Petronas – Mercedes F1: creating great partnerships from sponsorship deals

The Petronas-Mercedes partnership is the perfect example of the fact sponsorships must become partnerships in order to maximise rewards. Both brands have helped each other win in their respective fields…

Petronas became the title and technical partner to the Mercedes-AMG Formula 1 team in 2010. As a result, they became known as the Mercedes-AMG Petronas F1 team. They are a global energy and solutions company that shares similar net-zero carbon goals to Formula 1– making this partnership quite natural. However, not many could have predicted the Petronas-Mercedes partnership to be as successful as it has been.

With the Malaysian oil company’s expertise and innovation, the Mercedes-AMG F1 team won 8 consecutive Constructors’ Championships (2014-2021) and 7 consecutive Drivers’ Championships (2014-2020). If their success on the track isn’t enough to convince you of the partnership’s success, maybe their new $75 million a year extension is. Their new deal, which runs until 2026, is evidence of how happy the two brands are to work together.

Their success has highlighted the key for sponsorships to work- sponsorships must evolve into partnerships. After working together for more than a decade, CEO of the Mercedes-AMG Petronas F1 team, Toto Wolff, said, ‘Our team and Petronas are no longer just partners, we are family, and we will be one team for many more years to come’.

It doesn’t look like this friendship will be ending any time soon as Petronas have also pledged to support Mercedes in their goal to cut carbon emissions. They have committed to the development of more sustainable fuels. Take a look at all the features of this partnership and learn why Petronas decided to sponsor Mercedes.

How do Petronas benefit?

Petronas were definitely not a small company before partnering with Mercedes in 2010. Based in Malaysia, it is the largest corporate entity in the country, and they have long been one of the largest companies in the whole of South-East Asia. They control all of Malaysia’s gas and oil resources and operate in 35 countries. The size of the company is symbolised by the iconic Petronas Towers, a pair of skyscrapers in Kuala Lumper, Malaysia- they stand at a remarkable 1,438 feet (451.9 metres) tall! However, Petronas’ dominance was largely confined to South-East Asia. Mercedes were Petronas’ vehicle to enter the global market, and they have certainly entered it in style.

Petronas enjoy the benefits of sponsoring a top Formula 1 team. Formula 1 is one the world’s fastest growing sports, and thanks to marketing initiatives like the Drive to Survive Netflix series, F1 itself has become a global brand. Seeing as Petronas sponsor one of the sport’s biggest teams, they of course reap the rewards that come with this growth.

You cannot watch an F1 race without seeing the Petronas logo, whether that be on the Mercedes cars, or on the drivers’ gear. This has seen the brand’s global exposure grow massively, as shown by the figures they released in 2016 to justify their participation in F1. According to Petronas’ report, they earned $901.08 million in global media exposure during the 2015 F1 season. This figure measures the brand’s visibility in an F1 race and all of the media that surrounds a race day, including things like YouTube and TV highlights. This near $1 billion figure meant that their media exposure rose by 400% from 2012 to 2015, in turn making them the biggest oil and gas company in F1.

This amount of growth in just a 3 year period will have been an unexpected surprise for Petronas, and it’s a testament to the power of sports sponsorship. It also explains the jump in value of their partnership- the deal signed in 2010 was reportedly worth $30 million a year, whilst the updated agreement is worth up to $75 million a year! (According to Forbes)

The benefits of partnering with Mercedes even extend to a technical level. Their partnership involves more than Petronas just plastering their logo over Mercedes cars, they are the team’s technical partner. This means they provide fuel and other car specs. One may question how this benefits Petronas… well, it has essentially made the race track a testing ground for more efficient fuels and lubricants. The oil company would struggle to find a better environment to carry out research and development.

What have Mercedes gained from the Petronas sponsorship

All sports sponsorships benefit sports teams/athletes financially. Your typical sponsorship sees teams don a brand’s logo in exchange for large sums of money, however Petronas’ partnership with Mercedes is unique. Petronas are more than just another sponsor for Mercedes, they are part of the team and played a big role in their dominance of the 2010’s. As the technical partner, they have provided the team with Fluid Technology Solutions– the most effective fuel and lubricants.

Their help powered the Mercedes-AMG Petronas F1 team to 8 consecutive Constructors’ World Championships. This dominance from 2014 to 2021 has never been seen before in F1, and during this same period the Drivers’ World Championship was won by a Mercedes-AMG driver 7 times. This success was compounded when the team’s main driver and F1 icon, Lewis Hamilton, matched Michael Schumacher’s record of 7 World Championships. It would not be an understatement to say that Petronas and Mercedes have made history together on the track.

Petronas are also aligned with Mercedes’ aim to become more sustainable in light of the growing issue of climate change. Last year they announced an early extension to their deal expiring in 2026, which will see them work together towards 100% sustainable fuels when the new F1 regulations are enforced. On top of this, as the whole of F1 gears itself towards a net-zero future, new engine regulations will see a 50% electrification of cars’ power units. The early extension to their deal underlines the partners’ desire to stick with each other through the upcoming period of evolution in F1.

Petronas and Mercedes should be an example for brands looking to get the most out of sports sponsorship. Their partnership was summarised well by Toto Wolff, ‘Ever since 2010, our relationship with Petronas is founded on the values of true partnership: trust, honesty and shared ambition.’