The Art of Selling: Sponsorship 101
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The Art of Selling: Sponsorship 101
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By David Cameron, Italy
Atlas F1 Magazine Writer
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Table of Contents includes links to each chapter
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The timing of a deal is different depending on the company the team is dealing with, but a long lead period of a deal brewing is the norm rather than the exception. "These days the normal gestation period is well over a year, and it's quite normal that the first answer is no. But you try to plug away at it, you try and find out why it was a no and if there was a particular reason for it being a no, and you try and overcome that. If you take Allianz for example, that took over two years to crack, and twice it was no. But we knew that it was a matter of time with them, of convincing them and overcoming the hurdles.
"Compaq, obviously now HP, that was eighteen months. Budweiser was only a couple of weeks, but the difference there was Budweiser had already made up their mind that they wanted to come into Formula One, and had made their approach to Ferrari. We heard that perhaps all wasn't going well with Ferrari, and our guys moved in and made a move, and because the decision was already made to come into Formula One it was all pretty straightforward. But that's unusual - from a cold approach you really have to think in terms of over a year."
"And clearly people don't have that kind of money just lying around - budgets are planned - and so therefore if you start to talk to someone in March then clearly the budgets have already been planned for that year in most cases, and really if you talk to them, you are talking already for 2004. In some cases if you don't start talking before September then budgets have already been set and then you are talking about 2005. "So that's one reason, budget planning reasons, but also because it has to be such a thoughtful decision from a company. NiQuitin is probably a good example. We came up with the idea and made the approach [to them] in August, and we managed to track them and set up a meeting in Monza, which was remarkably quick; we were very, very fortunate to be able to do that - the set of circumstances were already in place because they were already in Milan doing a seminar. We got them to Monza and made our proposition, which was 'look, this is a sport that's had thirty years of tobacco messaging - it makes eminent sense for you to come in with smoking cessation products and anti-tobacco messaging'. "And they got it immediately - they just saw it and said 'yeah'. And it still took from there until April to conclude the deal, and that was because of budgets and convincing people that this was a good thing, there were regulatory problems to overcome, etc. That was fairly straightforward and remarkably quick - from August to April - bloody quick." Because of the massive amounts of money involved in sponsoring a top running team, there will always be some problems internally for the companies to actually find the budget, and it is something that a team has to be aware of. Often a company will have a number of existing sponsorship programmes in other areas which will need to be looked at again, or even replaced by the Formula One programme. "It's a question of priority, and if a company commits to a programme like this then it's a high priority programme, largely because of the scale - it's clearly a worldwide programme, it's clearly a high expenditure programme - so I think that it's a case of either doing that or other things. "In order to make a decision 'yes, let's go to a Formula One programme', other things probably have to be sacrificed. What Formula One does, is deliver a global programme, but it also delivers local programmes too, because each of the geographical areas have their slice of Formula One, either through having an event or through having a driver come to their region. There are so many things you can do, so the great selling point of Formula One is that it's a very flexible marketing platform, which clearly is very appealing." The key to helping a company find the budget to put together a sponsorship programme is these geographical areas - almost no multinational company has a centralised sponsorship budget, and as such it means negotiating with the various regions to pull a budget together. "That's right, and it takes a lot of coordinating. Sometimes you'll find that companies actually don't have a central marketing or a central budgetary control, and that's bloody difficult because then you're in a position whereby you've convinced them of a strategy, and let's say they're in the European / Middle East / Africa region - which is quite a common geographic area for many companies, and then they say 'yeah, we want to do this but we couldn't justify the costs on our own'. "You've then got to get the Asia / Pacific guys involved, and we'll have to get the South American guys involved, and the North American guys involved. First off you start to wince then, because with the North American guys it's doubtful that they'll get Formula One - Formula One just isn't on the radar in North America. So you think, 'well, we're going to struggle to get anything out of them'. Asia Pac - yes, they have a lot of races there, but you're dealing with enormous time differences and you have to go through the whole convincing process again. So that's yet another hurdle you've got to overcome - sometimes you can get a concept in, and one division saying 'yeah, we want to do this' but the other divisions saying 'no', and they could be more interested in golf or athletics or whatever, and you just don't know."
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And the reason for these long delays between first approach and completion? It all comes back to the money. "Because you're talking about a major marketing decision to come in and spend millions of dollars, or tens of millions of dollars in some cases, to then commit to go in a particular direction for what would normally be a period of at least three years, and probably more like five, it is a big decision for any company to make.
