The world of motorsports, or to be more precise, the business of motorsports, is in a constant state of evolution. That's right, the business of motorsports is changing so rapidly that if you are not prepared to meet this change head-on, then please accept my sympathy, because you will most likely fail to achieve your goals in racing.
Excuse my directness, but you must know that if you have dreams of being a great driver or even team owner, from either the grassroots of Saturday-night racing or to the top ranks of NASCAR Winston Cup, you had better pay attention to the business side of the sport, because sponsorship has become a very serious business.
It's important to realize that the sport of auto racing is no longer just a sport. Auto racing is entertainment. And for this entertainment business to succeed, the people who put the money in demand that the money come back!
For many of us to grow in this sport, we rely on sponsorship from sources ranging from the local auto body shop to a Fortune 500 company. Unfortunately for so many, the word sponsorship has become as mysterious as the ancient pyramids. What is it? How did it get there? Who creates it? Many racing teams, drivers, owners, and others have absolutely no clue as to what sponsorship in auto racing really represents.
In upcoming issues of Circle Track, my goal is to take you on an educational journey into the heart of the world of motorsports and explain this mystery. We will discover that sponsorship is the blood that flows through the heart of racing and without it, the sport dies.
The Motorsports Marketing EquationOne of the easiest ways to understand marketing in motorsports is to understand it as the following equation:
Stage 1 + Stage 2 + Stage 3 + Stage 4 = ROI
In this equation, we have four different stages that, when added together, produce the ROI, or return on investment.
By understanding the value of each stage, you will be better prepared to develop a focused marketing program for a potential marketing partner that will produce a positive ROI. Each stage of the motorsports marketing equation is defined by the following:
|Stage 1: ||Understanding the value of your racing property |
|Stage 2: ||Understanding the value of exposure |
|Stage 3: ||Building your motorsports marketing program |
|Stage 4: ||Developing strategic alliances |
During the next few months, we will examine this equation stage by stage and evaluate how to prepare your marketing program. For this issue, we will jump right in and examine Stage 1.
Stage 1: Understanding the Value of Your Racing PropertyThe first thing you should ask yourself is, how valuable is my racing property to a potential marketing partner? You should look at your racing property, and examine exactly what you have to offer. To make this a little easier, see which of the following classes you fall into:
Class 1: Your property is privately funded, you have all the necessary assets, and you have a budget for the upcoming race season.
Class 2: Your property is privately funded, you have all the necessary assets, but you do not have a budget for the upcoming race season.
Class 3: Your property has no private funding, no assets, and you have no budget for the upcoming race season.
As you can probably guess, Class 1 has more value to a marketing partner than Class 2, and Class 2 has more value than Class 3, and so on down the line. The point to be made here is this: Because racing is a business, marketing partners investing in your business want to see that you are capable of running your business successfully. You have to invest in yourself before someone else will invest in you. Therefore, the prop-erty that gets to the track first has a better chance of getting the deal first.
Another aspect of your racing prop-erty is to set yourself up legally. We won't go into great detail, but it is highly recommended that you consult with an attorney and an accountant to discuss how you plan on structuring your racing company. Racing is a dangerous sport, and you want to make sure you protect yourself and your family.
This now brings me to the budget. You must spend money to make money. You have to realistically look at what you are prepared to spend to market yourself and get yourself to the track.
From a racing perspective, set a realistic budget that reflects what your property needs for the upcoming season-but do not go overboard. If you are a local Saturday-night racer, do not go asking for Winston Cup dollars. Remember this important point: To get a marketing partner to invest in your racing property, you have to produce a positive ROI for that partner. Therefore, keep in mind that the more money you ask for, the more you have to make for your marketing partner.
Next, let's look at your marketing budget. To secure a marketing partner, consider what you can budget that will allow you to get one. Factors such as phone, faxes, postage, travel, brochure and proposal development, and so on, must be factored into your budget. Do you plan on doing all your marketing yourself or will you hire someone? All this costs money so you had better be prepared to spend it.
Now let's take a moment to discuss your proposal. What many teams fail to do is understand the difference between a proposal and a brochure. A brochure outlines the general information of your racing property. It should not be your proposal. Your proposal must contain specific information that pertains to the opportunity you are offering a potential marketing partner. The more specific you can be with the company as to their involvement with your team, the better your chances are of getting a deal. One final note: Don't be too upset if a com-pany you send your brochure or proposal to doesn't read them-most don't!
The next thing you must prepare yourself for is the process of contacting a potential marketing partner. Are you really prepared to sell a company a motorsports marketing program? Prospecting, cold calling, getting the meeting, and closing the deal are vital to your success. To close deals, you have to become familiar with strategic selling and negotiation techniques. Therefore, it's highly recommended that you read the books mentioned at the conclusion of this article. They will help tremendously!
Your potential for success in this business is reflected by what you put in. Effort equals results! So for those that are serious about getting a deal, remember-Effort = Results!
Rules Of The RoadThere are three rules of motorsports sponsorship; if you are going to be successful in this game, you must follow them.
Stop Using The Words Sponsor And Sponsorship!To many, these words are synonymous with charity, handout, and donation and represent a one-way agreement in which one party benefits more than the other. In motorsports, your focus is to provide value and benefit to the sponsor. Therefore, from this point on, the words sponsor and sponsorship will be replaced with marketing partner and marketing partnership.
Understand The Role Of The Company.Why do we see all those company logos on the side of race cars? What are they doing there?
Any company you see on a race car is there to make money. The company makes a decision to invest marketing dollars into the sport. In return, it seeks various benefits in line with its goals and objectives (see Diagram A, "The Benefits of Sponsorship."). This is the key: The company that makes the investment will not make the investment unless it is convinced that the return on its investment exceeds its desired expectations.
When trying to obtain a marketing partner, we really do not have any idea what the company may need to sign off on the deal. But I will tell you this: The better you make the program, the easier it will be to convince the company to become your marketing partner.
Understand Your Role In Motorsports Marketing.It is very important that you have a full and solid understanding of motorsports marketing. You should be clear on the roles you and your marketing partners play. This is a process that can be utilized by a race team, a series, an event, or a track. We will simplify this by referring to everything as a racing property.
To be brief, you, the racing property, provide a foundation for a company to attach their name, image, and brand. The company will then build upon this foundation to achieve specific sales, and marketing goals and objectives by using motorsports. In exchange for this, the company provides the race property with assistance that comes from both marketing support and from the most valuable necessity: cash!
For this relationship to continue into the future, you, the racing property, must continue to provide a foundation that keeps the company happy. If the company remains happy, then you have succeeded where all others have failed, and you keep a long-term marketing partner.
Lets Get Started!Get serious with your sponsorship effort and dive into this homework assignment. * Analyze the potential of your racing property to attract a sponsor.* Develop your brochure.* Establish a marketing budget.* Begin to prospect for sponsors.
Reading Materials: How to Master the Art of Selling Anything, by Tom HopkinsThe Negotiating Game, by Chester L Karras
Next month, we will examine Stage 2 of the motorsports equation and analyze how important exposure is to the overall equation.