Sponsors and Formula One

In the first of a handful of guest articles coming up here on F1 Colours, Mark Martin of moneysupermarket.com – they of the current Nigel Mansell-led advertising campaign – talks about the changing face of F1 sponsorship, and the ever-shifting trends of the sort of companies that involve themselves in the sport.

When sponsorship was first introduced into Formula One in 1968 by the Lotus team, tobacco companies were the ones most interested in sponsorship. The dangerous nature of the sport fitted with their rebellious brand images. The sight of James Hunt smoking a cigarette next to his Marlboro Mclaren looked almost as ‘cool’ as Humphrey Bogart in many of his classic films. However, times have changed, and smoking is no longer socially acceptable. A number of legislative acts have been brought in to ban tobacco advertising, and F1 has been affected. In 2000, six of the eleven teams ran a car with a tobacco sponsor logo on it; just ten years later, there are no cigarette company logos to be seen on any car or team uniform (unless you count the infamous Ferrari “barcodes”).

The banning of tobacco sponsorship in time for the 2007 season, however, couldn’t have come at a worse time for many of the teams, as the global recession hit and not as many companies had the money to buy expensive advertising space on the side of their cars. The teams therefore had to reduce the amount of money they spent annually in order to make F1 sponsorship a more cost-effective solution, and therefore a more attractive proposition for a larger number of companies.

The tobacco sponsorship era may have created some iconic liveries, such as the JPS Lotus, Rothmans Williams and Marlboro Mclaren, but its end doesn’t also mean the end of beautiful liveries. The reduced expense of F1 and changing image of the sport has opened the door to a wider range of companies who may be interested in the sport. Since the end of 2006, we have seen Red Bull continue to plough money into the sport, and surely the livery on their car will be remembered in years to come just as fondly as the aforementioned tobacco cars. The image of excitement, energy and danger still prominent in the sport is just as attractive to Red Bull in 2010 as it was the Marlboro in the 1970s.

On top of this, we have seen Virgin finally (after years of rumour and speculation) enter the sport, albeit for a completely different reason. The emergence of the Brawn team from the ashes of Honda with just two weeks to spare before the start of the 2009 season marked a brilliant opportunity for Virgin. Having spent the winter without much hope of survival, no testing and a compromised car which had been designed to accommodate a Honda engine but had to have a Mercedes bolted into the back, no one really rated Brawn’s chances. However, following the car’s first test it became apparent that it was going to be very competitive, and would certainly be capable of challenging the established championship winning teams of Mclaren and Ferrari. This fitted perfectly with Virgin’s underdog image – one which Richard Branson strives to enforce in any of his business ventures.

However, entering 2010 as world champions under the ownership of Mercedes and having hired the most successful driver in the history of the sport, Brawn’s team were no longer the underdogs and therefore no longer attractive to Virgin as they would only pollute the brand’s “underdog” personality. Branson therefore decided to support the new Manor team, which aimed to become the first team in history to design a car using only computers – a quirk that was again perfect for Virgin’s maverick image, and which therefore marked Manor out as the perfect team for the brand. The team were rebranded as Virgin Racing – partly so that a more recognisable name could itself assist in attracting further sponsors – and the team was moulded in Virgin’s underdog image.

These examples corroborate the belief of marketing academic Terence Shimp, who stated that a logo on the side of a car is no longer enough. Shimp believes that the personality and image of the team must perfectly match that of the sponsor for it to be effective. This perhaps explains why Red Bull and Virgin, along with Kingfisher (Force India), Mercedes, Air Asia (Lotus) and Renault have all decided that it was best to own their own teams rather than support others in the new era of F1.

The new resource restriction agreement drawn up by the teams for this season has allowed Virgin Racing to do a respectable job with a budget of just $40 million. This was the purpose of the agreement, to allow smaller teams to operate competitively on smaller budgets. If it had not been for this agreement, it is likely that Virgin and other sponsors like Air Asia would have turned their back on the sport. Instead, Virgin Racing marketing director Jim Wright believes that F1 can actually be a profitable business venture for the company, as he thinks the resource restriction and increased prize money distribution will allow this to be possible. If this is true, this will make the sport the most profitable sponsorship opportunity around and make it a far more attractive proposition for a greater number of companies.

Money Supermarket is the latest company to try and utilise an association with F1, with their latest car insurance campaign starring Nigel Mansell (and a cool looking Moneysupermarket sponsored slot car). It is likely that many more firms around the car insurance world will see the new, more cost-effective F1 as an attractive proposition. However, it is likely that the more affluent companies will actually become fully fledged F1 sponsors, as companies now realise that the sponsorship market is crowded and recognise the need for team ownership to better reflect their brand image. One of the companies recently mentioned is Porsche, who are investigating the possibility of entering F1 in time for the new environmental regulations due to be implemented for 2013. Surely Aston Martin would also see the benefit of entering the more cost-effective formula. We could therefore see a very different line up of teams in time for the 2013 season and perhaps many new iconic liveries which will be remembered throughout the ages. Who would love to see a Gulf Aston Martin car on the grid in 2013?

(Mark Martin)

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5 Responses to Sponsors and Formula One

  1. OllieJ says:

    Nice article, I’ve never thought about the whole Virgin/Brawn tie-up like that before.

    Also, that Gulf livery is lush, as long as they don’t let them use ’00’ numbers!

  2. bosyber says:

    Very nice article, good insight into how the marketing of F1 works, and also very good to hear that we might look forward to new and imaginative liveries in the years to come! Gulf Aston Martin colour scheme is great 🙂

  3. Ned says:

    Interesting stuff. Glad to see F1 Colours is back after its annual hibernation

    “surely the livery on their (Red Bull’s) car will be remembered in years to come just as fondly as the aforementioned tobacco cars”

    That’s a good point. People critcise Red Bull for keeping the same livery year in, year out, but it’s actually a nice ditinctive design, and it will most likely go down in livery history one day

  4. Gaz says:

    Mark’s point from Terrence Shrimp about teams and sponsors ensuring that their respective brands fit is key in the modern age of marketing. Brands need to ensure that their brand message and identity is integrated across all media and communications, including who and what they associate themselves with.

    Ego though still plays a rather large role as well in these things I believe. I just finished up working on a activating a sponsorship where the decision to enter into the sponsorship agreement was based largely around the CEO of the company wanting to meet a certain extremely high profile personality within the game 🙂

  5. Aly says:

    Great article with some very insightful comments. Its not as simple as just selling space on the car anymore but as Mark said, the association of image is just as important. If the teams were actually turning a profit through the resource restriction agreemant, then they also could be more picky about what names they display on the cars thus making the liveries even tidier?

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