No matter where your brand is investing marketing dollars, the value you get back is the priority. There are different value equations for different forms of marketing. In motorsports marketing, the value equation involves four primary stakeholders: fans, sponsors, teams, and series. Each channel will function differently, but they all need to work together to maintain a sustainable balance for everyone involved.

We work with our partners to ensure their channel generates sustainable value throughout their entire program. Let’s break down the components to understand the similarities and differences.

Fans

There are many entertainment options and sporting events for fans to spend money on. Race fans and their loyalty are why sponsors are involved because racing provides a unique platform to engage them. They will be happy if they receive a great experience, the action is captivating and they can feel connected to their driver and favorite team.

Fans understand that sponsorship is vital to the success of any team or driver and are loyal to those companies who support them. According to research by Nielsen, NASCAR has the most brand-loyal fans among any other American sport. If fan-centric elements are missing, fans will find somewhere else to spend their time and money.

Sponsors

Often for sponsors, the aforementioned fan loyalty and their demographics are a critical driver of involvement. This places importance on viewership and attendance data. There are fundamental business relationships that reduce the reliance on fan attendance and viewership numbers, but for marketing programs, the numbers remain a priority. If the fan base, spectator attendance or TV ratings decline, then the relative value of the marketing investment declines.

This doesn’t mean that the investment loses all of its value, but it does call for adjustments in the marketing strategy. We often hear from teams that “it costs us X million to run a season, so we need sponsors to cover that cost."

Covering the cost is necessary for the team, but if a limited value is returned to the brand for this investment, it becomes a less attractive opportunity for the brand. If the cost of competition rises while the fan base and viewership decline, an imbalance in the relationship needs to be addressed.

Teams

For teams to be successful, they need to invest in things like talent, equipment, testing, technology and infrastructure. Many revenue sources make up the budget to support those investments and sponsorship is often the most significant percentage of that budget. For sponsors looking to get involved with teams, there is a premium for associating with winning or front-running teams. Depending on your objectives, you might not need to go directly to the front of the field to pay the premium. In exchange for this funding provided by sponsors, teams grant unique access to the sport through various assets.

The value relationship between the teams and the sponsors directly correlates to the viewership and attendance data mentioned earlier. Large audience numbers call for more substantial sponsorship fees while a more targeted audience provides less-expensive entry points for brands.

Series

For the teams to go racing, they need a group to organize tracks, broadcasts, and more. The series then generally relies on local promoters to grow the sport while selling tickets to fans. This successfully managed event becomes the showcase for the drivers to perform, develop a following and provide significant exposure for their sponsors.

This channel is impacted when macroeconomic shifts hit the economy, as that is when spending on entertainment generally drops. On a more controllable front, if the rules or operation of a series become boring or confusing, fans have a hard time sticking with it. That leads back up to the teams and fans, highlighting the inter-connected nature of the different channels.

Delivering Sustainable Value

When all four channels are value-healthy, the motorsports sponsorship strategy in sports business can provide exceptional ROI. Each channel relies on the other to remain stable. When one channel experiences pressure, the system will begin to put pressure on program sustainability.

This is a key reason why SD recommends brands spend $2 on brand activation for every $1 spent on any property so you can be more responsive to shifts in external pressure outside your control.