By Emanuele Venturoli| Posted January 21, 2025 | In Formula 1, Formula1
The incredible effectiveness of sponsorship in Formula 1
Formula 1 (F1) is not only a top-level motor racing competition, but also represents an extraordinarily effective global marketing platform. The sponsorships in F1 offer companies a unique opportunity to increase brand visibility, engage diverse audiences and achieve a significant return on investment. In this article, we will explore the evolution of sponsorship in F1, analyze current trends, and discuss the concrete benefits that companies can gain by investing in the sport.
The evolution of sponsorship in Formula 1
Sponsorships in Formula 1 have undergone a significant transformation over the decades. In the 1960s, cars were painted in national colors and sponsorships were limited to small logos on the vehicles. However, in 1968, the situation changed dramatically when Team Lotus signed an agreement with Imperial Tobacco, introducing a fully branded livery for the first time. This marked the beginning of a new era in which sponsorships became a key component of F1 teams’ funding and identity.. In the following years, tobacco-related sponsorships dominated the scene until a ban was imposed in 2006. This change forced teams to diversify their sponsorship sources, opening the door to sectors such as automotive, energy drinks and, more recently, technology and software.
Current trends in Formula 1 sponsorships
In recent years, the sponsorship landscape in F1 has seen the emergence of new sponsor categories and a significant increase in investment. According to an analysis by Caytoo, the average value of sponsorship deals in recent years is about $37 million per year, with peaks such as the $100 million deal between Oracle and Red Bull Racing, the $90 million deal between HP and Ferrari , or the maxi deal between the Formula 1 Championship and the LVMH group. Another notable trend is theincrease in sponsorships from technology and software companies. This reflects the natural alignment between F1’s emphasis on technology and innovation and the aspirations of these companies to showcase their capabilities to a wide audience.
Benefits of sponsorship in Formula 1
Sponsorships in F1 offer a number of tangible benefits for companies:
- Increased brand visibility: With a global fan base estimated at 750 million people, F1 offers unparalleled exposure.
- Engagement of a diverse audience: The demographics of F1 fans are changing, with a significant increase in interest among women and young people. This offers companies the opportunity to reach previously untapped market segments.
- Association with values of excellence and innovation: F1 is synonymous with high performance, precision and advanced technology. Companies that sponsor the sport can benefit from a positive transfer of these values to their brand.
- Brand activation opportunities: Sponsorships in F1 are not limited to simply displaying the logo. Companies can create integrated marketing campaigns, promotional events and engaging digital content to interact with fans in innovative ways.
Case study: Oracle and Red Bull Racing
A prime example of the effectiveness of sponsorship in F1 is the partnership between Oracle and Red Bull Racing. The agreement, worth $100 million a year, is not limited to simply displaying the Oracle logo on the cars. It includes the creation of a digital loyalty program called“The Paddock,” powered by Oracle Cloud Customer Experience (CX) technology. This program allows fans to interact with the team in new and engaging ways, demonstrating how a sponsorship can be used to add value for both the company and consumers.
A powerful 360-degree marketing tool
Investing in a Formula 1 sponsorship is a powerful marketing strategy for companies seeking to expand their reach and strengthen their brand image. However, it is critical that companies carefully evaluate their options, considering factors such as alignment with the team’s values, target audience and brand activation opportunities. Working with specialized agencies can help maximize the return on investment, ensuring that sponsorship is put to good use through integrated and targeted marketing strategies. In conclusion, sponsorship in Formula 1 offers a unique mix of global visibility, association with values of excellence and innovation, and opportunities for audience engagement. For companies willing to invest strategically, the benefits can be significant and lasting.