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Why Sponsor NASCAR?

I’m going to write about NASCAR and marketing, if you don’t care about either of those things, you can quit reading now. I’m writing this for three reasons:

  1. I’m a big NASCAR fan (it’s more than just going around in circles, I’m happy to explain it sometime)
  2. I spent some time working with a NASCAR team and learned a lot about how the business side of the sport operates
  3. The New York Times had a story yesterday about how the NBA can learn something from NASCAR in regards to it’s thought about adding sponsors to jerseys. This article almost entirely missed the real point of NASCAR sponsorships. (I can’t say I find this shocking as NASCAR is hardly the number one beat for the Times.)

For some reason the article focused on how sponsors can affect the behavior of the athletes. This is sort of interesting, but pretty far from the real story of NASCAR sponsorships. While the business of NASCAR is struggling for a bunch of reasons (financial meltdown, arms race in technology raising the cost of fielding competitive teams, more competition than ever for ad dollars), what makes it work has not changed. When a brand buys into a NASCAR sponsorship (which goes for ~$20 million for a full season), they are buying two big things: Loyalty and activation opportunities.

Let’s start with loyalty. This is what the article really misses. When brands sponsor NASCAR they get a real understanding from the fans that they are responsible for the car on the track. The drivers get it, the teams get and the fans get it. This is hugely different from slapping your logo on something (whether it’s soccer where it’s displayed in giant form on the player’s belly or basketball, where they seem to be thinking about some little sponsorship patch). People in those sports think the sponsor is responsible for the team in the same way no one will ever walk into a Brooklyn Nets game and say “thank you Barclays for making this possible.”

The numbers in NASCAR back this up. I used to have them, but the league and teams generally trot around a number of 80%+ loyalty of a fan to its driver’s sponsor. If Jimmie Johnson is your guy you go to Lowe’s not Home Depot. That’s just how it works.

Okay, onto activation. Take a look at the official sponsors of NASCAR teams and you see a few different kinds of companies: Car-related companies (NAPA, Shell, Mobil 1), CPG (Budweiser, Mars, Miller Lite) and a lot of retail/franchise businesses (Burger King, Target, GEICO, Farmers Insurance, Home Depot, Lowes, Office Depot). The first set is obvious, the average NASCAR fan likes cars and car-related stuff. The second is about audience as NASCAR skews heavily male and sometimes guys are hard to reach. The last, though, is the most interesting to me.

What all these companies have in common is lots of employees (you could throw FedEx in this group too and UPS was a long-time sponsor of the sport). One of the more interesting things about how brands actually utilize their sponsorship is that they do fully integrated program where they use a sponsorship to reach not just consumers, but also employees. Target, Home Depot and Lowes have 900,000 combined employees (365, 331 and 204). That’s a lot of people to keep happy. One of the ways they do it is give them something to root for. It’s not shocking, or even all that interesting, it just sort of makes sense and means that the investment is offset into a few different departments.

Anyway, I don’t have a real conclusion to all this, just felt like writing a little bit about what I know about NASCAR. Hopefully it was relatively interesting.

October 22, 2012 // This post is about: , , ,

Comments

  • prince campbell says:

    A couple of things.

    Like most people, I’m ambivalent about NASCAR and didn’t read (until now) the Times story. But I am interested in Basketball and the effects ads on jerseys will have on the players. I was so interested in it that I had someone write an article about the ramifications for my @blackinformant followers a few months ago.

    I was completely shocked how the Times piece didn’t ask (or answer) the obvious questions:

    Will a player’s Nike deal override a team’s Reebox deal? Isn’t this just a way for teams to get their hands on the extra revenue that was once exclusively for players? Isn’t this a back-handed way of just snatching money from every player in the league? Who needs a deal with a player if a sponsor will have it on the jersey without a player’s consent? And will players have their own space to pimp out on the uniforms?

    Which brings me to the idea by the former democrat but running as a republican for mayor of New York, dude, I saw on @errollouis show. He wants to sell sponsorship to the subway and bus stops to raise revenue. Which seems like a good idea until companies realize their names will be linked to rats, delayed trains and sleeping homeless.

    Which brings me all the way back to your post and what people expect from NASCAR sponsors. Maybe the reason NASCAR sponsorship is drying up is due to a problem that a lot of companies will facing for the first time ever. The added costs that comes with taking a stand.

    Who’s really going to be responsible for getting rid of the urine smell @ Union Square Station, the city or Microsoft?

  • Phil Adams says:

    Key phrase: “making it possible”.

    Making something possible that wouldn’t otherwise come to pass is a great formula for successful, meaningful sponsorship.

    I hate the phrase “proud sponsors of”.

    Show me a “proud sponsor” and I’ll show you a lazy one. If you don’t put any effort into describing your relationship with a sponsored entity it’s highly unlikely that you’re putting any effort into working that relationship.

    Patronage is a better mindset than sponsorship. Patronage is money spent through genuine care.

    PS I’m a Brit and from over here NASCAR does look like going round in circles I’m afraid. I appreciate that there will be a lot more to it than that though.

  • Dan Thornton says:

    Interesting article. I’m a European motorsport fan, so have a passing knowledge of NASCAR.

    It’s interesting to note potential differences in sponsors between the aristocratic background of European motorsport like F1 and Le Mans when compared with the moonshine smuggling hot rods which gave birth to NASCAR.

    Certainly they all share the same affinity and external targeting of brands which would benefit from male and technology associations – lots of computer brands edge into F1 sponsorship etc.

    And obviously tobacco sponsorship used to play a big part. I’m not sure that’s the only reason I ended up smoking Marlboro, but certainly the association with Marlboro Yamaha was something which sprang up (Along with Rothmans Honda and JPS Norton).

    It’s also interesting that in addition to sponsor employees, who not only get someone to root for, but also corporate days with the teams etc, some teams are also using it more for outreach via social media – e.g. Fiat Yamaha invited top tech bloggers to the MotoGP round at Laguna Seca eta.

  • Kyle Bunch says:

    Good read.

    Prince hits on the key issue I see: NASCAR creates great opportunities because the sponsorships give you that individual relationship with an athlete. If the NBA can deliver that (sponsoring the Heat means you get all of the players as spokespeople) then I think they’ll establish a hugely profitable model for the other leagues. But in all likelihood (and using the current uniform sponsorships as the indicator), I’m guessing they won’t sell through a scenario with the players’ union where team sponsorships include players (except for those without conflicts). Not sure that the value proposition for team sponsorship will be significant if buying the Heat sponsorship only gives me a logo patch and the use of second-tier guys like Rashard Lewis, Mike Miller and Shane Battier.

    One interesting sidenote: when the Grizzlies relocated to Memphis, there was a proposal discussed for FedEx to become their title sponsor and change the team name to the Memphis Express. It eventually fell apart (killed by the league, if I’m not mistaken) but I always thought that was an interesting opportunity that should be revisited.

  • denise lee yohn says:

    noah, i never would have pegged you as a nascar fan, but what you’ve shared makes a compelling case — denise lee yohn

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