Which of these brands do you know?
If you follow Formula 1 (F1) races, surely one of them will sound familiar to you, although you most likely do not know what they sell. These brands have two things in common: their customers are companies (i.e. B2B, Business to Business), not individuals (B2C, Business to Consumer), and they sponsor Formula 1 teams.
With F1’s audience hovering around 1.5 billion people, why would it be profitable for brands to advertise if their target market is only a small fraction of the audience?
Some history. Recent world champions, they were accompanied by renowned B2C brands, where the audience has a certain degree of attachment, higher than what they might have for unknown brands such as BWT, which by the way sells water treatment systems.
Schumacher, Ferrari 2004, Marlboro.
Alonso, Renault 2006, Telefonica.
Hamilton, Mclaren 2008, Vodafone or since 2014 in Mercedes, Petronas.
Vettel 2013, Red Bull, Infiniti.
Until this list, all the products of those brands could be of interest to you as a consumer. The last year, the brand is B2B:
Verstappen, Red Bull 2022, Oracle. This team has 40 percent B2B sponsors this year.
B2Bs are replacing B2Cs! Why is this happening?
–The vast majority of B2B companies are technological and can conduct business virtually all over the world without opening offices as they offer services. Unlike B2C, which rather sell products. So this advertising investment is more beneficial for B2B’s, which makes it easier for them to expand their global coverage quickly.
–F1 related companies, who are both sponsors and suppliers. DHL sponsors, but at the same time provides logistics in the transfer of equipment, likewise Oracle and AWS provide technological services to the teams.
-Thanks to the incorporation of technology in purchasing processes, now 68% of buyers to B2B companies use the internet during said process. In this way, the advertising message in F1 triggers internet searches towards interested advertisers.
–The F1 audience is clearly high-income and this includes executives who decide on B2B purchases. As a counterpart, the FIFA World Cup does not have this type of company among its sponsors.
–Legal restrictions for tobacco companies, banned since 2008, left out an important sponsor such as Marlboro; as well as a series of restrictions on content and media for alcoholic beverage companies.
–Amazon, recently recognized as the brand that spends the most advertising in the world, sponsors F1, but not with its Amazon.com (B2C) brand that we all know, but with AWS (Amazon Web Services, B2B). Some technology companies have high margins, so even if the acquisition cost is very high for the very small market they are aimed at, the advertising investment in F1 is profitable. AWS is so profitable that in 2022 it had profits of USD 22 billion, while Amazon.com lost 10 billion dollars.
In the last ten years, F1’s audience grew around 300% while that of the FIFA World Cup only 10%. The audience is increasingly international, less weight to Europe, thanks to the management of Liberty Media, an American company. Many brands are technological B2B and Cryptocurrencies, we do not know if they will continue to invest or even exist. So we will surely continue to see changes in F1 sponsorships. Do these changes represent opportunities for your B2B company to really think big?
For the 2023 drivers’ world championship, we hope to see for the second time in history a B2B company as the main sponsor of the first place. I mean Oracle, in a Red Bull but this time accompanied by a Mexican flag. Amen.
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Linkedin: Alberto Cárdenas Aldrete
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