Before you get into the mechanics of where your budget should go, there are a few things you need to know to get the most out of a motorsports sponsorship. With this dynamic platform, the price of the property is only the price to enter. Don't expect a whirlwind of ROI to come in if you don't put forth proper activation budget.
Without a strategy to support the assets you have acquired rights to, often we see sponsorship programs fall flat after as little as 2-3 years. Contrary to most of our competitors, we advise brands to begin their sponsorship journey with targeted property spends and grow organically through activation.
Purchasing a property with a smaller cost leaves you with budget for your business units to use the property, integrate with the property, and drive business from the property. When you spend 100% of your budget without considering activation programs, often what you are left with is an expensive billboard and your team on the sidelines praying for results. Once the glamor wears off, you might not be so happy with that. We heard from SD President, Todd Stonis, on the topic and he underscored this industry trend:
"Unfortunately, many companies over-invest in the property and lack adequate funding to support activation programs which are the real drivers of return on investment."
What is a Property in Sponsorship?
In motorsports sponsorship, the property is what your brand will represent and it is where your logo will be shown. Things like race teams, drivers, race series', tracks/venues and more can all be utilized as properties. In motorsports, each property offers unique value and can apply to your brand in very different ways.
Often going straight to an individual property without representation as a brand can leave your brand vulnerable to downside. A lot can be promised up front with vague and uncertain terms that end up with 100% of your budget going to one, potentially narrow, scope of assets.
What is Activation in Sponsorship?
Sponsorship activation is what you do with the property you have just acquired. Media integrations, fan engagement, contests, lead generation, awareness campaigns, and any number of custom programs fall into this category. Activation is where your brand comes to life, and where you can start to see major ROI connected to your business.
Because we see the majority of results come from activation spending rather than property spending, we want to place the majority of resources in this space. By focusing on activation, you also build in a lot of flexibility to where you place your property budget. Based on how your activation efforts generate results, you can adjust your property mix accordingly.
SD's 2:1 Rule
Since you have already determined a clear objective and identified sponsorship as a vehicle to accomplish that objective, now is the time for your budget allocation. Our best client success has come when we see $2 spent on activation for every $1 spent on a sponsorship property. This breaks down to 67% of your budget on activation and 33% on the sponsorship property. Activation should be thought of first in this process, because it is the work that will generate the most ROI.
Say you have a $100,000 budget. To us, that means you have $33k to purchase a sponsorship property. It may seem like you have lost a lot of "juice" at first with that figure, and while you might not be a title sponsor for that money, you will put much more direct investment toward your objective with the remaining $66k spent in activation. The $33k in properties does not all have to be spent all in one basket, it can be spread across a couple of different ones depending on your objectives.
The spectrum of opportunities is seemingly endless in motorsports sponsorship. That prospect alone can seem overwhelming, but when the right properties are coupled with the right brand activation, you end up with remarkable stories and unparalleled results.