Companies use F1 championships for brand building. They shell out huge sums of money to make their brands recognizable on Formula One cars. The sponsorship is like a global media platform for the sponsors.
When Formula One racing began in 1950, sponsors supported it with
heart. But now, the scenario has changed. Decision-making is now done
with the head. A lot of analysis and research is done before arriving at
any decision. The would-be sponsors burn so much midnight oil to make
their brands visible to the people. They want to ride on the success on
Formula One. They know that if their names and logos appear on Formula
One cars and dresses of teams, it would help in brand buildings and
their business would benefit.
Riding Formula 1
In North America and Europe, Formula One is a hugely popular event.
Companies operating in these areas of the world always want to ride the
success of formula one. The amount they pay and their return hugely
depends on the success of the team and the positioning of the sponsor's
name and logo on the cars. If a team is successful, sponsor is, and if a
team fails, so does the sponsor.
Role of Sponsors
Sponsors' role is most important in promoting Formula One teams which
get 80-85% of their total income from sponsorship. Rest of 15% comes
from TV revenue and prize money. This itself explains the importance of
sponsors in Formula One.
Sponsorship liveries are in use in Formula One since 1960s, replacing
the previously used national colors. The liveries change for every
season in the sport. The change depends on the marketing ideas of the
sponsors. However, some teams have shown consistency over the years,
like the Ferrari, whose color has been red. At some Formula One events,
Tobacco Sponsorship is prohibited.
History of Sponsorship
Initially Grand Prix cars ran without any badging, using national
colors. However, as the cost of the sport rose, sponsors became
important. In the mid-1960s, Team Lotus began to use its name on the
cars. Honda did the same in 1966. In the US, commercial sponsorship was
allowed. However, Formula One governing body recognized commercial
sponsorship only in 1968.
Current sponsors of Formula One are Altria (Marlboro), Benetton Group,
Beta Tools, Brembo, British American Tobacco (Lucky Strike), Brooke Bond
Oxo, Candy, Ceramiche Ragno, Champion, Compaq, Computer Associates,
Copersucar, Credit Suisse, DHL, Eifelland, Essex Petroleum, Federal
Express, First National Bank, Fondmetal SpA, Foster's, Gallaher (Benson
& Hedges), Hewlett-Packard, Hong Kong & Shanghai Bank, Hugo
Boss, Imperial Tobacco (Embassy), Imperial Tobacco (Gold Leaf), Imperial
Tobacco (JPS), Japan Tobacco (Mild Seven), Martini & Rossi, Orange,
Parmalat, PlayStation (Sony), Politoys, Red Bull, Reemtsma (West),
Saudia Airlines, SEITA (Gitanes & Gauloises), Siemens, Skol, Sonax,
STP Corporation, TAG-Heuer, Tissot, Unipart, UOP, Valvoline, Villiger
(Tabatip), Vodafone, Warsteiner Brauerei and Yardley,