Founder and head of Right Formula, Mr Robin Fenwick is always helpful with his sharp insights on the sponsorship side of Formula 1. This time we focus more on how this sector is adapting to various relevant changes.
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How has the sponsorship side of Formula 1 changed over the last years?
Dramatically. When I first entered the world of sponsorship, relationships tended to start with a senior individual within a business who was passionate about a particular sport or entertainment property. They would then find a way to make a strong business case for a partnership and it was often signed relatively quickly.
Over the last decade, however, brands have approached sponsorships in a very different way. The senior individuals still want to explore these relationships based on their passion, however, they now were asking Marketing or Sponsorship Directors to compare them to other properties and evaluate them to ensure a strong return on investment could be delivered. If there was any doubt after this evaluation, a sponsorship would not be signed; this often resulted in missed opportunities if the Marketing or Sponsorship Directors did not have the necessary experience or were not prepared to seek guidance from a knowledgeable third party.
Today the relationships that are being formed are more balanced in benefit than ever before; to the extent, they are referred to as “partnerships” not “sponsorships” any longer. What I mean by that is the value of the benefit is much more evenly split; historically brands have paid an incredible price for title partnerships with teams simply because they could afford it and were prepared to pay it – a good example is the title partnerships signed by tobacco firms. Today, the cost of partnerships has come down to ensure true value is delivered given the essential need for justification and the greater level of competition with other sports and entertainment properties.
Do you believe 2017 is a turning-point year in any way for Formula 1’s sponsorship matters?
2017 represents the first full year with Liberty Media in charge and the start of what will hopefully prove a really exciting period for the sport. We are starting to see some changes that will affect the long-term future of the sport e.g. true fan engagement, enhancing the digital platform and new Formula 1 experiences for individuals that have never previously been possible. These are extremely positive changes for sponsors as brands seek to extract more value from their partners than ever before.
There is no doubt that it will take time to see the full benefit of Liberty Media’s initiatives, but there is a real buzz around the paddock at the moment, which we need to capitalise on. Interestingly, we have had a number of new prospective sponsors approach us to ask about the opportunities in the sport given Liberty Media’s involvement which a good indication of the changing perception.
We need the tools available from Formula One Management and the teams to enable us to help brands deliver value from their partnerships. Liberty Media appear to be doing everything they can so far to provide the very best platform for brands to benefit from existing and the new innovative assets that are on offer. This is just the start.
Interestingly, we have had a number of new prospective sponsors approach us to ask about the opportunities in the sport given Liberty Media’s involvement which a good indication of the changing perception.
What’s most important in your work with Formula 1 today?
Driving value. In everything we do, it’s vital that we achieve value with everyone we work with. In order to do this, we need to fully understand the objectives of these brands, help them articulate the contractual rights and ensure they deliver an effective programme of activities that can be measured to show the positive results to their organisation.
Each member of our team has been hand-picked to do just that; they bring knowledge of the sport, strong industry relationships, tactical sponsorship experience and a specific skill set that allows Right Formula to drive significant value for the people and companies we work with.
From your own experience, what’s the recipe for a successful partnership in high-end motorsports?
There are a number of components of a successful partnership, but it starts with choosing the “right partner”. Firstly, there needs to be a good synergy in the DNA of what the two businesses stand for. That could be, they both strive for success, are disruptors in their industry or they have a real focus on technical innovation for example. After that, the rights holder needs to be able to provide some specific (and ideally unique) benefits that will allow the brand to deliver against their overall business objectives. These benefits need to be provided at a price that is manageable which will ultimately show a great return if used correctly.
The best relationships are ones where multiple benefits can be provided meaning that the brand is not reliant on just one or two components to be a success. Some examples experienced by our clients include significant new incremental revenue from a B2B introduction; gaining a substantial volume of new consumers to communicate with a high volume of media value through clever brand placements; gaining stronger relationships with existing and prospective customers through hospitality and event experiences; uplift in motivation and increase in sales as a result of internal initiatives.
Of course, some of these items are more difficult to measure than others, but we have a team that helps brands evaluate their partnerships effectively which I believe is imperative to the broader business seeing the value of any given partnership.
One final element that has really helped deliver the best results (but is often taken for granted) is a good tri-party relationship and dynamic between the brand, rights holder and agency. Each entity needs to be as open and enthusiastic as possible and truly understand what the brand’s objectives are so they can deliver the very best results.
The use of social media has proved a cost-effective way to engage with your customer base, but perhaps more importantly, you can precisely measure it.
How are strong Formula 1 partnerships changing in terms of new developments or social media?
Formula 1 partnerships have often lead the way in terms of new marketing strategies and innovations, but surprisingly the rights holders owned social media platforms (in particular those run by Formula One Management), have been somewhat left behind compared to other sports. Historically there has not been a huge amount of importance placed on these channels, but that is changing under Liberty Media.
Right Formula as a business is constantly looking at new technologies and marketing tools to help our clients deliver the best results. For example, we helped develop a bespoke “mission control” and a replica “pit wall” for SAP, both of these tools allow SAP’s existing and prospective customers the opportunity to understand SAP’s strategic technology in the context of competitive racing. We are also currently helping Logitech and McLaren as they combine forces on a new e-sports game.
In addition, we have developed unique hospitality tools that help brands utilise VIP tickets in a more effective way; this reduces wastage and ensures the very best customers attend the Grands Prix. The system also helps navigate the complicated matter of compliance – an increasingly important component in sponsorship.
In terms of social media, the importance brands place on this element of their marketing continues to increase. The use of social media has proved a cost-effective way to engage with your customer base, but perhaps more importantly, you can precisely measure it! In general, the historic use of social media has been quite simplistic which often meant posts were not relevant to the audience and time/money was wasted. Today a much more sophisticated approach is taken as we have a deeper understanding of individual profiles and so can provide targeted communications with sponsored/paid posts. It’s also worth noting that Formula One Management has also relaxed their rules on Formula 1 video content which is a big thing not only in helping to promote the sport but also to deliver additional tools and better results for brands associated with the sport. Long may this approach continue!