88 replies to this topic

[LHamilton0810]

With McLaren struggling to find a title sponsor for this season and teams like Lotus struggling to even pay their drivers the last few seasons, why is sponsorship harder to get in racing nowadays? and is this the case in all sports? With more and more people watching Formula 1 (until last season at least) and more and more companies being created on a daily basis, why aren't they organisations willing to go into racing with cars recognised and even named after sponsors? I mean, you'd think that oil, tyre and automotive companies would jump at the chance to get into F1 with their relevance to the sport

[mangeliiito]

F1 lost a lot of marketing value and the economy is still quite shaky across the globe. I would also asume it costs more now than before, it was easier to your way into midfield then than now. But I might be wrong though.

[Prost1997T]

The F1 situation doesn't appear to be linked to viewing figures, perhaps their asking prices are too high.

[Longtimefan]

Maybe partly because F1 is becoming rather boring right now and it seems to have lost most of the glamour and glitz that it used to have,   Couple that with monotone PC drivers with no charm and charisma, its no wonder sponsors are turning away.

Edited by Longtimefan, 25 March 2014 - 21:04.

[BobbyRicky]

Not that hard in the states it seems.

 

;)

[NotAPineapple]

...why is sponsorship harder to get in racing nowadays? ...

 

Don't you remember that little economic hiccup a few years back which wiped trillions of €$etc from the face of the earth?

[scheivlak]

With McLaren struggling to find a title sponsor for this season and teams like Lotus struggling to even pay their drivers the last few seasons, why is sponsorship harder to get in racing nowadays? and is this the case in all sports? With more and more people watching Formula 1 (until last season at least) and more and more companies being created on a daily basis, why aren't they organisations willing to go into racing with cars recognised and even named after sponsors? I mean, you'd think that oil, tyre and automotive companies would jump at the chance to get into F1 with their relevance to the sport

That's a whole lot questions (and opinions) shot in one barrel 

 

Just a few things as background stuff:

- as we know now, viewing figures tumble in some countries (often as a result of going from free-to-air to pay-TV) while they're still growing in a few countries. It's a confusing mix of markets and not all sponsors are global players.

- Lotus is a (head)case in itself. Maybe, maybe, they had a nice concept in a growing world economy context, not for these times. 

- I guess McLaren aren't struggling, they just don't want a stop gap operation for only one year before Honda Times Are There Again (OK, just my guess)

- Yes, it's the case in maybe not all, but in any case a whole lot of sports. There are more sponsors stopping than joining in - in many sports. So you'll soon may have a problem in an expensive sport unless some rich Russian or Qatar guy is interested. But even then.... And you can't call that a business model IMHO.

- What tyre company would be interested outside Pirelli in the present situation? OK, that raises a new bunch of questions 

- The new Formula at least received the attention of another automotive company - the last few years their numbers were just dwindling.....

 

Main thing could wel be that -in an overall sense- Bernie's/CVC's business concept is just not interesting for attracting potential new sponsors. They're only interested in milking the financial cow, not interested in reaching a new public - as you'll see from what they're (not) doing in regards to website information, social media, pay TV vs free-to-air etc. etc........

[rhukkas]

No more tobacco sponsorship. That was a kick in the balls.

 

F1 is no longer a prime brand major companies want to associate with. 

 

Motorsport is general is so crazy expensive.

 

There's a ton of reasons.

[EthanM]

cause the economy has been in the toilet for the last 5 years?

[ardbeg]

The teams need a lot more money nowadays. 40 years ago you could be a title sponsor by offering free spark plugs and 1000km oil change.

[Ross Stonefeld]

Don't forget that the sponsors want to see return. Not just TV advertising, but increased sales. So if you want someone to give you 20mil to make your racecar go fast, you need to show that it can make *at least* 20mil in net profit for them.

 

And how many of us are honestly buying products because we saw them on a race car? I have, occasionally, but only in certain product categories where there's very little to choose between them so I pick on name/brand. 

[rhukkas]

Well, R.O.I is important indeed!!!

 

Formula One is a truly global sport that used to give companies back in the day ways to break into new markets. Pre-internet that was a genuinely valuable asset for F1 teams to sell to companies. ROI was fairly obvious. Now however, with the internet and globalisation suddenly F1's USP suddenly becomes a little less unique. So another reason to add to the list.

 

I don't think the lack of investment shouold be blamed on the economy. I am sure F1 would be arriving at this point anyway.

[EthanM]

Well, R.O.I is important indeed!!!

 

Formula One is a truly global sport that used to give companies back in the day ways to break into new markets. Pre-internet that was a genuinely valuable asset for F1 teams to sell to companies. ROI was fairly obvious. Now however, with the internet and globalisation suddenly F1's USP suddenly becomes a little less unique. So another reason to add to the list.

 

I don't think the lack of investment shouold be blamed on the economy. I am sure F1 would be arriving at this point anyway.

 

Sure it can ... Microsoft, Apple and Google sit on 300 billion CASH and F1 has nothing to offer them. Meanwhile old economy is struggling to justify the expense of mayo for the sandwich bar, they are not really crazy about dropping millions into a black hole.

[Otaku]

Because F1 just plain sucks right now, and has sucked for at least 5-7 years.

[Ross Stonefeld]

Well, R.O.I is important indeed!!!

 

 

I think they're much more strict about it these days. 

 

Also as sponsorship rates increase, it naturally limits the amount of companies that can even afford it. And within that small group you need companies that have unified brands(great for oil, tobacco, some telecoms) but less so for lots of everyday consumer goods. 

 

Like you said, previously it was great for getting your name established. But it's rubbish for demonstrating your product a lot of the time. Which is a pretty big part of marketing.

[Andrew Hope]

The only advertising that ever worked on me was cigarette liveries. Not that they started me smoking, it's just that when I was old enough to buy from a shop I tried the smokes with the cool paint schemes first.

[f1RacingForever]

There are alot better options out there for companies then F1 which appeals to the european market mainly.

[DanardiF1]

Personally, I think F1 teams are too strict on what area of the car costs what. You see so many of the cars currently with big empty spaces on the sidepods and engine covers. Those areas are prime real estate, and would've commanded top dollar in years gone by, but that was when tobacco money was inflating the market. Nowadays there just isn't that kind of money being thrown around, but the space on the car still remains. They might argue that if they drop their prices they'll never rise back up, but if you're not filling it at all you're not even in a position to ask for more.

[ElDictatore]

Probably because there are cheaper ways to sponsor. I mean let's say you're sponsoring in a sport, right? It's easier to sponsor, let's say, Champions League or a Fifa world cup. If you're a sponsor, you can be sure that you will be seen (aka Mastercard, Coca Cola even Sony who supposedly have no money to sponsor F1) whereas in F1 it's uncertain that you're in the spotlight.

Can't really comment if other sports are considerably cheaper or not.

It might also have to do that some companys have figures in a way that tells them that sponsoring something else or spend that marketing money in a different area is more efficient? There sure has to be a company that found out that their sponsoring campain in F1 didn't give them as much a gain as they wanted or as it did in other sports.

[RealRacing]

Because the last race of the championship counts double...

[sennafan24]

 the economy is still quite shaky across the globe. 

[George Costanza]

The teams need a lot more money nowadays. 40 years ago you could be a title sponsor by offering free spark plugs and 1000km oil change.

 

Pretty much this....

[George Costanza]

The lack of tobacco is really a player here.

 

Back in the 1990s, F1 and Tobacco was all over the place.... Jordan BH, Marlboro Ferrari and McLaren, Mild Seven Benetton/Renault. Williams Winfeild/Rothmans. And many others.

[wepmob2000]

The lack of tobacco is really a player here.
 
Back in the 1990s, F1 and Tobacco was all over the place.... Jordan BH, Marlboro Ferrari and McLaren, Mild Seven Benetton/Renault. Williams Winfeild/Rothmans. And many others.

Probably this.... major companies that had very narrow opportunities for advertising, and as advertising rules tightened around the world, the money they pumped into F1 grew exponentially. Probably for most companies now, F1 offers very little ROI, especially when they can advertise across so many platforms for a lot less. And F1 is fairly sterile now, it lacks the edge it once had.

In theory Lewis Hamilton, for example, should be an advertisers dream, but he's not really given that much exposure, even here in the UK. I find this puzzling, maybe it says more about how advertisers view F1?

[Watkins74]

There are alot better options out there for companies then F1 which appeals to the european market mainly.

 

I don't agree with that. F1 has a world wide exposure that is actually pretty rare. I am actually shocked that a company like Pepsi or Coke don't sponsor a car. Being a main sponsor for $30-40 million is a drop in the bucket for their advertising budget.

 

It seems like sponsorship is expensive but if you really examine corporate profits it isn't that much money. 

[Murl]

I don't agree with that. F1 has a world wide exposure that is actually pretty rare. I am actually shocked that a company like Pepsi or Coke don't sponsor a car. Being a main sponsor for $30-40 million is a drop in the bucket for their advertising budget.

 

It seems like sponsorship is expensive but if you really examine corporate profits it isn't that much money. 

Pepsi and Coke are mature brands. RedBull is still building its brand. Maybe F1 is a brand-builder from a marketing pov?

 

(dunno, I'm no marketing expert)

 

It does seem to me that there is quite a bit of residual value even after a sponsor has gone. Think of Canon they must still get a bit of coverage from their Williams days. And Marlboro....

 

Didn't they sponsor a Ron Howard movie recently?

 

Would be the easiest way for them to spend another $100m or whatever for a bit of coverage.

Wonder if we will see a Senna/Marlboro movie.

 

But to answer the OP, despite the supposedly huge viewing figures, I feel that F1 is a niche market - the general public don't really give a carp about it unless someone dies.

There is the "fanatical" following of some national hero or other. So that is where sponsorship can pay off, with local connections to reach that audience. Otherwise, not a lot.

 

And Bernievision sucks for sponsors...

Edited by Murl, 26 March 2014 - 07:24.

[seahawk]

Just ask yourself is there any product that you would buy because the brand is sponsoring a F1 team? Imho it worked for cigarettes because they are basically similar with the biggest difference being the brand - at least for people not hooked onto one brand already. Energy drinks might fall into the same category.

 

Banks did also work, but after the banking crisis I think wasting money in F1 would not give positive PR for any bank today.

 

All other products, I do not see much marketing value in F1. Even for car makers it is increasingly questionable if it is worth the effort. If I look a Renault they had little from their years of domination but the recent problems have been noticed interestingly widely.

[f1RacingForever]

I don't agree with that. F1 has a world wide exposure that is actually pretty rare. I am actually shocked that a company like Pepsi or Coke don't sponsor a car. Being a main sponsor for $30-40 million is a drop in the bucket for their advertising budget.

 

It seems like sponsorship is expensive but if you really examine corporate profits it isn't that much money. 

Well Coke and Pepsi already do pump alot of money into marketing. Perhaps they along with most other brands don't feel like F1 gives them enough Value?  It's not as if teams can't get any sponsorship. F1 has some of the biggest names in the world. Perhaps it's more a reflection of the unstable economic times where more modest sized companies have to be extra careful with their spending.

Edited by f1RacingForever, 26 March 2014 - 07:31.

[Hans V]

Many good exlpanatoins here. The current costs of F1 is ridiculous - and the money the teams ask for is too high compared to what companies think they will get out of it. Modern markering tools (Google adverts etc. etc.) has made potential sponsors see that F1 probably doesn't reach as far as previoulsy believed - or claimed by the F1 fraternity. For instance the ridicoulus TV ratings that Bernie have been claimimg for decades is a bluff that pretty much has been called. The demographics are aging, they fail to bring in young people, doesn't attract new so the fan base is dwindling. So while the costs are very high - and increasing, the commercial value is falling. This gap is increasing which is not sustainable for very long. A prime example is that the most professional markerting operation in F1, McLaren is struggling to find a new title sposnsor.

[f1RacingForever]

Agreed. The fact that you need to pay a ridiculous  $100< sky subscription to watch races, video's are instantly copyrighted, you need to pay for live timing etc doesn't help. F1 is alienating themselves from potential viewers by their greedy business plan.

[kenkip]

Because of the evil Vettel/Redbull dynasty,everything that is wrong with Formula one is their fault!!

 

On a serious note though,someone has mentioned F1's ageing audience and its inability to bring in young people and I think he has a point.Most young guys want to see wheel to wheel combat and drivers on the limit.Thats the F1 they think is and it becomes hard trying to explain why race strategy and the technological battle between the teams is just as important as the racing.In other words,F1 may be too technical this days to attract the young ones.

For example,have any of you guys tried to explain Ricciardo's DQ to any of your passive F1 friends?They get really confused and ask why they should have a fuel flow limit in addition to a maximum fuel load limit.In other words is F1 becoming too complicated for the younger generation?

[ensign14]

With McLaren struggling to find a title sponsor for this season and teams like Lotus struggling to even pay their drivers the last few seasons, why is sponsorship harder to get in racing nowadays?

 

1. Tobacco sponsorship is banned.  That was the major source of income for F1 teams.

 

2. Money laundering regulations have become much more tight.  That was the second source of income for F1 teams.

[jonpollak]

cuz car racing is not on the front burner of life anymore..

Jp

[SenorSjon]

There are almost no competing brands anymore on the cars. With tobacco sponsorships, brand A could win from brand B who stayed ahead of C.

 

And the costs of course. If you watch some old budgets from early 90's. :X I think I've read somewhere that the current backmarkers spend way more than Benetton ever did in 90-95.

[grandmastashi]

These days, every single £/$ counts for companies and marketing budgets are invariably the first to get slashed when times get tough. Whoever mentioned ROI was bang on, yes F1 is global exposure, but if your brand could get better value in their own market in a more local series, that's where they'll go. 

 

Without mentioning any names, a good example is the company my dad works for. They title sponsor a top team in the British Touring Car Championship. When the discussion came up about motorsport sponsorship F1 was the first thing discussed; turns out for the same price of a logo on a wing of a lower level F1 car they could be the entire focus of the car in the BTCC. The exposure they get across the BTCC coverage, as well as being associated with race and championship winners has been fantastic for them and grown their profile immeasurably.

 

I think it just goes to show that in F1's 'head' the value of sponsorship hasn't decreased, even though companies have less money to kick around. Far better to put your money into something that will really show your brand off, rather than a tiny logo on an endplate. 

[CoolBreeze]

Simply because times are tough. Plus, tobacco banned ads are taking its toll on F1 as a whole 

[grandmastashi]

That said, I am slightly surprised no one has gone down the E-Cigs route yet in F1.  

[August]

1. Banning tobacco ads hurt teams' finances.

 

2. Bad economic situation makes companies less reluctant to sponsor an F1 team.

 

3. I think e.g. Honda and Toyota used a lot of their own money, now there are more privateers.

[Exb]

LHamilton0810 - Are you doing some kind of school/college project on F1 by any chance? You keep posting up some interesting questions.

I would think a big factor is the global economic crisis of a few years ago like others have said.

Maybe another factor is that some companies seem to deal directly with Bernie to get trackside advertising which will give more exposure as the adds are guareenteed to be shown on TV, whereas certain cars may not be.

Also a few theories from F1 connected journalists, its probably worth checking out some of their blogs. (such as Joe Saward - he seems to write a quite few stories around sponsorship) http://joesaward.wor...ed-immediately/

https://joesaward.wo...he-right-races/
Money may be the ultimate goal for Bernie Ecclestone and those behind him but it is worth noting that the Russia and Azerbaijan are the lowest ranking countries (from the Transparency International ranks) to have been included in the F1 World Championship in the last 20 years. The lowest before that was India (94th), China (80th), Brazil (72nd) and Italy (69th). Given the damage that is being done to the sport by Ecclestone’s adventures in Germany – whether they prove to be true or not – it is perhaps not wise for the sport to be reaching lower and lower down the list… Big multinational companies look at these kind of things when they consider whether to get involved in sponsorships.

[boldhakka]

Personally I think it's because these days even the big spending branding campaigns like to understand and measure the ROI in concrete terms. This is almost impossible to do with F1 sponsorship. With web-based marketing and advertising campaigns, you can track how many visitors your marketing dollars are bringing in, and how many of those will convert. Even pure branding plays (like Pepsi or Coca Cola) like to understand engagement metrics for the advertising real-estate they purchase. Again, that's something that's impossible to do with F1 sponsorship. 

 

The day FOM or the FIA can quantify how much more or less engaged viewers are for sponsorship on the McLaren vs. the Sauber, companies will begin to get interested again.

Edited by boldhakka, 26 March 2014 - 10:13.

[Murl]

LHamilton0810 - Are you doing some kind of school/college project on F1 by any chance? You keep posting up some interesting questions.

I would think a big factor is the global economic crisis of a few years ago like others have said.

Maybe another factor is that some companies seem to deal directly with Bernie to get trackside advertising which will give more exposure as the adds are guareenteed to be shown on TV, whereas certain cars may not be.

Also a few theories from F1 connected journalists, its probably worth checking out some of their blogs. (such as Joe Saward - he seems to write a quite few stories around sponsorship) http://joesaward.wor...ed-immediately/

https://joesaward.wo...he-right-races/
Money may be the ultimate goal for Bernie Ecclestone and those behind him but it is worth noting that the Russia and Azerbaijan are the lowest ranking countries (from the Transparency International ranks) to have been included in the F1 World Championship in the last 20 years. The lowest before that was India (94th), China (80th), Brazil (72nd) and Italy (69th). Given the damage that is being done to the sport by Ecclestone’s adventures in Germany – whether they prove to be true or not – it is perhaps not wise for the sport to be reaching lower and lower down the list… Big multinational companies look at these kind of things when they consider whether to get involved in sponsorships.

Bernievision.

 

BB (beforeBernie) f1 was a Eurocentric sport with a bit of glamour.

 

Now it is a high class (well expensive at least) hooker.

 

Slap your brand on that legacy, I don't think so.

 

Bernievision.

[tifosiMac]

The economic downturn is the key I think. F1 is an expensive business and sponsors are not getting the exposure they need from the sport so this will naturally result in less interest. The teams demand the same high figures for putting the sponsor branding on the car and lets be honest there are more lucrative ways to market a brand and get a larger outreach than using F1. Its just another example of the sport over-valuing itself and paying the price.

[Lotus53B]

There's an interesting article here:-

 

http://www.theguardi.../formula-one-tv

 

which contains a little snippet  "However, it isn't all bad news for the teams. For the first time this year they will receive 63% of F1's total profits as prize money, meaning that they also benefit from the increased money brought in from TV rights sales"

 

With Bernie giving them more dosh, they don't need so many sponsors

[Paco]

I do not think it's economy related.  That's just a simply way for teams to make an excuse for the bigger problem.

 

1.  Bang for your buck.  It's simply costs tooooo much for how much a sponsor can get in return.   Getting a real ROI for something like F1 advertising is just simply to hard to quantify.  CFO's are simply not a loose with their corporations funds as they were in the past.  The stock markets demand greater and greater value for their investments.  There is significantly more accountablility now then in the past etc.  Its not the wild west any more.

 

2.  The Internet has changed the rules drastically when it comes to marketing strategy.  NO ONE in F1 has figured out yet how to crack it.

 

3.  Viewership #'s.  People are simply tuning away from TV.  No doubt about it.  Netflix etc. has drastically changed how people watch TV.  PVRs has caused people to fastforward through commercials and advertisers know it.

 

4.  Dull racing:  Most tune in to the start.. and .. maybe the end.  Simply fact.  Advertisers know that.

 

5.  During a race.. few middle and even worse back markers get no screen time.  Considering there is only 40 odd TV appearances (qualify and race).. that's a whole lot to swallow.. considering you may only get a couple of minutes of screen time to a consumer.  Even then, the telecasters often focus on a driver or team name vs. sponsors.  They simply do not focus enough of promoting the sponsors during a race with the expection being RedBull for obvious reasons..

 

6.  You only get to MALEs.  Next to zero female target audience.  Considering Females represent that vast majority of buyers... very very very few brands can be successfully advertised in F1.  For example... it would be futile for Proctor and Gamble to advertise in F1.. one of the worlds largest companies.  The loss of tabacco was significant as stated above. 

 

7.  F1 decided to focus less on DEVELOPED countries and into EMERGING markets .. WRONG WRONG move IMO.  Even in a global economy.. a lot of the emerging markets are simply OIL driven or low cost manufacturng where the base population are still in proverty and not a broad GDP exporters.

 

8.  Dwindling middle class worldwide.

 

The list goes on and on.. That said.. I think the 2 biggest issues in F1 is:

 

1.  The product is generally boring now.  CONSERVATION racing is awefully bland.  All out sprints were exciting knowing each corner each lap was balls to the wall and every driver on edge of losing it.  Now.. its about who can make it to the end on fuel.. who can save their tires more.. whos tires wont go off the cliff.. its all focusing on who can save more of this and that.. then who is the fastest no holds barred.  Watching a telecast... sometimes I swear a senior citizen in a battery operated wheel chair would be faster on track ...

 

2.  ZERO online marketing strategy by F1 and also all of the team sponsors.    Zero online exposure .. makes it very hard to convince marketers these days it's a worthy investment.  Show me one blog, one youtube channel, one tumblr etc  that is F1 centric that is in the top 50 or even top 100 of its presence.  I highly highly doubt you'll find a youtube channel with 2million followers.. a twitter account with 100million followers, a tumblr with 100,000 followers.. hell even a youtube video with over 25million views..

 

I doubt you could even get the vast majority of casual F1 fans to name more then 8 drivers currently in driving in F1... let alone general population.

Edited by Paco, 26 March 2014 - 11:31.

[Henri Greuter]

My thoughts;

Since F1 is a world based formula, it is most suited for companies that operate worldwide if it comes to reacing fans who attend races live.
It makes little to no sence for a company that is active in a single country (continent perhaps) to expose in countries where your product isn't available.

Now many of these worldwide operating companies took a beating the past 8 years... Like many others too by the way.

leaves: TV exposure making it worth all the while, assuming that many people who can't see the cars in real want to see them on TV
Well, ever more countries see free F1 exposure on TV disappear and go to pay-per-view station which menas that sponsors have to rely on the willingness of TV watchers to pay for watching something they got for free in the past.
But, without going into details about the reasons as of why, F1 is loosing interest with the older fans who simply loose interest and refuse to pay money to watch something they don't like as much as they once did.
So: the potential to reach TV watchers has been reduced as well.
On top of that: F1 isn't cheap at all anymore nowadays and require massive budgets to be competitive. Too much for some potentially interested sponsors.

If that isn't enough, then there is the opposition of other sport events and competitions organized on a megalomanic scale. Worldwide you're talking about football/soccer with a World championship tournament or the continental championships once every two years.
Same goes for the Summer and/or Winter Olympics once every two years. These tournaments are near vital for many TV stations to cover but they come everything but cheap.
In addition to that, within soccer/football there is the annual UEFA Championship League and some national competitions (Spanish, German, British, Italian) which spend outrageous amounts of money and get sponsors for it. Didn't the Spanish team of Real Madrid `buy` three new players two years ago for which they spend almost 250 million euros?
Other megalomanic annual sports events are the Tennis World Tour and within the USA/Canada there is the Icehockey, American Football, basketball and baseball competition to spend money on.

That's what I can think of

Henri

[oetzi]

Many good exlpanatoins here. The current costs of F1 is ridiculous - and the money the teams ask for is too high compared to what companies think they will get out of it. Modern markering tools (Google adverts etc. etc.) has made potential sponsors see that F1 probably doesn't reach as far as previoulsy believed - or claimed by the F1 fraternity. For instance the ridicoulus TV ratings that Bernie have been claimimg for decades is a bluff that pretty much has been called. The demographics are aging, they fail to bring in young people, doesn't attract new so the fan base is dwindling. So while the costs are very high - and increasing, the commercial value is falling. This gap is increasing which is not sustainable for very long. A prime example is that the most professional markerting operation in F1, McLaren is struggling to find a new title sposnsor.

Red Bull are without question the most professional marketing operation in F1. The whole company IS a marketing operation.

 

As for the other stuff you mentioned, and the people mentioning ROI etc., I think they all touch on the real problem, which is attribution. Most marketing people these days are required not just to run a marketing campaign that coincides with a rise in sales/awareness/whatever, they need to demonstrate how their marketing brought about this improvement. The sales part is particularly hard to do with F1: imagine the difficulty of tracking a single customer's journey across (for instance) TV, the internet, print media, mobile and a physical store, and then, if you manage this, attributing a weight at each point on that journey to the influence of your F1 presence. It's well-nigh impossible, which means a lot of marketing people who could afford it will be scared off because even if it works for them, they can't really prove it, and will at best get no credit, almost certainly a reduced standing with the 'serious' sections of the board for making a gut call on something so expensive, and at worst maybe the sack for doing it.

[Slackbladder]

Red Bull are without question the most professional marketing operation in F1. The whole company IS a marketing operation.

 

As for the other stuff you mentioned, and the people mentioning ROI etc., I think they all touch on the real problem, which is attribution. Most marketing people these days are required not just to run a marketing campaign that coincides with a rise in sales/awareness/whatever, they need to demonstrate how their marketing brought about this improvement. The sales part is particularly hard to do with F1: imagine the difficulty of tracking a single customer's journey across (for instance) TV, the internet, print media, mobile and a physical store, and then, if you manage this, attributing a weight at each point on that journey to the influence of your F1 presence. It's well-nigh impossible, which means a lot of marketing people who could afford it will be scared off because even if it works for them, they can't really prove it, and will at best get no credit, almost certainly a reduced standing with the 'serious' sections of the board for making a gut call on something so expensive, and at worst maybe the sack for doing it.

 

Red Bull have had the advantage of being dominant though, and only one team can be dominant at any one time.

 

If they hadn't won a WDC or a WCC yet, would they still be in the sport? and lets not forget they've probably thrown the best part of a billion dollars or two at the sport at least.

 

They may have got the return, but that has left no room for anyone else in terms of success over the last 4 years.

[oetzi]

Not really sure what you're getting at there?

[Slackbladder]

Not really sure what you're getting at there?

 

Simply that the exposure and the marketing benefit from F1 is only so large. There isn't room for 3 or 4 Red Bulls in F1, as the market is only so big, and there's only a max of 2 titles (driver/constructors) in any one year. 

 

Say for example that 5 or 6 years back, Coke decided to do what Red Bull have done, and thrown hundreds of millions either buying or sponsoring a team. Now either

 

1) They wouldn't have had any success, because Red Bull did, and their investment would have looked like a huge error,

or

2) They took some or all of the titles from Red Bull, in which case either Red Bull would be questioning their investment, or some measure of balance between the two.

 

Basically, for massive investment, it's a case of 'go hard or go home'. That's what people are saying about Merc if they don't start winning championships, and they're already much more integrated being a motor company.

 

You still might get companies giving up say $20m or so for marketing, but when you have teams with a budget running into hundreds of millions, then that'll pay for a driver, or for the logistics, not to run a team which will bring you success.

 

And that's the problem. The budgets are too big for the market which F1 is. If you could run teams for 40 or 50 million, and still get success and exposure then that might work, but you can't.

[oetzi]

I think a lot of it relates to what you do with your investment. If you just use it as a rolling billboard then, yes, the sums are ridiculous. If you use it as the basis for a number of integrated campaigns (see Vodafone, Santander for example) then there's the possibility to get a lot more out of it without the need to actually win all the time. Not saying winning doesn't help, but it's not the be all and end all. My personal opinion is that understanding of the current media situation (particularly digital) is underdeveloped in both the teams and the potential sponsors/partners, and once they all get a bit more of a handle on it all, particularly how best to monetise the investment, you'll see some money coming back to F1. I've not studied what they're up to, but I do wonder if something along those lines is part of the reason Williams have managed to pick up a few new big names while almost everyone else is struggling. Just a hunch, nothing solid.

Edited by oetzi, 26 March 2014 - 13:33.