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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Exploitation of rights is the current growth area of sports marketing, and simply put it's a package sold to sponsors which allows them to use the imagery of the team in their marketing campaigns. Recent examples include television commercials for HP, Allianz, Vodafone and Shell, which all included footage of the Williams or Ferrari cars being driven by the current race drivers, as well as the various tobacco companies having pictures of their cars placed in tobacconists.
There is a huge potential in these type of deals, and it is a difficult area to negotiate, as Wright explains: "it's horses for courses - some teams or some sponsors will want to leverage the sponsorship right through to point of sale or even to the point of packaging and labeling on the product; others will want to use the imagery of the team in TV advertising or whatever. I think it depends on who the company is and what their marketing objectives are, and we would sell them a rights package based on what their objectives were.
Which brings us to pricing. The biggest problem with exploitation of rights is that there are few guidelines to compare to in the paddock, which means looking towards other sports for a model: "I think what we've got to do is look at ourselves as a sports brand and compare ourselves with football, golf, tennis, whatever. And you have to look at what David Beckham could charge - Castrol is a good example, because he endorses Castrol in Japan, and you have to say that if David Beckham can command this kind of fee for endorsing this kind of product in this territory then on all territories and in all forms of media, TV, radio, newspapers, whatever, that gives you some kind of guideline. "And then recently we came across a little bit of information about Luis Figo with Coca Cola in certain territories, and you sort of put all that together and from there you would come up with realistic proposals to put to your sponsors. But it's a matter of recognising that we are a sports brand and realising that our competition is not just the other nine teams in the paddock but that any sponsor can spend its money in golf or tennis or football or the arts or whatever, making that comparison and coming up with something that's plausible." The most recent sponsor Wright brought onboard with WilliamsF1 is Budweiser, who were introduced to the paddock at the Silverstone Grand Prix. Various reports put the value of the contract at 50 million UK pounds for a five-year deal, which seemed extraordinary for such a small on-car signage. "I think you have to be careful about what you're defining as 50 million," Wright warns. "That sum was quoted in Marketing Week - they broke the story four weeks in advance of the deal being officially announced, and they clearly have put a figure on it - that figure may be accurate or it may be inaccurate. "But the point to remember here is, what does that include? Is that just a rights' fee to the team? No. Is it a rights' fee plus exploitation money over a five-year period? Maybe then it would start to make sense. So I think you have to be careful what you are talking about - it's like saying that Rio Ferdinand cost Manchester United 18 million pounds. He costs a lot more than that, because then he's on 70 thousand pounds a week in wages on top of that, so the real cost to Manchester United is far bigger than 18 million. "So I think you have to be careful with what you're defining as the value of the sponsorship - and most sponsorships, especially of that nature, you would have a big exploitation budget in order to leverage the sponsorship." The major sponsors of a team are fairly obvious to all - their logos are branded on the car and team member's clothing - but there are far more companies that assist the team in a variety of ways. These deals can be just as difficult to put together as the major sponsors. "We essentially have three forms of sponsorship - on-car or on-driver sponsorships or something with visible branding; official suppliers that don't have branding on the cars or drivers but have branding within a team context; and then what we would term promotional partners, and they have further restrictions and no branding." In the case of Williams, some examples of official suppliers include Western Union, Oris watches and Nike; promotional partners include Xilinx. Both provide goods and services to the team, and the remuneration can be either financial or in services. But without branding, it is a difficult thing to establish a price for. "It's still a sizeable sum of money that we would charge for that, because, remember: the only thing we have to sell is our name, fame, image and reputation. So with a technical sponsor, official supplier or promotional partner we still are selling our name, fame, image and reputation in some shape or form, and there is a value to that. If we diminish that value then we're not being true to ourselves, and we're also undermining all the major sponsors' investment. So we protect that very, very carefully. "The kind of companies that perhaps want to be involved as an official supplier and have a technical association may be smaller companies, so to them the kind of money we are charging is a lot of money, and at the end of the day they want value for that money. Whether you are the smallest sponsor or the biggest, you still want value for that money - there may be different degrees of value, but it's still value. So we have to work hard on those, and I think we have to put the same kind of resource into finding an official supplier as we do for an on-car sponsor - sometimes it's even more."
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"And there are other things which we can include - we could include, for example, personal product endorsement from the drivers, and that's something that Castrol uses, for example; they've used it for two years with Ralf, and this year they've just switched to Juan Pablo, and you'll see Juan Pablo actually endorsing Castrol products. That's another avenue, but that's a right we've sold them because we've identified with them and said 'look, you could actually benefit from having our drivers endorse your products at the point of sale', and then you ask which territories are you talking about, because clearly if it's worldwide in all forms of media, all forms of communication, that has a value; if it's in certain countries or certain territories in limited forms of media - say, just in print - then that has a different value. So it's complex."
