The importance of the business of F1 has grown in the previous few years and has reached a certain level of fever pitch since 2008, where every conversation seems to be about income generation and value for money. Despite the disintegration of Super Aguri and the credit crunch in 2008, the total spend on on-car sponsorship peaked at almost US$837m, a rise of US$5m on 2007 (source: Formula Money 2008). Although not significant, it shows that sponsors were willing to justify the astronomical spend in F1.

Now that the credit crunch has set in and a number of high profile sponsors have pulled away from the sport – RBS and ING to name a couple – it will be interesting to see the eventual level of investment in F1 in 2009. One question that has risen in prominence is the level of activation around F1 and its associated success, especially focusing on brand loyalty and resultant income generation – a way of justifying sponsorship spend to stakeholders.

Having looked into studies carried out over a period of 14 years, it can be seen that 72% of NASCAR fans reported that they would ‘almost always’ or ‘frequently’ choose the brand/product associated with their team/sport (Performance Research). At the RAC British Grand Prix in 2000, it was the opposite, where almost 40% of fans insisted that they would ‘almost never’ choose the sponsor’s product ahead of a competitor (Performance Research).

As an example, the RAC British Grand Prix in 1999 was Damon Hill’s last and as such the crowds flocked to see the retiring driver in his last appearance before quitting F1. Benson and Hedges was a major F1 sponsor at the time and took to the Grand Prix stands, handing out a huge number of free goodies, offering Grand Prix simulators and temporary tattoos! The free recall of F1 sponsors onsite resulted in 83% of fans recalling Benson and Hedges (advertising at the time as “Buzzin’ Hornets”), with Marlboro and West at least 35% below.

Performance Research reported a dramatic decrease the following year, back down to 39% of fans able to name B&H as a F1 sponsor. So why did the onsite activation work for B&H and can this be translated to other sponsors?

The onsite fan engagement was honest and open –a simple brand awareness programme that transparently made F1 fans aware of the company’s presence in F1. There were no figures on whether this then increased brand loyalty or boosted sales, but we can deduce (from 29% of F1 fans saying they would be more likely to select the brand associated with their sport) that there would have been a short-term increase in revenue.

I believe that fans are still open to onsite sponsor activation, but are more receptive to non-cynical communications where they are encouraged to learn more at their own pace. For companies that are trying to promote their brand messages through their sponsorship of F1 the task is harder as fan engagement is necessary to allow empathy and understanding of the brand.

We can see from this example that onsite activation can work and would probably have greater merit if the campaign was extended to include a number of races, different markets and continuous campaign theme.

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F1 Paddock Insights

July 24, 2009

As the Formula One season briefly settles back into its fortnightly cycle, the ten teams, global media and VIPs make their way over to the Hungaroring circuit just outside Budapest’s eastern ring road. One of the oldest circuits on the calendar, it held its first race here in 1936, only to wait 50 years before the zenith of motorsport lapped the track once more. Here what’s happening in the paddock at the historic Hungaroring:

As if the legal war between the FIA and FOTA has not dragged Formula One through enough of a public quagmire, poor old Sebastian Bourdais has joined in on the action. Having recently been booted out by Scuderia Toro Rosso for not delivering on the track, the French driver is considering taking his former employers to court for wrongful dismissal. Adding fuel to the already freely-burning fire, STR then promptly employed young Spanish racer, Jaime Alguersari. At only 19 years of age, he will likely be the youngest driver to ever race in Formula One, with his only experience before the Friday practice in the 2009 a straight-line test this week back in Italy. The 30 year old is unsurprisingly upset about being replaced, especially by someone so young, but with only 6 points in 27 races, perhaps the team is right to turn its attention to one of the brightest stars on its Red Bull young driver programme. Felipe Massa – who himself started his Formula One career at 20 years of age – recently told insiders, “Maybe he’s an incredible talent and he will do much better than everybody thinks, but for me it’s not good for him.” Jaime Alguersari has recently defended the decision for him to compete in Formula One alongside the Formula Renault World Series simultaneously by telling critics in the paddock that “I need to do as many races as possible. I need to experience as many situations as possible. For me, for sure it would be good because it would give me more experience and of course there are no clashes with Formula One, so there is not really a reason not to do it. If it becomes an issue, then obviously we may have to reconsider.”

The on-track struggles of 2008’s most successful teams have not gone un-noticed by the world’s media, despite the roaring success of Brawn GP or Red Bull, and questions have often been asked of their commitment to improving their 2009 contenders. Stefano Domenicali recently told F1 insiders that he expects Ferrari to turn its attention to the 2010 version of its F60. Having been caught up in the nail-biting finish to 2008’s Formula One season with McLaren and, to a certain extent, BMW, all three teams are feeling the pressure this year, with a severe downturn in their performances. “We have already started some work on the new project and in the next couple of weeks we will basically move on to that to make sure we do not lose any time. Next season will be crucial and we really want to start with a different pace compared to this year.” Interesting that Domenicali and his Ferrari friends should come out with this when McLaren has recently stated that Lewis Hamilton has a greater chance of winning then before with a number of new parts to the MP4-24 coming to Hungary. Some of the team mechanics in the paddock have told me that perhaps Ferrari should look at continuing their development in 2009, either that or McLaren are so far behind that they feel they need to keep working on the car before they can consider being competitive in 2010.

With McLaren looking stronger this weekend than they have all season, are we going to see another shift of power on the Formula One grid? There’s a few conversations flying around the paddock this weekend that make me think that it’s going to be down to the drivers, rather than the cars in Hungary. With all the teams looking stronger and making the right noises, we can expect to see the Brawns back somewhere near the top (the higher temperatures with put the heat back in the their tyres and returning to the site of Jenson Button’s first ever win), Red Bull are still on a high and have a car to match the Brawns in all departments, the Ferraris have looked stronger and stronger every week with the new/last developments of 2009 working wonders for Felipe Massa in particular. A number of the chief mechanics in the paddock have told me that the team with expectant smiles on their faces is Toyota. Timo Glock claimed second place here in 2008, where a Toyota podium was more of a shock than this year and with a new rear aerodynamic package to boot, it could be the Toyotas who surprise the crowds.

And finally, it is with great sadness that we are reminded about the danger of motorsport as Henry Surtees was killed in a Formula 2 race at Brands Hatch on July 19th. After achieving his maiden podium in the race on Saturday, Surtees was involved in an incident in which a loose wheel from fellow competitor Jack Clarke’s car hit him on the head and caused him to crash on the entry to Sheene Curve. He later died of his injuries in hospital. Henry’s father, John Surtees, remains the only man to claim the World Championships on both 2 wheels and 4, winning the Formula One World Championship with Ferrari in 1964 and the Motorcycle World Champions in 350 and 500cc in 3 consecutive years from 1958-1960. Henry Surtees, at only 18 years of age was only just embarking on his career as a racing driver. His own father issued a statement that read, “Despite his young age he had shown maturity, technical understanding and speed.” He was also described as “one of the best Brits in the racing series” and will be sorely missed by everyone involved in motorsport. Our sincerest condolences are with the Surtees family and friends.

So, as we return to the summer heat of eastern Europe, keep your eyes out for a mixed field, a close race and some all-important tyre choices.