CSM, Sport Dimensions and Prism on the state of motorsport sponsorship and where it goes next

The contributors:

• Austin Schneider, Director of Business Development, Sport Dimensions
• Chris Long, Managing Director, Motorsports, EMEA & APAC, CSM Sport & Entertainment
• David Webb, Chief Executive, CSM Sport & Entertainment
• Quentin Warren, Head of Motorsport, Prism Sport and Entertainment

How would you assess the overall health of the motorsport sponsorship market?

Chris Long: It’s in good health across a range of motorsport series, but no doubt that is being driven by the ongoing renaissance in Formula One, which has seen enormous growth since Liberty Media took over.

In any typical year over the last decade or so, Formula One has succeeded in attracting an average of 50 to 60 new brands to the sport. In 2021, a year after Covid, it was able to attract around 125 new brands of which nearly 40 per cent were US-based companies.

In 2022, although the number of deals halved, it should be noted that they have increased in value significantly, with 13 of them exceeding US$10 million.

• BlackBook’s latest report: The business of motorsport sponsorship in 2022

Quentin Warren: With new title-level deals for Red Bull Racing and McLaren, it feels like the motorsport sponsorship market remains healthy and vibrant with new brands coming into the sport. We’ve also seen Formula E retaining and adding new sponsors.

Another trend of note is the continuing presence of cryptocurrency brands in motorsport and other forms of professional sport. While new crypto brands are inking sponsorship deals, the volatility of that sector and the unproven nature of token schemes in other sports creates a level of uncertainty and risk.

Eight of the ten Formula One teams currently operate with a crypto sponsor, including Ferrari, who have a partnership with Velas

Austin Schneider: Many technical partnerships have a positive impact for the entire marketplace outside of motorsports – such as 100 per cent sustainable fuel development, single-use plastic elimination, safety enhancements, and many more.

The cost of entry to modern sponsorships has dropped considerably as more flexibility is built into the ecosystem. Brands are no longer required to sign multi-year arrangements right from the start.

The most successful programmes still end up there but the new flexibility has allowed for more brands to explore the opportunities sponsorship provides with less commitment.

What is motorsport lacking and what can it learn from other industries?

QW: It would be good to see more fast-moving consumer goods (FMCG) brands coming into the sport, not only in Formula One.

Our experience indicates to us that there is white space for campaigns appealing to broader fan audiences and targeting more accessible areas of the sport. This seems to be lagging behind the recent growth in mainstream interest in the sport.

More FMCG brands embracing all motorsports would help what is a niche category of sports (arguably even Formula One) have more of a mass appeal, such as MotoGP in the post-Valentino Rossi era.

AS: Motorsport is still missing its ‘World Cup’ event where an overwhelmingly large portion of the mainstream stops and watches – even if they have zero interest in the sport throughout the rest of the year.

Other industries have found ways to make their offerings much more engrained in cultural and mainstream activities. Motorsport has made positive strides in that direction, but since motorsport affects the mainstream consumer more than they realise, there is still room for improvement.

Motorsport is still missing its ‘World Cup’ event where an overwhelmingly large portion of the mainstream stops and watches.

– Austin Schneider, Director of Business Development, Sport Dimensions

CL: The first is the need for a better narrative around both sustainability and diversity and inclusion (D&I) across the board. Even those best placed to tell a compelling story around those subjects have to work hard to land the message.

The fan experience in Formula One – and other series – is lacking in some areas. More effort needs to be made to encourage sponsors to elevate the fan experience and for them to deploy their technology to support spectators, rather than just the teams and drivers.

One other area of concern is Formula One’s dependence on B2B and tech companies for sponsorship revenue. Whereas the revenue and, in some cases, the technical assistance is welcome, these companies do not create engaging fan-facing activation campaigns.

What are the major challenges and opportunities facing brands/buyers and rights holders/sellers within motorsport right now?

AS: Motorsport has a unique opportunity to integrate and share audiences more than other industries. There are multiple globally-recognised, professional motorsports series across different disciplines. The US market is particularly well-positioned for brands to take advantage of this.

For example, you don’t see multiple US-style football sanctioning bodies. If your brand is interested in American football, you will be attracted to the National Football League (NFL). However, if your brand is interested in US motorsport, you can choose from Nascar, IndyCar, F1, IMSA, NHRA, and many others.

Each of those motorsport properties provides different value and access to different audiences but there is a common thread linking them all together.

Saudi oil and gas giant Aramco became a sponsor of Formula One in 2020

DW: The main issue is rising costs – for both fans and partners. Due to an increase in fandom, viewing figures and world events, the price of entry into Formula One is becoming high.

We can see the impact that is having, because whilst B2B-focused brands still see value in motorsport, consumer brands are finding it harder to make a case for getting involved with the sport.

For the fan, meanwhile, race weekend ticket prices and the cost of hospitality is unsustainable. Formula One, specifically, needs to think about the long-term health of the sport rather than taking the quickest money on the table.

Fans are dealing with economic issues at home. They need to be nurtured, supported, and sustained – not exploited.

QW: Challenges include the volume of races and general travel chaos teams have to negotiate, compounded by the post-Covid staffing challenges faced by many industries. This has resulted in shortage of staff willing to travel.

Opportunities include the broader audience for Formula One which has been spurred by the popularity of Drive to Survive. We believe this new generation of fans has broader interests and more crossover passion points. This is appealing to brands to align their portfolios with other partnerships, such as in music and entertainment.

The expansion of race schedules also creates opportunities. It will be interesting to see which brands make the most of having three Formula One races in the US in 2023.

Who’s doing the most impressive work in terms of marketing creativity?

AS: Ally Financial across Nascar, IndyCar, IMSA, and Sprint Cars has been wonderful to watch grow over the last couple of years. The programme has been well-executed and organically expanded with some great campaigns along the way.

They have built up equity with a strategic mix of drivers, teams and venues that provide a valuable asset mix to activate all year long.

CL: From a brand perspective, BWT is generating a lot of awareness. The next step for them is to formulate a narrative and use link that captures the imagination of consumers.

McLaren and Google’s wheel stickers were a good stunt and raised interesting ideas around potentially commercialising what has commonly been perceived as dead space on a Formula One car.

Water treatment firm BWT has used its motorsport sponsorships to encourage people to 'Change the world – Sip by sip'

QW: Aston Martin Formula One team have redefined their creative and content strategy to include a well-defined message via Sebastian Vettel. W Series continues to attract interest: its first race outside Europe at the Miami Grand Prix shone a stronger spotlight on the series, increasing interest.

McLaren’s big focus on engaging the US audience and embracing their fans – in addition to their test and learn content strategy, [such as] Unboxed – is really paying off.

In what ways is the role of the sponsorship agency within the motorsport industry evolving today?

AS: The role of the sponsorship agency has become much more than simply handling footprints and hospitality onsite. The sponsorship agency has become a central hub of marketing and revenue-generating activities for its clients.

Because revenue-generating arms of businesses are often the ones to leverage sponsorship assets, the agency has the opportunity to integrate disparate business units to create new value.

This provides obvious value to the brand the agencies represent, but also to the properties their clients are sponsoring because this kind of success leads to longer, more sustainable partnerships.

QW: There’s a huge and growing appetite for content and creativity, not just in at-race activation and guest hosting. Brands are relying on agencies to help them navigate digital platforms and new technologies that enable deeper fan engagement and open up commerce opportunities.

There is also a much greater focus on data analytics beyond top line metrics like engagement. We work closely with clients to uncover behavioural insights and leverage these to inform a more audience-focused approach to storytelling.

CL: The demographic of audiences consuming motorsport has shifted significantly in recent years, which necessitates a more important role for research and insights teams, particularly when it comes to identifying sponsors and brands interest.

Similarly, with added scrutiny on marketing budgets, genuine deep sector knowledge, expertise, and a consultative approach is required to ensure brands are getting a good deal. You cannot really get that without using an agency.

In addition to that, measurement and evaluation of rights holder packages is also critical. With an economic squeeze happening, brands want to ensure maximum ROI. It is our job to ensure we connect them with rights holders we know can deliver that.

How do you expect the motorsport sponsorship business to evolve in the coming years when it comes to areas like sales, new categories, on-site activation, ROI measurement, and market growth?

AS: From environmentally sustainable footprints to increased efficiency with resources, the current demands of sponsorship require efficiency.

You will start to see decisions being made to benefit increased efficiency more than just for increased impressions, or whatever the chosen vanity metric is.

Sponsorships may also rely less on vanity metrics because they have been diluted in value recently. There seems to be a gap with how consumers are watching live sport and how that viewership is reported, which has left the industry without a single source of accurate reporting on all of that, so there can’t really be a single metric everyone can equally compare to.

CL: We will see further development of virtual product placement (VPP) by companies like Ryff as the sports broadcaster landscape changes with new arrivals like Amazon Prime and Netflix, and further growth from DAZN. This will increase the advertising and signage inventory during live races for rights holders to sell.

On-site activations will need to become increasingly personalised, and I would expect that rights holders will continue to come under pressure to bring their brand personalities through at races, providing more partner-specific experiences along the way.

QW: Key areas to watch are an ever-increasing reliance on data and data analytics, fan engagement growth, opportunities to tailor content to individual fans and redefining the fan experience, as well as guidance on how brands can meaningfully engage via augmented reality, virtual reality and the metaverse.

This article is taken from the BlackBook Motorsport Sponsorship Report. To download and read the report yourself, click here.