F1 Sponsorship: Is Now the Time to Get In?

by Rick

Saturday, March 27, 2010 at 06:56 AM EDT

This weekend is sees the second race of the 2010 F1 season take place in Australia. In the leadup the Financial Times has run a story on the slowdown in F1 sponsorship, with reporters Christian Sylt and Carloine Reid noting a drop of $115 million from last year. They cite Formula Money data showing that is the biggest drop in five years.

Certainly the state of the general global economy is a leading factor here. Also noted are the departure of some key sponsors such as ING who previously pumped big money into the sport. It’s a good article and worth the read (free registration required). But is this seeming exodus warranted? Should brands be looking elsewhere to spend their marketing dollars? On the contrary, I think this is a great time to get involved with F1 for the right brand and critically, in the right way.

First, let’s look at the F1 landscape. I see a lot of positives from new teams and talented young drivers, to new markets with great facilities and huge audience growth potential. Add in some long overdue marketing sophistication and new technologies and things look good. Here’s a deeper dive:

New Teams

Last season longtime Ferrari fixture Ross Brawn started his own team and immediately proceeded to win both the driver and constructor’s championships. In addition to Brawn GP, Force India grabbed a space on the grid in 2009. In 2010, Lotus, Hispania and Virgin have also come on board. Now, certainly these teams are likely to struggle, but they bring a diversity and freshness to the sport, and for the media they generate fresh angles to cover. It also indicates an increase to 12 participating teams (it would have been 13 if USF1 had managed to get their act together) from just 10 in 2005.

New Drivers

Certainly Lewis Hamilton is at the forefront, not only the first black world champion, but also the youngest in 2008. In addition, young stars like Nico Rosberg (25 years old), Robert Kubica (26), Jaime Alguersuari (21), Nico Hulkenberg (23), Sebastien Buemi (21), Kamui Kobayashi (24) along with several others still in their 20s and you see that there are names that people will be following for many years to come.

New Markets

F1 has transformed from a European focused sport to a truly global one over the last several years. Races this season will be held in Bahrain, Malaysia, China, Turkey, Singapore, South Korea and Abu Dhabi. India is on board for 2011. When you add these to the traditional European stops, plus Australia, Canada and Brazil, you realize there is really no sport that has the same reach on an annual basis.

New Thinking

I worked on behalf of clients who were F1 team sponsors for several years over the past decade and I was shocked by how little thought the teams, and F1 as an entity put into some of the finer points of marketing. They just opened up the gates and let the people in. Merchandise ranged for ok to poor to non-exsistent. The sport just wasn’t particularly fan friendly, unless you were a movie star or fabulously wealthy – and preferably both. But as new brands like Red Bull and Virgin become involved they are bringing their marketing savvy with them. Red Bull in particular has done a strong job and as a result other teams have had to improve as well.

New Technology

Both F1 and teams are starting to see the power of Social Media (some more quickly than others). Here are a couple of posts from Viral Blog – first a look at where F1 teams are falling short in Social Media. This one highlights the strong F1 Social Media efforts by Virgin. F1 is doing a better job as well, with a cool new iPhone app.

As a result, TV viewership seems to be headed in the right direction. RTL in Germany did well with the Bahrain GP, and ITV’s coverage in the UK peaked with a 47.2% share. So, with lots of potentially exciting developments, and teams hurting for sponsorship dollars, now is a great time to get in on the F1 action, and marketers probably have some leverage right now, especially with teams that are in the lower half of the grid. The key is understanding what you can and can’t do with your sponsorship, and knowing how to exploit it properly.

New Opportunities

As a brand, you have to go beyond merely putting your logo on the side of the car and having friends join you in the hospitality tent. Leveraging a sponsorship involves what you do off the track just as much as what happens on it. I’ve always been a believer that you don’t need to spend a lot of money directly on an F1 sponsorship, just get yourself a seat at the table. Does this mean you’ll be lower on the pecking order when it comes to certain assets (like driver appearances)? Yes, but you can do other things to supplement that. Social Media provides an unprecedented opportunity to connect with people who have and want to share their passion. Formula one is a true global, year round sport that is supported by a massive media contingent that have a finite number of teams and drivers to cover. If you can create a compelling narrative, you can generate earned media coverage that can help build your business.