Formula For Success

Formula One is changing next year, the cars will be powered by a 1.6l V6 turbo engine instead of the current 2.4l V8, and they will have increased reliance on energy recovery. This change may shake up the competitive order and has led a few people to ask me how this changes the decision on which team to sponsor.

I have to admit that this question confused me a little. Purely because, I now see sponsorship as a business decision, and not related in any major way to where a team finishes in the Championship. This wasn’t always the way – I would have chosen Ferrari or McLaren day-in day-out several years ago. But maybe your opinion will change too, when you consider the following;

Brand position in the market (and its future aspirations)

This relates to whether you are a leading brand in your discipline, or a challenger? Example: UPS and Ferrari are both leaders in their disciplines, so fit well together. Alternatively part of the story BlackBerry tried to tell with their Mercedes partnership, was that BlackBerry had lost ground, were not considered a leader anymore. By partnering with global power brand, Mercedes, BlackBerry hoped to regain that ‘leadership’ position. As it turns out there were deeper-rooted problems at BlackBerry that no marketing could help turn around.

Specific business objectives

Is there something a particular team can provide the company that you couldn’t get elsewhere? Example: If your new product line is relevant to the automotive segment, sponsoring one of the teams backed by auto manufacturers could develop top-level relationships that may lead to integration of the product in their range of cars.

Business-to-business opportunities

Is a particular team’s sponsor network better suited to delivering new or enhanced business for your product sector? Example: A business services company would want to sponsor a team that had multiple sponsors that are 1) large global businesses 2) with a requirement for your service. Providing greater revenue opportunities.

Brand values and their fit with the team

Is your brand very corporate and clean, or is it very much centred around family? Example: McLaren can be seen as corporate whereas Williams can be seen as a family team. Brand fit helps to communicate your desired messages not only with consumers and business customers, but also internal within the company.

Size of activation budget

If your aim is to increase awareness but have a limited budget, can you gain ‘windfall exposure’? Example: Santander and Vodafone invested large amounts of marketing spend running F1-themed campaigns using the drivers (in their overalls). A benefactor of this activity was Lucozade – their branding on the overalls appeared in all of the Santander and Vodafone’s marketing activity, helping raise awareness of Lucozade’s partnership.

These considerations have more influence on the return on investment than championship performance has. That’s not to say that strong championship performance and regular victories won’t aid success – at the end of the day, everyone wants to be associated with winners. But it won’t make a significant difference to the return on investment. Take for example, British Airways sponsorship of Justin Rose.

BA began sponsoring Rose before he went onto win the US Open. Many sponsorship professionals raved that BA now had a great deal. But my question is, do you think the fact that BA now sponsor the 2013 US Open champion mean they are likely to generate significantly greater returns than they could when he was Top 5 player? I wouldn’t say that one title would make much of difference when he is already linked with success – but hey that’s just me!

There is a time however when performance can be used to a brands benefit, and that is when the brand has contributed to the success of the team / athlete. Take for example, Autonomy’s Virage software that helped Mercedes to save 0.1 seconds of lap time. This made them more successful on-track, gave them a higher championship position and greater end-of-year prize money. A great story to tell potential customers! But could it have been more powerful at Marussia, where it could have helped the team gain more time, let’s say, half a second?! Last year that half-second could have meant 10th place in the championship and the millions of dollars the team ultimately missed out on.

This impact isn’t limited to just one sector either, many business sectors can create powerful stories. A business services company could save an F1 Team money that could instead be spent on the cars performance. Using a ratio (e.g. $2m/0.1sec saved) the sponsor could say, “our services saved the F1 Team $4m that could instead be spent on more important areas of the business – the money saved was spent on new aero parts and resulted in a 0.2sec/lap time saving.”

Summary

The key is to create a partnership based on, business rationale. With ROI the name of the game, opportunities may be better suited to your business further down the grid.

Win by creating a successful partnership, not by an unsuccessful partnership of winning!

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2 thoughts on “Formula For Success

  1. Pingback: F1 Fanatic round-up: Ferrari 'won't be close to Red Bull next year'

  2. Pingback: Ferrari won’t be close to Red Bull next year – Lotus | F1 News Round-up » Formula 1 News

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