Intangible assets are qualitative and emotional. In racing, the most common intangibles are reputation, relevancy, loyalty, awareness, opportunity, series strength, and differentiation. Demonstrating these can increase the value of your race program to sponsors who want more from representation than impressions and media coverage.
Reputation of the team or driver
Your reputation is an important intangible benefit. If a brand is not well-known, then your reputation transfers to the brand. Marketing directors at conservative corporations seek to minimize risk, so they prefer to sponsor teams with a history of respectable behavior.
Similarly, if a new sponsor’s image does not align with your existing sponsors, value could decline for everyone. I once landed an off-road racer a $100,000 cash sponsorship from a company that had never sponsored racing before. That year, the racer also got transmissions worth about $20,000 from a smaller sponsor. The transmissions broke more than they performed, causing the car to break down so much the $100,000 sponsor didn’t renew. A few free transmissions cost the racer six-figures. You can’t position as high-quality and dependable if your car breaks down all the time.
Reputation is not only how you act, it’s how you perform. Remain consistent and you’ll create intangible value for companies that associate with your reputation and performance. Inconsistency is one reason sponsors don’t renew.
Relevancy is arguably the number one reason why sponsorship decks, cold calls, and emails go unanswered. A common mistake is to send decks and proposals to brands that don’t relate motorsports. Sponsoring a race team won’t help Easton Bats as much as sponsoring baseball. It’s commonsense, but you’d be surprised how many teams put logic aside and shotgun every brand they can when looking for money.
Relevancy also has to do with how sponsors relate to each other. It’s more relevant to solicit sponsorship from an energy drink if you are sponsored by a convenience store. The two brands can cross-promote. Soliciting a beverage company when your primary sponsor is an oil brand doesn’t make as much sense. If you’re sponsored by Walmart, then it’s more relevant to go after Timex, which is sold in Walmart, than Rolex, which is sold in high-end retailers and luxury stores. For maximum relevancy, only go after sponsors who share the same customers.
Studies show that race fans are more likely to buy a brand that supports racing than one that doesn’t. Performance Research was the first to discover that motorsports fans are more loyal to series sponsors than any other sport. Not just slightly or somewhat more loyal, far more loyal. Based on almost two decades of data, the company found that the percentage of fans who claimed to “almost always” or“frequently” purchase a sponsor’s product over a non-sponsor’s product was greatest for American motorsports and least for the Olympics.
Fan loyalty is extremely valuable for companies that align with teams who have strong fan followings, so make sure to win over fans while you’re winning races. Successful teams do both.
Awareness of the series
Most professional athletes are not recognized by the general public, but once a person hears that “This guy is an IndyCar champion” or “That guy is a NHRA champion,” the public’s attention turns to the “champion.” It’s human nature to gravitate towards famous people, even if we don’t really know who they are. In the racing community, the authenticity of a series or title adds credibility to a driver within that series, which in turn bestows the driver more respect, especially in local appearances.
For most grassroots racing, the brand awareness of a series is isolated to geographic regions near the actual tracks. The intangible value of smaller series’ will therefore be much greater for companies that market to locals than for brands that target a national audience. If you race in the annual Chili Bowl in Tulsa, you’ll have more luck finding companies in Oklahoma to sponsor you than from New York City. Regional brands get more intangible value from local events than global brands, so they’ll pay more for the association. National and global brands, on the other hand, tend to steer towards events and series with strong television and media coverage.
Opportunity to network and generate B2B
Many companies sponsor teams and events is to meet potential business partners. The one-on-one networking opportunities of joining a well-connected team can lead to millions of dollars of sales or savings if an introduction is made to a potential customer or supplier. Find opportunities to put your sponsors together so they can generate business among themselves. The intangible value you’ll create for them could far exceed their financial investment in your program.
Series strength and viability
Sponsorship is a risk, which mature companies seek to minimize.While teams have more to lose than sponsors when a series closes, marketing executives responsible for sponsoring a failed series risk their jobs. When a marketing director makes a big investment in a team or series that doesn’t perform, that executive is putting his or her career on the line. That’s why it’s sometimes easier for a team in a big series to get a large sponsorship than a team in a small series to get any sponsorship—the risk-reward tradeoff might not be there for the person making the decision to spend money. Minimize this risk to maximize their investment in your team and be careful when you raise money to race at financially unstable events or in questionable venues.
Differentiation among brands, i.e. “Sponsor soup”
On the flip side, there is a dilutive downside to big events and populated series—differentiation among brands. When we commute on a freeway lined with hundreds of billboards, it’s natural to tune them all out. But when we cruise a deserted highway and see a single billboard, it sticks out like a sore thumb. When things get too cluttered, we overlook them.
It’s hard to stick out when you’re surrounded by hundreds of alternatives. When things are unique, we notice. The intangible value of differentiation among sponsors is huge. When spectators go home after an event, your sponsors want them to remember only one brand—their own.
Use this to your advantage when pitching to new sponsors. Highlight the fact that they will be the dominant and most visible brand in their category. Of course, if you promise such differentiation, then you can’t clutter your race car with a tone of logos. The fewer logos, the greater their individual value.
Less is more.
Based on independent research reports from 1992 to 2010 of over 200 self-proclaimed fans of each sport or event.