How Netflix and social media helped F1 buck a global sports sponsorship slump

News Focus

Posted on

| Written by

According to the European Sponsorship Association in the overall sector dropped 23% in 2020, the first fall in over a decade. The survey, conducted in conjunction with Nielsen Research, found that sports sponsorship dropped by 9%, while the music industry experienced a contraction of 70% – no surprise given the live performance nature of the sector, which was obviously hit particularly hard by Covid-19.

Yet, all pointers are that motorsport – in particular Formula 1 – seems to have bucked that trend, with all ten teams announcing new partners or extensions to existing deals, with a number of partnerships confirmed during the build-up to the second round held in Imola.

Aston Martin F1 Team arguably shades the grid, having in September appointed Jefferson Slack to the newly created position of managing director for commercial and marketing. No sooner had the American – who guided Michael Jordan in basketball before working in sports investments – slid his feet under the desk than a raft of deals were struck, including that of IT giant Cognizant as title partner at an estimated $35m/season. season.

“IT is the future of Formula 1,” Stroll told RaceFans in February in an exclusive interview. “It’s the Internet of Things, it’s cloud computing, it’s digital engineering, it’s data analysis, it’s [artificial intelligence]. We’re building a new [F1] factory; I want it to be a smart factory, 5G. The most important partner one can have in Formula 1 today to make a true contribution to the team is an IT partner.”

Sebastian Vettel, Aston Martin, Bahrain International Circuit, 2021
Aston Martin attracted new title sponsor Cognizant
Not be to be outdone, during the Bahrain Grand Prix Red Bull announced the return of software giant Oracle to F1 – the company sponsored Benetton during the early 90s – in a deal said to rival that of Cognizant, then confirmed an extension to its TAG-Heuer deal through to end-2024.

Concurrently Mercedes announcing software house TeamViewer as major partner; crucially, all three companies considered wider sport sponsorships, so the teams needed to sell both F1 as a platform and their own merits.

McLaren, too, enjoyed a bumper off-season after CEO Zak Brown extended a number of partner agreements – the team now boasts over 30 partners and 12 official suppliers, although a title sponsor eludes the team. However, last year McLaren sold an initial 15% holding – rising to 33% by end-2022 – to US sports investment fund MSP, thus valuing the team at almost $700m and pointing to F1’s commercial potential.

Advert | Become a RaceFans supporter and go ad-free

“I think the Formula 1 grid is probably the healthiest and wealthiest it’s ever been,” Brown said in Bahrain.

Brown says F1 is in good financial shape
This ‘health and wealth’ extends down the grid, albeit to greater or lesser degrees. For example, the security created by the sale of Williams to Dorilton Capital enables the team to attract external commercial sponsors and funding from brands within the US-based investment fund’s network of companies. Haas announced a number of partners unrelated to title sponsor Uralkali, controlled by driver Nikita Mazepin’s father Dmitry.

Indeed, including deals either struck or extended at F1 corporate level – F1 commercial rights holder Liberty, for example, announced Saudi oil giant Aramco and betting website Bet188 last March plus the Ferrari Trento sparkling wine and a cybersecurity company earlier this year – the sport could justifiably claim to collectively have sealed more deals since Covid hit the world than in any season during the past decade.

In total Liberty boasts 16 corporate partners, ranging from the $40m-plus trio of Heineken, Aramco and Emirates to a handful paying one-tenth that per year. RaceFans estimates that Liberty’s partner income exceeds $220m annually.

The reasons for this commercial interest are as varied as the sectors attracted by F1, but credit is due in no small part to its resilience during the pandemic: F1 was the first global sport to return to action, and last year managed to cram three-quarters of its planned fixture list into six months. Not only were existing sponsors hugely impressed, but brands desperate for global TV audiences, and, crucially, with cash to burn paid attention.

New podium sponsor Ferrari Trento debuted last weekend
“Formula 1 and the teams came together really well during Covid-19,” believes Brown. “The financial impact on revenues was effectively, at least speaking for McLaren, offset by a reduction in cost [due to less races and fewer travelling staff and regulatory cost-cutting measures].

“So, while we had a revenue shortfall, we did a great job of saving money so we actually didn’t have any bottom line impact.”

One of F1’s major advantages is that space available for commercial messages is at the heart of the action – mainly on-car – and is obviously larger than on football shirts or tennis clothing. Indeed, teams are able to increase or add logos or even offer sponsors a second brand, a tactic pursued by McLaren as it sought to retain sponsors by keeping them sweet despite fewer races and no (or reduced) trackside audiences.

Then, the move to greater sporting, technical commercial parity from 2022 as outlined in the current (2021-25) Concorde Agreement means that sponsors can back a team of their choice secure in the knowledge that they have a fighting chance to be seen on TV or from the grandstands. These are now dipping their metaphorical toes in the water ahead of next year’s change-over.

Advert | Become a RaceFans supporter and go ad-free

F1’s hybrid engines and sustainability thrust have ensured the sport remains ‘in tune’ with global trends – regardless of increasing sales of full battery vehicles, hybridisation still accounts for the majority of car sales – while the sport’s commitment to 100% non-fossil fuels from 2025 makes it attractive to sponsors who had shied away during F1’s gas-guzzling days.

Ditto F1’s ‘We race as one’ diversity initiative. “Since 2017 we have attracted a 41 per cent growth of our fanbase under the age of 35,” says Ellie Norman, F1’s marketing director, who puts this growth down to recent “sustainability, diversity, inclusion and community drives.” These messages are broadcast globally every fortnight.

“One of the trends that we’re seeing in F1 is with the emergence of new technologies, new countries, and new companies to use it as a great platform to, as we say, get famous fast,” says Brown. “Some of the more recognisable brands, they don’t need the brand awareness. They want the content that the sport creates and the drivers create.”

Netflix Drive to Survive season three
Review: Netflix Drive to Survive season three
This ‘content’ goes beyond traditional televised fare, for F1’s social media drive, e-sports and the Netflix ‘Drive to Survive’ series have brought the sport to new and diverse audiences, in many instances in new territories. Where brands would usually pay a small fortune to ‘place’ their products before audiences, F1 provides this visibility as an included component while turning teams and drivers into household names.

“I think Netflix has been great for F1,” believes Brown. “It’s been trending number one,” he said, adding, “I think it was number one in 25 countries. The primary goal of Netflix is to entertain and bring new viewers to F1. It’s accomplished that ten-fold, which is great.”

This points to a sport no longer dependent on the whims of car companies or largesse of billionaires, all while attracting new fans. True, Mercedes and Renault (Alpine) are on the grid, and Stroll is a billionaire, as are Gene Haas and Red Bull/AlphaTauri owner Dietrich Mateschitz and Sauber boss Finn Rausing, but at least they can expect reasonable returns on their respective investments rather than viewing F1 as a bottomless pit.

This in turn provides badly needed stability, in turn feeding further growth precisely at a time when F1 faces an onslaught from electrification. Whoever would have thought that Netflix, social media platforms and e-sports would ultimately prove to be F1’s saviour?

Go ad-free for just £1 per month

>> Find out more and sign up

News Focus

Browse all News Focus articles

25 comments on “How Netflix and social media helped F1 buck a global sports sponsorship slump”

  1. Josh (@canadianjosh)
    20th April 2021, 13:39

    Netflix has done wonders for F1 in my opinion. I’ve had buddies that otherwise wouldn’t give auto racing the time of day telling me things about the drivers they learned through the Netflix show I didn’t even know. I watch F1 religiously on race weekends but don’t watch the Drive to Survive because I get my fix on race weekends but from the amount of people talking about F1 because of a tv show, I would say it’s a huge huge plus for F1 having this show.

  2. Given how much extra reach F1 was able to achieve in the past 3-4 years with the increased activity on the social platforms, it makes the old Bernie and CVC mentality of ignoring that side of F1 even more pathetic. Imagine how many more fans F1 would have been able to reach if they had started this in 2010 instead of when Liberty Media took over? I have several friends who watched F1 until about 2009 then lost interest for a while, and only started rewatching it in the past 2 years due to Netflix and the F1 YouTube channel making the sport seem interesting once more. The 2010-2014 era was one of the best for racing, probably even better than it has been the past few years, yet interest for F1 was at a low. If F1 is able to grow its brand even during the “boring” years of Mercedes domination and cars unable to follow within a second of each other, imagine if the 2012 season was playing out. F1 would be trending on all social media platforms constantly.

  3. The big question, though – is can they keep this new audience?
    Is F1 sufficiently entertaining to actually hold them for the long term?
    Is F1 accessible enough? Is Pay TV the right medium?

    Short term gain does not equal long term security.

    1. The new sexier looking cars and hopefully improved ability for closer racing they will bring definitely makes F1 potentially far more exciting in years to come than it has been for a while, and honestly it’s been pretty fun and dramatic in the last few seasons anyway. There’s huge potential.

      We also have a younger set of drivers who are truly in touch with younger generations also, and broadening the audience via them live streaming at home and working social media in a not cringey dad way that can often come across when big brands try and tackle it.

      The future is bright for growth. Even the YouTube channel works wonders. It gives people short exciting glimpses into events, short recaps of quali etc, that have been missing for years. What better easier way to pique someone’s interest than that easily accessible avenue.

      F1 has become an exciting, cool brand of late in a way it just hasn’t been for a long time. The cars look good, the drivers do actual have some semblance of personality and we can actually see that, as well as the team bosses in Drive To Survive. It’s been fantastic.

      The main hurdle now is making the actual sport cheaper to follow live and more widespread. Big deals with Sky might get guaranteed money flowing, but as F1 grows there’s a huge number of fans being left out in the cold, in some of the sports main markets. The very fact an F1 fan in one country can follow the sport for a reasonable cost but a UK fan must spend in the hundreds, highlights the inequity. Sponsors spend money precisely to get their brand out there, they’d rather a million viewers every race in the UK rather than 100,000. I sincerely hope when the Sky deal is up Liberty either give us the F1TV service, or sell rights to someone like Amazon. £10 a month or as a small add on to a Prime subscription is feasible for many. £10 plus a race for a 20 plus race calendar just isn’t.

      1. Spot on. I’m a huge fan but can’t justify £40/month for Sky Sports. Luckily the BBC’s radio coverage is pretty great – super commentary team – so between that and the highlights I’m making do. If I hadn’t got into F1 back when it was on free TV I wouldn’t be a fan today, probably like many others.

      2. @davidhunter13 Great comment. I am stoked for what Liberty is doing and for the future of F1. The better product on the track starting next year is imho going to go a long way to growing F1 in a very big way, especially given how that has already begun with the social media and Netflix work that Liberty has done and will continue to grow and expand no doubt.

    2. Well, the last 4-5 races (with the exception of the stale Abu Dhabi race) have been quite a joy to watch in my opinion, I am sure new fans who tuned in for most of those would have had a positive experience!

    3. “Is F1 accessible enough? Is Pay TV the right medium?”

      Lets face it, FTA TV is dead. I’d go as far to say that most metro areas in the world will probably see much reduced FTA broadcasts in years to come.

      The future is (and already is) on a platform you pay for. Be it PayTV or streaming services, which will soon (and possibly has) become 2 of the same.

      1. I think that depends very much on the demographic.
        The best way to get people interested in something is to show it to them – locking it up behind a paywall immediately turns off most people.

        1. But the Premier League has been exclusively behind a paywall for the last 28 years, seems to be going from strength to strength.

          Growing up in Malaysia, back in the 90s, EPL games (well Liverpool and Man Utd games, heavily sponsored by Dunhill no less) were free to air on the state broadcaster’s English channel. However, by 1998, a local satellite TV company was launched and they pick up exclusive rights to attract subscribers. It worked. In a few years, most middle class households had it, the EPL was the major pull, thats the only reason we got it.

          It worked here in Australia too. When Optus (local internet company, owned by Singapore Inc no less) wanted to expand its user base, it outbid Murdoch Inc to win the rights to broadcast EPL. It worked, they have grown their subscriber base significantly.

          The point is that, if the product is good, people will pay to watch it.

  4. I believe the future of F1 is bright. I don’t think this would have been possible with the old CVC/Bernie school of thought. It has to be said, Liberty Media have played it well.

  5. RocketTankski
    20th April 2021, 19:20

    What they need is an F1 European Super League… ?

    1. They don’t need it.

  6. Scotty (@rockonscotty)
    20th April 2021, 19:49

    Where I currently live, it was very rare to find a Formula 1 fan in the ‘wild’. While you don’t see them every day, you will see a team shirt or a hat weekly. Also a group of us now have breakfast appointments on race weekends (US central time) . Nothing like a good race with your eggs and coffee!

  7. There’s absolutely no measure of the effectiveness of for example the Netflix show, but if it is as they assume, just really just goes to show that general exposure is making up for the free broadcast of before (which I’m sure how most of us got into F1).

    Putting 41 per cent growth of fanbase under the age of 35 since 2017 to a diversity initiative without taking into account the increase of gaming due to covid or the Netflix series is impossible to believe.

  8. Definitely IT is the future of F1, I think especially machine learning. With limited CFD time, maximising each design even before running it in a simulation would be key, running non-F1 related CFD to tune an algorithm to deliver maximum downforce in a particular area when a regulation change comes along that limits bodywork shapes (as we have seen this year with the floor) is where I’d be spending my money if I wanted to be successful 5-10 years down the line.

    It won’t be the teams with the best hardware engineers and designers that have the best car, but rather the teams with the best software engineers.

    In still amazed we don’t have Google, Amazon, Microsoft teams (I was expecting this to be the case years ago) it’s just the logical evolution of the sport as F1 loses its car manufacturing relevance.

  9. Sky has been a liability for years. Glad to see Formula One attract more following.

  10. Fantastic article. As a US based fan I have personally seen the new approach bear fruit. Within my group of friends and professional colleagues, at least 10 have just started watching F1 this season. Most based upon DTS or YouTube. Thankfully they have seen entertainment provided by the first two races as well. Bright future ahead. Hopefully the 2022 regulation change provides the expected closer racing to maintain the interest level.

  11. I remember the days of no online presence, woeful social and website content, hasty DMCA takedowns of video clips online, and wide chastising of any driver who dared to get a glimpse of the paddock in a social media post.

    Contrast that to now, when the day after the race there’s a 2 minute highlight reel on all social channels… F1 has really come of age.

    About time too.

  12. Does anyone know how Europe/UKs ban on ICE ban post 2030 affect “non-fossil” fuels? Can a manufacturer sell an ICE vehicle if it runs on this carbon neutral fuel? I believe the answer to this question will be key for attracting new manufacturers in 2025.

  13. @jaymenon10

    This. I’ve tried talking about it, but people have their heads in the sand cause they don’t to face the fact that within 10 years F1 won’t make sense to manufacturers unless it’s all electric or the automotive sector suddenly changes course to ICEs run on new fuel types. F1 will face a big fork in the road: switch to loud and entertaining (but outdated) engines or go all electric and lose tons of existing fans and hope they can grow new ones who might never get a driver’s license and have little native exposure to motorsport.

    1. ” F1 will face a big fork in the road: switch to loud and entertaining (but outdated) engines or go all electric”

      I made this exact point on here some time ago. I really think F1 should abandon trying to attract new manufacturers if they want to continue an ICE based formula. It doesn’t fit the narrative.

      My argument is, assuming “renewable/green/carbon neutral/non-fossil” fuels aren’t exempt from the upcoming ICE bans in Europe, why would a car manufacturer want to continue pouring millions into developing technology that is being asphyxiated to death? The simple answer is they wont. VW have already said they are building their last ICE platform, I believe many other are following suit. So if there is no commercial value, why join the F1 grid? Especially when any new manufacturer will be at a massive disadvantage to the experience the incumbents would have gained over the preceding 12 years at that point.

      Go all electric? It will just merge with FE and as you say it will lose fans. So why not become a boutique formula? Race spec V10s made by Cosworth, in light chassis, a formula reminiscent of the era up to 2005, perhaps with a bit more ground effect. It will be cheap, thrilling and competitive.

      F1’s future may very well be V10! We can dream right? haha. My bet is, in 2031, there will be no F1, it will be something else.

      1. Nick T. @jaymenon10

        I do not at all subscribe to your theory about the pace of the demise of the ICE at all. I think you both have to read carefully that ‘electrification’ does not mean full electric, and in fact hybrid technology and e-fueled ICE’s are here for a good 30 years yet. Even VW, who seem to be the most vocal and aggressive with their talk that makes it sound like the ICE is dead, admits it will still be around for quite some time.

        Just think of the number of ICE cars still being made and the fact that the pace of that is still going to be very very strong while full electric still has far to go in terms of practicality, and it seems obvious to me this prediction for 10 years from now of F1 being gone as well as the ICE, is simply unfounded.

        F1 is thinking exactly as they should by heading towards e-fueled ICE powered cars for quite a time yet. Their future is very bright. You two are the ones closer to having your heads buried in the sand if you think the world is becoming full electric any time soon and that F1 must do the same or become extinct in a decade.

        1. @Robbie

          I am sceptic of the general news media and the crap they report. I too believe that in theory, the ICE will live on. However, everything I see suggests that the UK government for example will ban sales of all new ICE vehicles after 2030. This appears to be factual at this.point, but I don’t know the fine print, for example, if hybrids or e-fuels are exempt.

          Couple this with the fact that the likes of VW have to pay a federal fine for every ICE engine they sell? Which they offset by selling EVs.

          The point is, it appears that in order to appeal to a certain popular sentiment, governments in Europe (and eventually the world), by regulation (and/or force) will push people to not buy ICE vehicles.

          Do I think it’s feasible? No. But when has sense ever stopped governments?

          If the regulation is imposed, why would car companies bother with ICE? Yes it may live on, but will it be worth developing? Like I said, it really depends on the law. Governments say stuff all the time with no intention of following through, so there is that as well, my point was that we need to be conscious of the future laws and regulations.

          Just my views.

  14. Just bring back alcohol sponsorship and all teams funding/sponsorship issue will resolved. If Heineken Dutch Grand Prix sponsorship allowed, i failed to see why team sponsorship can’t.

Comments are closed.