Santander’s Formula 1 saga

Many people in the Formula 1 paddock were saddened to hear of the passing of Emilio Botin, Chairman of Santander Bank. He was closely involved in Santander’s Formula 1 sponsorship program, which has provided significant results for the bank and strengthened its market positioning.

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The life of a chairman

Emilio Botin, chairman of the Spanish banking giant Santander, passed away on September 10, 2014, at the age of 79. Botin was the driving force behind Santander’s sponsorship of Formula One, which was estimated to be worth $66 million (€51 million or £40 million) annually.

Not content with simply approving investment in Formula 1, Botin built relationships with team members, attended races, rode bikes with Fernando Alonso and cheered on the teams and drivers supported by Santander.

Ron Dennis, CEO of the McLaren Group, had this to say about Botin: “He adored motor racing – there was no one more enthusiastic in the McLaren garage than he was when a race win was in the offing. The world has lost a great man.”

The bank’s research indicated that Formula 1 and football in Latin America were the best platforms for strengthening Santander’s position.

Overview of Santander’s Formula 1 sponsorship

Santander began its Formula 1 engagement in 2007, deciding to sponsor the McLaren team when Alonso joined McLaren. Botin and Alonso built a close relationship, leading Botin to move Santander’s team sponsorship to Ferrari once Alonso joined the Scuderia in 2010. Santander continued to sponsor the drivers at McLaren and has also been the title sponsor of several Formula 1 races, including sponsoring the British Grand Prix for eight consecutive years.

Santander announced in 2012 that its partnership with Ferrari will be extended until 2017 while at the start of the 2014 season, the partnership with McLaren was renewed for an undisclosed amount of time. No doubt Ferrari and McLaren are hoping there will be no changes with those agreements.

The business side of the sponsorship

Santander had embarked on a series of bank acquisitions in the early 2000s, including banks outside of their home country of Spain. One of those acquisitions was Abbey National, a UK bank that Santander acquired in 2004. As Santander sought to establish themselves in the UK market, they realised they were suffering from very low brand recognition – in 2006 they were known by only 20 per cent of UK consumers.

The bank decided to sponsor McLaren, obviously a British team, and became the title sponsor of the British Grand Prix as a way of improving their recognition levels. The result has been impressive; Juan Manuel Cendoya, senior executive vice president of communications, told Paddock magazine in 2010:

“I’d say that the turnaround of our brand awareness in the UK is outstanding because in less than four years we came from being virtually unknown (20 per cent of brand awareness at the end of 2006) to be one of the most recognised financial brands (92 per cent of brand awareness at the end of 2009).”

The success of their Formula 1 engagement led Santander to look for ways to extend that on a global basis. The bank decided to partner with Ferrari, which of course has an enthusiastic fan base around the world. Santander and Ferrari announced a five-year agreement worth €200 million in September 2009. This was a team sponsorship, and Santander shifted from a team sponsorship at McLaren to one that sponsored the drivers.

The stars must have been aligned just right for Santander as the first race of 2010 saw Ferrari drivers Alonso and Felipe Massa in first and second place, with Santander-sponsored Lewis Hamilton in third. So all three drivers on the podium featured Santander on their driving suits. Doubtless, there were some happy sponsorship managers at Santander.

The Financial Times pointed out additional benefits derived from the partnership with Ferrari:

“Finally, the Ferrari alliance offered Santander a strategic advantage in emerging markets. In 2010, Santander had planned special publicity appearances at the Bahrain and Chinese Grands Prix.

“Entry into these regions had historically been difficult for western companies but fellow Ferrari sponsors such as Etihad Airways and Mubadala, Abu Dhabi’s state investment vehicle, offered Santander an advantage: by association, Santander became linked with familiar brands and accepted in the local culture. Having local co-sponsors facilitates dealmaking in previously untapped markets.”

Santander’s sponsorship measurement tools have identified additional results obtained from their engagements in Formula 1:

• The growth in UK brand recognition from 20 per cent to 92 per cent (mentioned above)
• A 19 per cent increase in awareness in key countries
• Eighty-two per cent of employees say they feel prouder of working at Santander as a result of the bank’s sponsorships
• A 25 per cent increase in favorability among customers and a 41 per cent increase among non-customers.
• In Spain, Santander was the top brand associated with the sport in 2011 and 2012, ahead even of Coca-Cola.

Why has it worked so well?

Santander has enjoyed success with its sponsorship program partially due to the time-honoured use of market research and strategy development, well-defined objectives and program measurement. With the rapid pace of acquisitions, Santander’s brand identity had not had a chance to be established in new markets.

The bank evaluated its new geographic dispersion, identified Formula 1 and football as relevant platforms to reach customers in those markets, and built clever programs to engage consumers and motivate employees.

Regarding football, Santander sponsors three club competitions in Latin America: the Copa Libertadores, the Copa Sudamericana, and the Recopa Santander Sudamericana. Santander also sponsors the Copa América de Naciones, a tournament held every four years to determine the continental champion of South America. Lastly, Santander has personal sponsorship agreements with Pelé and the Brazilian player Neymar da Silva Santos.

The bank’s research indicated that Formula 1 and football in Latin America were the best platforms for strengthening Santander’s position. The two sports are being followed by the most fans than any other sport around the world. In Santander’s key markets, Formula 1 has a very high level of loyal fans. That passion for the sport connects fans with the bank.

I’d say performing the fundamentals of business planning and clever decision-making that is informed by research are the underlying reasons for Santander’s successful sponsorship program. I suspect many people in the Formula 1 paddock hope that Ana Botin continues to sponsor Formula 1 in the manner of her father Emilio. Her best options may be to continue the program with necessary changes or to invest even more in Formula 1 to further strengthen Santander’s position in the market and drive higher brand loyalty. It’s good to be able to operate from a position of strength!