The In’s And Out’s Of Racing Sponsorships

Dec 1, 2009

Getting involved in the racing world is often a scary but exciting venture, but what many companies do not realize is how easy it is to get involved even if you do not have your own race team. The world of racing can do wonders to build your brand and drive sales, if it is approached right and there are many budget friendly options that do not require a “Trump-Sized” bank account.

Types of Sponsorship

When you first begin to consider your options for becoming involved in the racing arena, you should start by looking at the sponsorships opportunities available as well as your budget.

Racer: Sponsoring a racer can be a great way to get your brand out in front of millions of people and add credibility to your products. We all know how loyal race fans are, so if “Joe Bob” their favorite racer says he wins with your products in an interview or runs your logo on his race suit or car, most people will believe it. This can be a great avenue for you to reach what may be your core audience. One thing to keep in mind, is depending on the scale of the racer and what association (i.e., NASCAR driver, NHRA, DHRA, PSCA, etc.) they run with, will often determine how much a sponsorship will cost. Keep in mind that not all racer sponsorships are always strictly about money. They can be a mix of dollars and products, just straight products or just straight dollars. Like all business deals, setting up a contract for sponsorship with a racer is all about negotiation.

Finally, think about the type of racer you are looking for, as they will be representing your company at every race. “When choosing a racer to sponsor it is of the utmost importance to select a racer that best personifies your company,” states Kenny Laughlin, President of Dr. Performance. “If your company touts its willingness to help and friendly customer service, then you want a friendly racer who is always there to greet and shake hands with the fans. But, if your company is all about the technical aspects of your product and loves to go in depth with technical jargon, then you want a racer who can talk the talk and walk the walk when it comes to technically explaining your product and the benefits.”

Vehicle: Another way to become involved in the racing scene is to sponsor a specific car. Often when you sponsor a specific car it can be a straight product trade for running your product and decals and usually you can negotiate the rights to use the vehicle in promotional advertising and such. This is usually a very cost effective way to start working with a race team and get your brand out in the marketplace. As the season progresses and you begin to monitor the results for investment you can begin to look at your marketing plan for the next season and determine if this sponsorship is a good fit for you and what your future plans will be.

Product Sponsor: One great way to get involved in racing is to become a product sponsor. There are a couple of different routes you can take to do this. The first one is to work with an association or league and become the ” official widget” of the XX racing association. With this sponsorship you can negotiate product mentions, advertising rights, and can build the credibility of your company or product just by letting customers and future customers know about being the official product. Depending on the association you are getting involved with, this can be a costly or an affordable option.  Another way to become a product sponsor is to pick and choose a few different race teams through out various associations and leagues and offer to provide their teams with all of the product they will need for that season. This can be a great way to determine which league is a good fit for you and work as a cost effective entry into the world of racing. Keep in mind, that the better the products on the race vehicle, typically the better the racer runs (with a great crew and a good driver, of course) and those products can really add up, so by helping them out with what they need for the race season, they’ll go that extra mile to help you get your brand exposure in their arena.

Association/League/Brackets/Divisions/Races: If sponsoring a racer of a specific vehicle sounds a little “too risky” right now or you are not sure if you want to be involved with a certain association or league, there’s a lot of other options that are available to you to test the waters. Most leagues and associations have title sponsors each year that sponsor the overall season. While these sponsorships can often be very expensive, they can, also, yield a great amount of media coverage and brand awareness. With the sponsorship of a league or association, you are now exposing your brand as a credible product to all of the fans in this arena, not just the ones that you might reach with a certain racer or car sponsorship.

If being a major sponsor is a little out of the budget right now, you can always look into sponsoring a certain division, bracket of the association or offering a specific award. For example, many companies will sponsor divisions like the “Pro Street” class in one of the racing leagues or offer a bonus for the fastest pass of the day. These are great ways to still get your brand exposed to those core fans while keeping the budget in check to determine if this racing arena is right for your products and company.

Finally, if you are still not sure if you want to be that involved and just want to get your feet wet then a great way to do that is sponsor a race in your area. You will enjoy many of the perks you would receive with being a major sponsor of the association for a fraction of the cost, since it is just one race that you are sponsoring. Remember, as in most things in business, all deals are negotiable, not all will be negotiable on price but you should be able to work with them to get media exposure and product mentions and so forth to make sure you are receiving the maximum return on your investment as well as being able to monitor if this is an avenue that you would like to continue being involved in.

Contingency Sponsorship: Being a contingency sponsor can be a tricky thing. The concept behind being a contingency sponsor is that you sign up with the association you want to get involved with and then offer $XX dollars for the winner of XX bracket or division if they have your decal on their car. Thus, encouraging the racers to run your decals and giving you the exposure you want. This can work beautifully with some monitoring. Keep in mind, racers want to make money just like you and I do, so typically most unsponsored racers and some sponsored ones will run as many of these decals as possible and that’s great. Except, if they are running all of your competitor decals as well. So one condition you may want to put on your contingency offering is that no other decals from your company’s competitors be on the vehicle during the time of winning to claim the prize. It is often a good idea at some of the bigger races to have someone from your company go around and meet the racers, offer decals and check for racers who are breaking that rule. This can be a great way to discern which racers will be loyal to you in the future and may be worthy of additional sponsorship dollars and which ones will hop on any bandwagon as they come along.

How to Use Your Sponsorship

Once you have decided to become a sponsor, don’t just sit back and let it go to waste. Be sure to get approval to hang banners at the track and in the pits. Have calendars, T-shirts, hats, etc. made with your race team on it and sell them or give them out as promotional items with your products. Set up appearances and signings. Put out a press release to the relevant racing media about your involvement or sponsorship and let them know how your product will be involved or why it’s a great fit for that race team or association. A little media coverage goes a long way in driving sales and bringing in new customers. Also, don’t forget to gather endorsements and testimonials that you can use in your marketing efforts. If the president of the XX racing association says they made you the official widget because there is no one better suited for their racers that can go a long way in terms of credibility. Same with a racer saying he only wins with your product on his car or under the hood. Endorsements are free credibility and who doesn’t want that? One final thing to keep in mind is that sponsorships can, also, be a great way to test out new products or prototype products. Who will be able to help you work out the kinks of your new product better than someone who is constantly putting it through all the paces?

What to Expect

As with all things if you are paying for something, no matter what it is, you want to get your money’s worth and you should. Racing sponsorships are no different in that regard.

When working with a racer or a vehicle, you should negotiate for guest appearances (could be at your shop or trade shows, etc.), mentions of your company name or product in all press interviews as well as negotiate the size and number of the logos they will run for your company and determine the placement. Keep in mind; you can, also, work to get your decal on the racers suit as well as their vehicle. Just be sure that you track your return on investment and make sure that you are happy with the results. If at the end of the season you are not, you may need to explore other avenues to increase brand awareness and drive sales.

Options For Paying For Sponsorship

As I briefly touched on earlier there are a few different ways you can pay for your sponsorship. Of course, we all know that the dollar is king so paying $XX amount of dollars to sponsor a race, racer, vehicle, etc. is always an option. But, there are other ways to get involved. Some sponsorship can be negotiated as part cash and part product, while others may be solely products only. Then there’s contingency which is cash but only if the winner has your decal and has followed the rules to win. No matter what your budget is, there’s a racing sponsorship out there for you. You just have to look for it and keep your eyes open and you’ll find the entrée into the racing arena you have been looking for.

Measuring Return On Investment (ROI)

No matter what you are looking at in terms of your marketing plan and building brand awareness, the most important factor is always the bottom line. Racing sponsorships are no different. It’s important to have a plan in place to measure your ROI. “Measuring your ROI is dependent on how you activate the sponsorship,” states Mark McFann, Vice President of Marketing for Royal Purple. “Activation strategies are dependent on each company’s particular goals.  For instance, if the goal is to strengthen their relationship with key distributors, then hospitality events tied into the sponsorship would be a sound strategy. Without activation, there is no ROI.” Bottom line is, make sure that your sponsorship is meeting your goals and helping to drive the bottom line, if it’s not, it might be time for a change.