What makes sponsors splash their cash on F1? McLaren boss Brown explains

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This weekend in Silverstone the Formula 1 world championship celebrates a magnificent milestone: Its 70th birthday, with an event officially dubbed the ‘Formula 1 70th Anniversary Grand Prix’.

True, the first-ever championship race had been staged on 13 May 1950, so celebrations are three months overdue – but blame Covid-19 for the delay rather than some administrative slip-up.

Indeed, as revealed here in December, commercial rights holder Liberty Media had plans to stage a Fan Fest in Central London on 16/17 May; then, of course, the sport was placed on hold. Although races had previously been staged for what was then quaintly known as ‘International Racing Formula No. 1’, the event hosted by Silverstone on that May Saturday marked the first round of the FIA World Drivers Championship.

Saliently, although that first WC event was staged on British soil, a its programme cover – depicted on a recently re-released DVD produced by the Guild of Motoring Writers, then commissioned by the organiser, the Royal Automobile Club to record the event – shows that the race was titled ‘The RAC Grand Prix d’Europe incorporating The British Grand Prix’…

If, though, 13 May 1950 marks an illustrious date in F1 history, 1 January 1968 comes a close second, for FIA’s sporting wing, the Commission Sportive Internationale (CSI), decreed that from that date onwards commercial sponsorship would be permitted. In one stroke of the regulatory pen the face of F1, literally and figuratively changed forever. Before then only bona fide motor trade logos were permitted on cars and drivers.

Silverstone 1950 programme
The programme for the first world championship race
Thus, the likes of British Racing Green, Bleu de France and (Italian) Rosso Corsa disappeared from grids. Without that rule change a Haas would today race in USA (dark) blue with white stripe (or vice versa), while Red Bulls would be in Austria’s national colour of pale blue, essentially similar to that of the French hue. Where national colours were similar, a system of differing colours for numbers and roundels applied.

The Lotuses raced variously in the white/red/gold of Gold Leaf, black/gold of John Player Special or Camel yellow, and BRMs in Yardley. Alfa Romeo were painted the green/white of Benetton, and Mercedes would not have been permitted its recent change from (Hitler era) silver to black. Ferrari’s hue would be scarlet rather than an orangey-red of Marlboro dictated by Philip Morris.

Perversely perhaps, for 11 years a single one round permitted commercial sponsors and non-national colours: the Indianapolis 500, which counted towards the drivers’ championship from 1950 to 1960. Maybe F1 learned a thing or two from the Americans?

However, the impact of commercial sponsorship in F1 extends far beyond the dropping of national colours, for the influx of sponsor money enabled the likes of Frank Williams to raise money, buy chassis and go racing. Equally, drivers with rich parents or faster tongues than talent had he wherewithal to get into F1. For an unfortunately few the reverse also held true.

As alluded to above, the earliest sponsors were tobacco brands, with privateer John Love of Zimbabwe (then Rhodesia) being the first to sport commercial livery, in his case that of a local cigarette brand (Gunston). The first world championship round of 1968, the South African Grand Prix, held rather conveniently on Monday 1st January – which marked the final win F1 for Jim Clark, who was to lose his life three months later, on 7 April.

Team Lotus followed with Gold Leaf at the next round in Spain held in May. Although all the Scot’s F1 wins had come via cars liveried in traditional green, he raced earlier that year in Gold Leaf colours in the Tasman Series and F2. Tobacco sponsorship became a massive source of income for teams, but almost completely disappeared following bans which arrived in the mid-noughties. Nonetheless, Philip Morris International remained (at Ferrari) and British American Tobacco returned (to McLaren) and are now promoting new-generation products (NGP).

Start, Silverstone, 1985 British Grand Prix
Tobacco advertising was restricted from the mid-eighties
As sponsor fees increased, so, too, did the influence of tobacco barons. Such was their eventual power that they dictated driver choices and even team structures. McLaren would probably have plunged into bankruptcy at end-1980 had not title sponsor Marlboro brokered a merger of the then-beleaguered outfit and the Project 4 outfit of Ron Dennis. Numerous other examples of such sponsor power abound.

With their money came explosions in budgets, and thus team sizes. In 2006 global bans on tobacco advertising finally hit F1, but by then a number of motor manufacturers had bought into the sport, filling the void. When a number of car brands exited in 2008/9, blaming the Global Economic Crisis, budget squeezes commenced, the consequences of which F1 is still living with.

McLaren Racing CEO Zak Brown is former a junior series racer who funded his participation by cutting deals before establishing himself as a sponsor broker extraordinaire. He tracked the growth of sponsorship over the ages, and believes F1 partnerships have come full circle, not only due to the return of tobacco houses – BAT is a commercial and technical partner of the team – but also from awareness perspectives.

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“Sponsorship [in F1] started as a mass awareness platform for tobacco, and fuels and lubes companies, then it started to shift from awareness to engagement,” the US American told RaceFans. “Formula 1, is as you know, great about making logos very visible to hundreds of millions of people, but that doesn’t necessarily mean they know what the company or product or brand is all about.”

Brown says sponsors care more about content than visibility
As a result of the corporate investments, the industry entered what Brown calls ‘the era of real measurement’, with brand exposure on screen and via activation programmes being infinitesimally quantified. “It was all, how many seconds did we get?” he explained.

Brown has, though, discerned a shift away from time measurements towards brands awareness and content, particularly amongst emerging technology companies: “Now it’s all content. What I’m seeing is companies that want to become famous overnight, those are the ones that are making for the most part the bigger sponsorship spends.

“So if you look at our car [you will see], Darktrace (cyber security) and Splunk (software). These are fast-growing companies that are going to go public, or have recently, and they want to be fast [growers] overnight.

“You look at the Coca Colas of the world. They’re all about engaging content, and less about how big logos are on the car.”

However, the business-to-business [B2B] elements should not be overlooked, he stresses. “B2B is, I think, a huge strength of Formula 1; it attracts ‘C-level’ executives unlike any sport I’ve seen.”

In corporate structures such managers generally incorporate the word ‘chief’ in their job titles, and as decision takers are the targets of the sponsorship acquisition department.

“It’s an awesome B2B platform,” Brown continues, “and it’s got so much wealth in the sport, whether that’s government [money], corporate, personal, you know, depending on who you are and what you want to do. All the governments are huge spenders in the sport.”

Carlos Sainz Jnr, McLaren, Silverstone, 2020
Making connections between sponsors can also be beneficial
Brown also believes that F1 has “more tentacles to it than any other sport out there”, qualifying his belief by name-checking a number of team partnerships such as Dell (computers) and Arrow (electronic components). Brown refers to such partnerships as ‘co-mingling’ deals, i.e. partnerships that involve cash and product elements.

“They’re really able to showcase their products (through integration in the team). I think the best partnerships are the strategic partnerships where sponsors are really integrated. As we say, ‘you’re not [only] on the car, you’re in the car’.

“Dell Technologies, they have a great logo on our race car. But we’re all on Dell laptops, screens, Dell servers, Dell security, et cetera.”

Sir Jackie Stewart, triple world champion and team owner-ace sponsor finder, told of a barter-type arrangement on his nineties team, whereby he brokered a circular deal for sponsors Ford, HP and HSBC. The computer company agreed to buy Blue Oval cars and bank with HSBC, and so on. Business thus generated more than covered individual sponsor contributions, so the exposure was effectively free for all three. Do such deals still exist?

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“We’ve got [sponsors] doing business in Hilton Hotels and [sponsors] using Dell. I was playing golf today with the CEO of Dell Europe and put him in front of another one of our partners.

Stewart’s team connected Ford sponsors
“Today was about relationship building and adding value to our network. So it’s something we definitely encourage a lot.”

As Brown outlined, early sponsorships were sector -elated, with tobacco brands followed by auto makers and, to a lesser, degree, alcohol labels. So, which sector(s) will be the next big thing?

“I think the next wave that we’re experiencing is less sector focused, and more ‘stage of a company’,” Brown believes. “What I’m seeing is companies that want to put themselves on the map globally, quickly. Those are the ones that are coming in.

So, whether that’s BWT (water treatment), that’s Darktrace or Splunk or CrowdStrike (threat intelligence) the trend is not category specific; [it will be] more stage of a company specific.”

Brown, though, has a hunch that the presence of tobacco houses, albeit pushing their e-cigarette and alternate products is likely to increase, citing IndyCar as example.

“This is me speculating that others will see what Mission Winnow and BAT are doing, that it’s working for them, so I would imagine people will be looking around.”

BAT has consolidated its NGPs into three brands, namely Vuse (vapour), Velo (oral) and Glo (heated tobacco), and its association with McLaren enables it to activate individual products by market. However, If F1 is such a great deliverer of value, where are the classic sponsorship brands such as McDonalds and Burger King in F1, I ask Zak.

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“McDonalds are a huge Olympic sponsor if I’m not mistaken, but I’m not sure McDonalds is a great fit for Formula 1. They’re more a little bit more going after the family.” The ‘Big M’ burger chain was in NASCAR until recently, he notes, “which is going a bit more after the family.”

Charles Leclerc, Sauber, Circuit Gilles Villeneuve, 2018
Heineken has a major branding presence at some races
Brown is surprised there are not more beer brands or financial institutions in F1. A notable exception is Heineken, which has partnered with F1. Is advertising directly through the sport itself – going after ‘bridge and board’ visibility – a preferable option for big brands to sponsoring a team?

“Different proposition,” he shoots back. “Trackside does an excellent job of getting you massive guaranteed exposure. You’re not going to crash in turn one and you don’t lose [that race, as teams potentially do]. So it’s a really good platform for mass awareness.

“That takes us back to where we started: Mass awareness or engagement. It becomes more difficult to engage when you’re a billboard.”

During his sponsor hunter days Brown cut numerous corporate deals on behalf of F1, not least the UBS corporate deal with F1, and recommended that they tie up a deal with a team as well.

“Some sponsors don’t have a reason to talk to the fans. UBS put up outstanding media numbers, but it wasn’t until they did a deal with Mercedes and Lewis [Hamilton] that they felt like they had an emotional connection to the sport.

“I think anyone who does trackside ultimately comes to the conclusion that they need some sort of team/driver relationship to really have the engagement that they need to deliver good content to their customers and fanbase.”

Is there no conflict between teams and Liberty Media, who control F1’s TV feed and are able to influence the amount of airtime a team and its sponsors, receives? Liberty, after all, sells corporate sponsorship on the basis that it can guarantee airtime minutes to partners, yet on the flipside controls team exposure. On that basis Liberty could theoretically ensure that certain teams receive zero exposure during a season.

“I think [to prevent that] the only thing you can really do is try to run at the front of the field. I think [Liberty] put on the best show that they can. I’ve never felt like they’re not taking care of us and trying to take care of their tracks and not our sponsor. I’ve never felt like a broadcast was not treated in the appropriate manner because they were trying to help or hurt someone.”

Grid, Silverstone, 2020
Trackside deals give Pirelli and others high visibility
Brown believes there are two things which bring sponsors to F1 in preference to other platforms: “Content and storytelling.”

“They’re able to take the imagery, the relationship, whatever story they’ve created with the team and use that through their marketing channels.

“You don’t get anything as an Olympic sponsor, you get the rings, you get the association, but it’s what you do with it is how that sponsorship works. There’s nothing on the [Olympic] playing field other than I think some watches, Omega or Rolex or something, around the horse [competitions].

So, when you hook up with Silverstone this weekend by whatever means please celebrate its 70th birthday with gusto, but also pay particular attention to the sponsors, for they make the show possible. The average F1 team derives around 50% of its income from Liberty in the form of prize monies generated mainly by TV and race hosting fees, with the balance flowing in from ‘bridge and board advertising’.

The other 50% is provided by brands that sticker up cars and influence decisions ranging from livery to driver selection. That is how crucial they are to modern F1, and it all started with a privateer team on that Monday in January 1968.

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Dieter Rencken
Dieter Rencken has held full FIA Formula 1 media accreditation since 2000, during which period he has reported from over 300 grands prix, plus...

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  • 22 comments on “What makes sponsors splash their cash on F1? McLaren boss Brown explains”

    1. “They’re able to take the imagery, the relationship, whatever story they’ve created with the team and use that through their marketing channels”.

      This whole article made me feel sort of sad. I know this is how the world works, but sad regardless.

      1. Indeed marketing is a sad industry

        “ they need some sort of team/driver relationship to really have the engagement that they need to deliver good content to their customers and fanbase.”

        They don’t care what the “content” is as long as it drives “engagement” online … sad craven industry. I long for the days when advertising is looked down upon as the greed fueled industry that it is!

        1. tony mansell
          6th August 2020, 9:10

          Now say that without crying. Marketing is pretty benign compared to a lot that goes on but find a man making money and you’ll find 10 squealing its unethical. Whatever it is, however it is.

      2. Jose Lopes da Silva
        5th August 2020, 16:14

        And that’s why people in 1968 shout in outrage, claiming that Formula One was dead.

    2. Steve (@machinesteve)
      5th August 2020, 12:46

      Other than otherwise untouchable companies such as those associated with big-carbon car companies, tobacco or oil or dubious middle easter or money laundering non-brands, F1 sponsors are a hotch-potch of tiny stickers. Not seeing any big corporate brands these days…..MC McDonalds, KFC, Apple, Microsoft, etc wont touch F1.

      1. Microsoft is on Renault…

      2. Microsoft is a long standing partner of Renault / enstone . They’ve had the logo on the car for ages. When the team was struggling in 2015 they even had an Xbox and Lumia logo on it. Typically it only says Microsoft dynamics though

      3. One of many reasons F1 wants to increase the number of races in the States.

      4. Should’ve gone to SpecSavers …

    3. Must say I don’t really like that ’70th Anniversary’ as the title for the Grand Prix. They should have held it as European GP (same as in 1950 when it was more of a honorary title) incorporating 70th anniversary of the World Championship.

    4. Also the elephant in the room currently is hospitality…

      1. Apparently moved to the golf course.

    5. The thing I don’t understand is how McLaren sell it sooo much better than anyone else.

      They’re the one team I’ve seen that has been able to rebuild and sell all those sponsorships. A few years ago the McLaren car was as bare as the Williams. Since Brown took over now look at it. Salesman of the century!

      1. Since Brown took over now look at it.

        Isn’t that his background, though, @skipgamer? I’d say it’s only natural that their sponsorship numbers have been growing over the years, especially after he reshuffled the leadership structure of the team in order to focus more and better on the commercial side of things.

      2. @skipgamer
        “The thing I don’t understand is how McLaren sell it sooo much better than anyone else.”
        Does he?
        As long as we don’t have an insight in teams finances, we cannot draw that conclusion. (You can sell 10 spots for $500.000,- each or three spots for $ 2.000.000,- each.)

        1. @skipgamer, @toiago, @Oconomo: The truth probably lies somewhere in the middle. Zak’s career prior to McLaren was marketing and sponsorship deal-making, so not surprised his team would do better than others. BUT, also remember Ron had said several times that he wouldn’t adjust the “rate card” of McLaren sponsorship just because they had been doing poorly. Consequently, the space on the car was over-valued and no one was paying to sponsor them. I’m sure Zak adjusted the rate card to be more representative once Ron left.

      3. Mclaren has also continuously been improving every year. They are as such going up in value. And their social media campaigning has been very successful.

    6. It’s ONLY about Money.
      Got no bucks ?
      Got no luck.

      Oh and advertisers love success and that might mean dominance in where the dollars are invested. There is only one dominant team at present and it’s now Black because black lives matter. So advertisers must role the dice while in Formula One because until recently you could hook up with a team on the rise but at the same time that investment could flop as a teams fortunes flop. But without a return of significance these companies come and go.
      Smoking advertisers should NEVER BE ALLOWED again as an F1 supporter. Products whose intent by proper usage Kills humans is beyond even considering. That’s why it stopped so many years ago.
      Booze is the same deal. But society lives to temp itself with danger. Death type danger. It’s stupid too.
      Who know what BWT even meant two years ago. As the pink car grows up it’s advertisers struck it rich with visual rewards from F1. How about Rokit and Williams. Think they got the best results from that investment?? Nope.
      Advertising is the future of Formula One and success while racing makes that investment worthwhile. Most F1 advertising falls to the barely can get it done teams. It’s all about money and when that comes to a end Formula One will go away with it. It’s too damn expensive today because It’s allowed F1 to grow dependent on the money for its survival. Hope the money flow continues. Money supports technology, that technology grows because that investment money is in their veins and on an on…now F1 races on without fans because the advertisers say so. Gotta make something out of this Covid world. Gotta make money at all expense. That’s F1 but most just want to see fast cars making really cool sounds without all the BS. Listen to the words of the late Michael Jackson on his song called “MONEY“ and think about F1. The song rings true. It’s all about the money

      1. Welcome to the real world?

        I’m off the belief that any product that is available via legal tender, should allowed advertisement and marketing.

        I agree that smoking and drinking and gambling is bad on various levels. There is some argument that the latter two causes way more social distress that the former, but, the latter are freely advertised, for now anyway.

        Pretty much anything can kill you if you take enough of it.

      2. Oil is killing the whole planet, cars kill millions annually, tech removes your privacy or leaves you at their mercy, banks cause market crashes, etc … you can find a negative in anything if you want to.

        I’m all for a world without money. I grow my own food. Are you ready for it though? If F1 shouldn’t be about money, why should your job be? Surely you should just be proud of what you do and do the best you can every day … you shouldn’t need money as an incentive. Surely whatever you make can be bartered … unless of course you don’t make anything, & are just part of the chain getting things made by others to people who need them …

    7. @dieterrencken, thank you once again for a fantastic article at what goes on beyond the race track! I think Zak is a fantastic person to learn from and listen to as far as running the race team as a commerical enterprise goes, and I think you got some great insights out of him.

      1. Thanks, I enjoyed doing the interview. A good guy.

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