The Strategy Behind Great Sponsorships
In 1950, the many brand logos you see on the overall of Formula One Champion and Mercedes driver, Lewis Hamilton, would not have been there. As at the time the F1 championship began, participating teams weren’t allowed to display sponsors’ logos on cars or drivers’ overalls. This changed in 1968 when BP and Shell ( both were not regarded as commercial sponsors) withdrew from the sport, and Firestone (the tyre brand) began to charge for the tyres it supplied to the teams. These companies did no longer see the need to continue funding a sport that didn’t provide an opportunity to fully advertise to a seemingly growing audience. Racing teams were running out of funds and had begun threatening to withdraw from the sport. Commercial sponsorship seemed to be the only solution.
Today we see on the cars and overalls of drivers brand logos belonging to companies across different industries. These companies are leveraging the sport to improve perception and business outcomes. Some have questioned the effectiveness of such a high-investment campaign, but if the picture above says anything, it is that there obviously exists a great deal of value for the brands who go on to sponsor the racing teams. A good example is the title sponsor— Petronas, which signed a deal with the Mercedes AMG F1 Team (now Mercedes AMG Petronas F1 Team) in 2016. The Malaysian oil and gas company has remained a sponsor for four years — a non-verbal, but clear statement that underscores the benefit of such partnership to the oil industry leaders. What’s even more interesting is the fact that new brands (especially in the B2B and luxury categories) are now building associations with the sport.
Sponsorships in the past were often considered a risk. It required some level of investment and did not guarantee any specific returns, and so brands were wary. This has since changed. Marketing leaders are now identifying new ways to make the most of the partnerships to improve the bottom-line.
On Track
A great example is the Mercedes Benz investment in the Mercedes AMG Petronas F1 Team. This partnership which comes with a cash requirement (£30m annual fee as of 2018) also makes Mercedes Benz the engine and chassis supplier for the team. This translates to not just a traditional sponsorship, but a technical partnership that seems to be paying off. Lewis Hamilton, the F1 champion drives a Mercedes Benz, and now it’s a case of the chicken and the egg on who (or what) facilitates the victory — the excellent driver, or the powerful engine. This gives a positive brand image and subconsciously places Mercedes Benz as leaders in the auto manufacturing industry. This same situation applies to many of the other sponsors, like Petronas, which works closely with Mercedes to supply the perfect lubricants for their engines. The F1 motorsport is considered a team sport as the drivers’ success is often dependent on the team. This provides an avenue for brands to actively integrate their products/services across the different functions within the teams. Tommy Hilfiger can now creatively showcase their superiority in the luxury clothing industry by offering premium outfits to the drivers and other members of the team, just the same way Bose will continue to dig into the market share pie, as they supply quality sound equipment for driver-team communications.
Other less popular brands are not left out. Tibco, the analytics software company which signed with Mercedes in 2018 (with a ~£1m annual fee) is able to test the effectiveness of their tools on one of the biggest stages in world sports. Tibco provides real-time insights to the Mercedes team on how to do much better which indeed is a competitive advantage (more here). What better way is there to prove that your software product works than to have it as a core utility tool of the champions.
Behind the Scenes
Beyond the public show and massive awareness brought about by a logo display visible to fans of the sport from around the world, a number of closed deals happen behind closed doors. A lot of enterprise companies are associated with the F1 championship and are granted privileges to connect outside of the sporting track. This often serves as the perfect platform to connect to leaders of businesses that may require specific services other businesses associated with the F1 offer.
Winning With Sponsorships
Every business wants to play in a league that matches its status, and the kinds of clients/customers it wishes to acquire. The F1 championship has an obvious array of sponsorship from established B2B and B2C brands, but these are not the only platforms available for leverage. Building goodwill starts from identifying where your target audience can be found and then positioning your brand in a way that they see you.
When we talk about distribution in marketing, there are only a few methods relevant to the bottom-line than strategic sponsorships and marketing.
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