Why would a company spend millions of dollars to get their name on a stadium or their brand logo onto a team’s kit? A very common question asked by the average man on the street. They understand value must be seen by the company at some level, but they don’t quite understand how, why or where. They often fail to understand why these companies need to spend so many millions on sponsorship, when their brands are already so well known.
The fact is that for many companies brand exposure is very low on their priority list. Brand awareness means little to the likes of Vodafone or Red Bull anymore, so now these brands are looking to create a connection with the audience by the transfer of F1’s premium values to build increased brand loyalty. Let’s focus on brand value transfer first and I’ll ask you, the reader, what words would you use to describe F1?
I’m willing to bet some of the words that spring to mind are ‘global’, ‘innovative’, ‘speed’, ‘reliable’ and ‘leading-edge’. It’s fair to say that even non-F1 fans would strongly associate F1 with at least three of these. If I am right, then this tells us that F1 has very strong brand values. Now think again, this time create a list words you would associate with F1 sponsors, what did you come up with? A recent Repucom survey revealed the top results for F1 fans were; ‘market leader’, ‘cutting edge’, ‘premium’, ‘modern’, ‘reliable’ and ‘customer focused’. So we can comfortably say that a sponsor of an F1 team is, for example, seen as a cutting-edge, modern and reliable brand. This is one of the reasons companies enter Formula 1 as sponsors – their perception amongst 500 million individual fans around the world is improved or enhanced.
To briefly explain why this is the case, consumers assign a ‘meaning’ to everything, including F1. When a consumer interprets F1 as ‘global’ or ‘innovative’, those F1 values by association transfer, in the consumers mind, to the sponsoring company’s brand. This effect is even more pronounced when the brand is relatively unknown – this is why F1 has become the ultimate global platform to shift what would be considered a challenger brand into a world leading brand.
Despite this, it is becoming more and more apparent that some people still do not understand Formula 1 and maybe it is time for Formula 1 to actually start to market its assets. Today consumers are becoming very selective about what they choose to consume and will only take notice of new things that are of current interest to them, or are recommended to them by someone they trust.
In the modern digital age “Content is king”. People consuming content that’s of interest to them at all times of the day and with social media growing in popularity at an unbelievable rate and technology giving near “full-time, real-time” access, sharing of content is becoming easier and faster, with greater reach. As far as fan content is concerned, the teams are doing an okay job. But what about growing the senior executive audience? After all, F1 budgets are on the whole funded by sponsors, so how good is the understanding of F1 amongst company senior executives?
The issue is that if business executives don’t want to even consider spending a second talking about F1 then where will F1’s next line of sponsors come from? With increasing focus on Corporate Social Responsibility (CSR) and what can be considered ‘business relevant’, doesn’t Formula 1 now need to start telling its story? Well, maybe. From a commercial aspect there are several qualities to Formula 1 that sponsors can easily and effectively associate themselves with, these are:
- 1) The relentless technology development and engineering innovation.
- 2) The luxury and aspirational lifestyle profile.
- 3) Global business and finance.
- 4) The excitement of the competitive action, on and off track.
The problem occurs when a significant proportion of today’s senior business executives don’t understand or get “it”; instinctively they think that F1 will make their businesses look egotistical and are participating in a ‘who’s got the biggest or best’ competition.
While the individual teams are doing a great job, Formula One Management Ltd (FOM) still needs to act in order to positively impact current viewership – which in turn helps FOM command higher broadcast fee agreements so increasing the revenue and profit for both for themselves and the teams.
So what action are we talking about? In short, it can be described as a brand marketing campaign that enhances the four ‘aspects’ we mentioned above. Brand marketing is one of the key factors in determining business success. It is no coincidence that two of the biggest brands – brands that can claim incredibly high brand loyalty – created some of the best ever brand marketing campaigns. We are of course talking about Apple (Crazy Ones) and Red Bull (numerous, but a good example would be the 2013 World of Red Bull commercial).
So shouldn’t F1 now initiate their own brand marketing campaign? Personally, I believe they should. McLaren CEO Martin Whitmarsh spoke recently about the need for greater central marketing activity: “We need to work a little harder,” he said. “We as a sport are a little bit arrogant. We’re Formula One. We arrive and people will want to come to see us.” He went on to say that China and the USA don’t need F1 – and that is a key point. F1 needs countries like China and the US far more than they need F1.
In terms of annual global sports platforms Formula 1 has been at the top of the table for a long time, but sport is competitive. It is no longer enough “just” to have a presence in emerging markets, the sports fan and business following has to be substantial too. In order to compete with other sports Formula 1 may have to start marketing itself, and soon – no matter how adverse its owners are to the idea.