things looked terrible the first time they did it, and then you look at the clock projection in Singapore and its vastly improved.
I’m thinking the projectors would be mounted on the car (not sure if you were thinking of the same thing?) and I’d imagine that on TV tracking shots, logos on the shark fins would be legible. For spectators in the stands they probably won’t see them that well, but they can’t read the current static stuff either
Hmm still not too sure how effective it would be. Potentially but the odds of getting a side on shot for long enough for it to be worthwhile are quite low. It’s probably easier just to stick to conventional sponsor logos on the actual cars.
Potentially though LED position indicators could be added to the fins, though they wouldn’t be pretty, it may be beneficial to those trackside, like what Indycar has.
Or what about something to indicate what the hybrid p.u is doing, like an outdoor version of the Toyota Prius information screen.
So we’d know when the drivers are deploying the KERS storage, and so on
That could work, Indycar allow it to flash PP when they activate push to pass. I’m sure they could do something similar with bars.
Teams already do change the sponsor logos through the season as new deals are added. Williams also put local sponsors on the car for certain races (Sure appearing on the car at Silverstone).
Sure, and they’ve done that for several years. When Vodafone sponsored McLaren, they used to run Verizon on the cars in North America as the two companies were interconnected at the time.
I more meant a wholesale change of livery throughout the year, so like in NASCAR for example were a sponsor signs up to be the primary sponsor livery for ten races, then the next ten perhaps are a totally different livery with the others becoming more minor sponsors etc etc, dependent on the region and the interest in sales from a company in that area.
More like this
http://www.espn.com/jayski/cup/schemes/2017/story/_/id/17714754/2017-nascar-cup-series-paint-schemes-team-1-chip-ganassi-racing
instead of like this
http://img1.auto-motor-und-sport.de/Williams-FW38-Technik-F1-2016-fotoshowBigImage-9ec2d1f6-933958.jpg
http://4.darkroom.shortlist.com/980/31a32e9fe66094f05bed091aaaad8409:4d564181f2db2cc5488aa75bc5d940cb/untitled-1.jpg
“They are under the illusion that tweeting more and hosting Facebook live events is the answer. It’s not.” I agree with everything you said in the article, but while social media is not the silver bullet answer it can defiantly help. And it can specifically help with the question of advertisers. Social media posts end up being free viewings for advertisers. If you’re only seen on practice and race days (with those viewings determined by the FOM broadcast on how well the team is doing) a team that tweets pics of the car coming out of the garage with your… Read more »
With FOM stealing sponsors from the team’s (Rolex were invited to the paddock by one of the teams as a potential sponsor, and Bernie offered them better exposure for their money) teams have been unwilling to make the effort if they weren’t going to see the reward. Perhaps FOM should control all the advertising, negotiate all the deals and pay team’s to carry the sponsors logos?