Are you willing to sponsor?
Are you ready to explore the transformative power of athlete sponsorship for your brand? Click here to learn more about how sponsorship can help brands grow and thrive in the exciting world of motorsports.
By Riccardo Tafà| Posted December 9, 2024 | In Formula 1, Formula1
In the context of the current sports marketing landscape, the Formula 1 emerges as an invaluable platform, not only because of its vast global following but also because of the unique marketing opportunities it offers.
For companies aiming to explore this territory, it becomes crucial to fully understand the role, costs, and benefits of being supported by an’ agency that specializes in sponsorship in F1.
This blog aims to explore these key issues, providing a clear guide for businesses trying to navigate the world of Formula 1 sponsorship.
A marketing agency specializing in F1 acts as a bridge between Formula 1 companies and teams, the championship organizer, and sometimes the circuits where events are held.
Initially, its main role is to identify and negotiate sponsorship opportunities that align client brands with Formula 1’s values, vision, and audience.
This is not just limited to brand visibility on cars and race suits, but extends to exclusive experiences, VIP hospitality, driver access, and unique engagement opportunities that only the sport can offer.
The costs of sponsorship in Formula 1 can vary significantly depending on various factors, including the team chosen, the level of exposure desired, and the length of the sponsorship agreement.
Investments to be relevant start from figures in the million-dollar range to over $70 million for the most exclusive and high-profile partnerships.
Although these numbers may seem high, it is crucial to evaluate them in the context of the return on investment (ROI) that Formula 1 can generate.
We cite two successful examples to demonstrate how innovative strategies and partnerships in F1 can not only justify the initial investment but also amplify the return exponentially.
Red Bull Racing and the partnership between Scuderia Ferrari and Philip Morris International are testaments to the power of well-planned sponsorship to transform the brand and create an emotional connection with consumers.
Sponsoring a Formula 1 team offers brands unparalleled opportunities to enhance their global visibility, engage with a passionate audience, and align with values of excellence and innovation. To associate with Formula 1 is to share values of excellence and innovation. The benefits go far beyond simply displaying the logo. These include:
Formula 1 stands as one of the most-watched sports globally, attracting a cumulative audience exceeding 2 billion viewers annually, with each Grand Prix drawing an average of 70 million viewers. This extensive reach provides sponsors with significant exposure across diverse markets. Brand logos prominently displayed on cars, driver apparel, and trackside banners are broadcasted worldwide, ensuring that the sponsor’s brand gains substantial visibility. This global platform enables brands to penetrate new markets and reinforce their presence in existing ones, leveraging the sport’s international appeal.
F1 fans are renowned for their loyalty and passion, offering brands a unique opportunity to engage with a dedicated and enthusiastic audience. The sport’s fan base is not only vast but also demographically diverse, encompassing various age groups and regions. Notably, there has been a significant increase in female viewership, with over 300 million female fans globally, presenting valuable opportunities for brands to connect with this segment. Engaging with such a committed audience can lead to increased brand loyalty and a higher likelihood of consumers choosing the sponsor’s products or services.
Aligning with F1 allows brands to associate themselves with the sport’s core values of excellence, innovation, and high performance. This association can significantly enhance a brand’s image and credibility. For instance, partnerships like that of IWC Schaffhausen with the Mercedes-AMG Petronas F1 Team target high-net-worth individuals, leveraging the sport’s prestigious reputation to elevate the brand’s status. Such collaborations not only boost brand perception but also create a sense of exclusivity and premium quality in the eyes of consumers.
F1 events serve as a nexus for the global corporate elite, providing unparalleled networking opportunities. Sponsors can connect with other sponsors, team owners, drivers, and industry leaders, fostering collaborations, joint ventures, and B2B partnerships. The exclusive nature of F1 events, often attended by high-profile individuals and decision-makers, facilitates meaningful business interactions that can lead to new opportunities and partnerships beyond the realm of motorsport.
Although there is no fixed rule, the cost of employing a marketing agency specializing in F1 generally falls into two main categories: sponsorship fees and service fees.
In larger partnerships, a third item is added, that of the consulting fee , which occurs when a company commissions an agency to provide a report to study an industry before beginning work to explore various present or future possibilities.
Commissions are percentages calculated on the total value of the sponsorship agreement. The fee is negotiated between the agency and the sports property and can vary depending on the size of the agreement, the level of service required, and the complexity of the negotiations. The fee is intended to cover the agency’s work in identifying, negotiating, and managing sponsorship opportunities and is awarded by the Team to the agency.
If thes ponsoring company does not have an internal structure experienced in managing and implementing a sponsorship program, it can get support from an agency. The agency may be the same one that worked with the company to conclude the sponsorship agreement or another one experienced in the field and able to follow up.
For this service, agencies can be remunerated by the company by applying:
This approach is often used for specific services, such as marketing strategy development, advertising content creation, hospitality field management or the organization of exclusive sponsorship-related events.
As mentioned The costs associated with employing a marketing agency in Formula 1 are incurred by the customer, that is, the company seeking to sponsor an F1 team or event for the implementation part or from the sports property which recognizes a commercial introduction fee in the event of closing the sponsorship agreement.
The exact nature of the costs and who incurs them can vary depending on the specific agreement between agency and client, or between team and agency, with some agencies offering tailored packages based on the client’s marketing goals and budget.
Sponsorship investment in Formula 1, while substantial, offers a potential return that few other marketing platforms can match. A marketing agency specializing in F1, with its experience and industry knowledge, can guide companies through this process, maximizing ROI and ensuring that brands not only meet, but exceed their marketing goals.
In conclusion, whether it is a commission on sponsorship or a service fee, the cost of agency is a key investment for companies wishing to make the most of the opportunities offered by Formula 1.
The benefits are many, from completely eliminating the learning curve and related mistakes typical when starting a new business to taking advantage of all sponsorship-related opportunities.
From defining the marketing rights necessary-and listed in the sponsorship contract-to achieve the goals set to setting the correct price of the partnership.
The key is to choose an agency with an excellent understanding of the F1 world and a proven track record in helping clients meet and exceed their marketing goals.
Fundamental then is to turn to agencies that are not tied exclusively to one team, agencies therefore in a conflict of interest and in a position to force the sale toward the one team they work for even when it does not represent the best solution for the client.
Agencies are also an important resource for teams; in fact, they represent a no-cost opportunity.
Agencies receive a commission only and only when The teams are paid, not burdening with fixed costs the teams that must meet a budget (budget cap) that for 2024 is US$135 million and cannot be exceeded.
For a more detailed and customized view of how an F1 marketing agency can specifically serve your brand’s needs, consider a consultation with experts in the field. Remember: in Formula 1, as in business, speed and precision make all the difference.
Are you ready to explore the transformative power of athlete sponsorship for your brand? Click here to learn more about how sponsorship can help brands grow and thrive in the exciting world of motorsports.
Managing Director for RTR Sports, Riccardo graduated in law at the University of Bologna. He began his career in London in PR, then started working in two and four-wheelers. A brief move to Monaco followed before returning to Italy. There he founded RTR, first a consulting firm and then a sports marketing company which, eventually, he moved back to London.
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Read MoreIn an era where it is possible to get anywhere with a click, there is a strong temptation to approach teams and properties directly for sponsorship projects.
By doing so, we are convinced that we are shortening the value chain, saving time and money. However, these DYI methods are anything but risk-free and what initially appears to be a competitive advantage soon turns into a problem that is difficult to resolve. That’s why there are agencies. And this is why you should rely on us for your sponsorships.
When first approaching a sponsorship or sports marketing project, it is difficult to know immediately which stakeholders are correct, what the decision flow is, and what the right timelines are for each process. Sports is a very specialized field of action, and fitting effectively into its paths can take a lot of time and therefore money. We, on the other hand, know referents and spheres of action and know who to talk to, when and how. So you are also more effective.
Sports is an immense passion, and for our heart colors we would be willing to do anything. But business is a different business, and it is important to make the best possible strategic decisions based on independent research, statistics and reliable data. A sports marketing and sports sponsorship agency like RTR has an objective, 360-degree picture of the scenario and can tell you what is really best for you: which sport, which athlete, which team. This is because we possess a great deal of data and information on ratings, segmentation and attitudes. Because the numbers don’t lie. Never.
Activations are the real heart of sports sponsorship. Without them, there remains only a blank sticker on a motorcycle, car or uniform and no contact with the public, no emotional connection, no impact on the bottom line. Then how do you do it? It certainly won’t be the teams or the athletes who will help you leverage sponsorship and enjoy the many marketing rights you have paid for. To bring out the best in a sports marketing project you need an agency that knows how to use sponsorship to engage the fanbase on the Web, to reach out to Shopping Centers, to organize hospitality, to develop B2B and B2C opportunities, and to get “your” athletes in front of millions of potential consumers.
Would you ever go to the dealer who sold you the car and ask if the competitor’s car is better? No, of course. So, how do you expect to get firm measurements of the effectiveness of your sponsorship if you do not rely on someone super partes? At RTR, we have always worked with independent third-party agencies that allow us to know the return on any exposure of your brand on TV and in the media. In addition, we believe in calculating ROI as the ultimate measure of your success-so we can tell you for every penny you spend how much you are making.
We have been involved in sports sponsorship and sports marketing for more than 15 years. We are consultants in the sense that our goal is to maximize your investment, but we are also an agency that manages the project from start to finish. We have been doing this since 1995 with passion and professionalism, following three principles that have become cornerstones of our business: independence, verticality and transparency.
I would like to highlight the fact that one of the qualities of RTR is its great ability to approach the sponsorship scenario strategically, together with its passionate attitude, its amazing enthusiasm for solving problems, and its high level of professionalism.
Gianluca Degliesposti
Executive Director Server&Storage EMEA
Eurosport is truly delighted with its business relationship with Riccardo Tafà, who has become extremely popular, thanks to his detailed knowledge of the sports marketing sector and his highly diligent attitude to work.
Francois Ribeiro
Commercial Director
Passion and Expertise are the features that I have found in RTR since the very beginning. Serious and reliable professionals but also very helpful, nice and open-mind people, willing to listen and compare different ideas. All the values in which RTR believes make this agency a partner, not just a supplier, a partner with whom we have had the opportunity to achieve significant commercial results in term of success and image.
Luca Pacitto
Head of Communication
We have been working with RTR Sports Marketing for over 10 years. The objectives and the programmes of collaboration continue to be renewed and to grow with mutual satisfaction. I believe RTR is a team of great professionals led by Riccardo Tafà, who I consider a manager of exceptional skills and with a great passion for his work.
Lucio Cecchinello
Team Principal
I have known and worked with Riccardo Tafà since 1995 when we collaborated for the first time on a project for the Williams Formula 1 team. Several clients followed. After leaving Williams to work for Gerhard Berger then owner of the Toro Rosso F1 Team, I turned again to Riccardo to seek his help in finding a tool supplier for the team and Riccardo duly obliged with an introduction to USAG, a partnership with Toro Rosso which endured for five years. I recently started a new role as Group Commercial Director for the renowned Andretti Autosport organisation and I find myself working with Riccardo once again on a number of interesting projects. Why has this relationship with Riccardo endured ? He’s smart, knows the commercial side of sport inside out and back to front and he’s honest and trustworthy. Riccardo Tafà is a “doer” not a “talker”: in over 20 years I have never had a dispute either with him or with a company that he has introduced and each partnership introduced by Riccardo has delivered quantifiable ROI to rights holder and sponsor alike. I can think of no better testimonial of Riccardo’s diligence, knowledge, contact base and hard work than that.
Jim Wright
Group Commercial Director
The online platform where you can discover the latest trends, strategies and insights from the exciting world of sports marketing.
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