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’.
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.
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).
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.”
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.”
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.
“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.”
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.”
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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