Sponsorship in Formula One Racing

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Formula one sponsorship liveries started being used in the mid-1960s, replacing the previously used national colors of the team's origin. A delivery is the specific paint scheme and sticker design used in motorsport vehicles in order to attract sponsorship or advertise sponsors. The liveries change for every season in the sport, depending on the marketing ideas of the sponsors: Some sponsors would like to have their logos more prominent depending on the location of the Grand Prix race – and the rules and regulations of some events eg at some formula one events tobacco sponsorship is prohibited.

However, there are some teams which have shown consistency over the years ie Ferrari and the color red. It should be noted that the liveries should still adhere to the Grand Prix rules.

After the birth of Formula One racing in 1950, there were only a handful of sponsors who supported it with their hearts, but as the cost of the sport rose sponsorship became important and more sponsors got involved in the sport. They then started using a different supporting style; decision making was done critically using their heads and not their hearts. A lot of resources are spent in research and analysis before arrival at any decision. As they would be spending a lot of money in sponsoring a certain team they would want to regain all of their investment with some profit. The positioning of the sponsors logo on the car determines the advertising exposure the sponsoring company gets. This is used in developing brand awareness, therefore, sponsors will invest in teams that show the will and actually win such that if the teams win, the brand of the sponsors benefits. This in turn causes fans to associate a certain team and / or driver to certain brands depending on the location of the logo on the car.

The media exposure enables the fans to appreciate the sponsors and enable the sponsors to acquire new customers from the fan base directly and indirectly from the friends, family etc. of the fans. Although the sponsors only get the attention of media during an active race most teams use a company that specialize in sponsorship management and have great success in providing exposure for the team's sponsors away from the track.

Most of the interaction between the racing teams and the sponsors is done by the Sponsorship Management teams which roles include: maintaining liaisons with the existing sponsors- ie the contracts are maintained and coordinated with the other areas involved with the sponsors eg Communications, licensing, merchandising etc. Another role is to find new sponsors by looking at the legal aspects such as marketing rights, evaluating sponsorship proposals, carrying out market research etc.

A lot of effort goes into teams finding sponsors and sponsors finding teams to sponsor as sponsorship is more than a sticker on the car. Although sponsors provide 70-80% of the revenue to the teams that they get a higher return, this is due to the fact that they give the teams a chance to concentrate more on their performance and not on their financial obligations; this in turn enables the teams to perform well and if the racing teams succeed so do the sponsors and vice versa. The sponsors can also use the Grand Prix races as a form of interaction with potential clients (especially those who are fans) this creates a sense of rapport with them unlike only interacting with them in strict business environment.

Sponsors however need a mechanism that enables them to be able to quantify the returns they get so that they are able to make informed decisions about whether or not they should continue with their sponsorship when their contracts end.

As it can be seen sponsors are needed for the operation of Formula One Racing.

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