Nearly there now. The new Formula One season is almost upon us. Is everyone okay for sponsors, or could you use one or two more? All the teams can always fit another logo on the car, another few hundred guests in Paddock Club, but generally it looks to me as if most teams are reasonably well catered for.

That’s because most sponsorship agreements are multi-year, and the law of averages militates against a mass exodus at any one time. These contracts are strong enough to withstand recession-driven legal scrutiny. Otherwise I suspect we’d be seeing a number of cars more logo-free than logo’d up, or worse, fewer cars altogether.

This would be a tragedy because right now, F1 sponsorship looks like being pretty good value as a marketing investment. I know it’s an unfashionable view but hear me out.

At a time when budgets are being cut, particularly affecting short term discretionary (read “above the line”) spend, there is a huge danger that the pendulum will over-swing and residual brand awareness will decline to levels that make it very difficult – and expensive – for a brand to advertise its way out of the trough when the money flows again.

Maintaining a base level of brand awareness is critical for any brand with ambition, even if that ambition is temporarily held in check by lack of cash flow. For my money there is no better way of maintaining residual awareness than a well-crafted sponsorship, especially just now when F1 teams are happy to entertain offers that they may not do in a rising market.

Some teams are going into the activation business, so brands don’t even have to spend cash on advertising their partnership; the teams will do this for them, often bundling together promotional activities for a number of sponsors to maximise the impact of their activity. This seems smart from the teams’ point of view, and it also adds value to a brand investment.

All of which means that there’s great value in the F1 sponsorship market right now. Brands can cut ad spend, reduce loss-leading sales promotions and value engineer their products to cut costs, while still maintaining a brand awareness platform from which to launch a renewed assault on the upturn when it comes. 

By Scott Garrett on March 10th, 2009

Tags: Formula 1, Sponsorship