In a previous analysis we already had a look into the relationship F1 used to have with tobacco companies - a sight that dominated the field till 2007. But it is no news to anybody that Formula 1 has had a very particular relationship with another market sector as well - namely the luxury goods market. From expensive watches to expensive hotels to expensive champagnes and many more. But why is it so exactly that this relationship came into being? Is there more than just the surface value of money underneath all of it? In this particular article, I will aim at exploring not only the monetary value of luxury goods sponsorships, but also the discourse around such relationships.
Before we even look deeper into the luxury brands and F1, here are some general numbers for you: a report from sports data agency Two Circles claims global spending on sports sponsorships was estimated to grow to $65 billion in 2019. Sport sponsorship is nowadays the most known sponsorship type and the fastest growing branch of sponsorship in general. Sponsorships became an integral part of Formula One itself, making up a considerable chunk of the team’s budgets, even to the extent of having an impact on who might and who might not be considered for a seat in the Queen of Motorsports.
Sponsorship itself is not a bad thing of course - it helps the participants with funding that is necessary to compete in such demanding and costly sport. Cheong, Pyun and Leng (2019) note that sponsorship, on a general note, is a three-way communication process: between sponsor, the sponsored entity and the consumer. It is a marketing strategy that in a way, benefits all three of them. In the case of Formula One it helps the teams not only to get money in the budget by selling “ad space” to the brands, but can also bring new fans as a result of the association with the brand, of course depending on the brand. For the brand, it helps to market themselves to a wider audience. Lastly, it benefits the consumer with the information about brands that is eventually linked with a behavioural response when making a purchase - a very complex topic investigated through research for decades, something we will not touch upon in this article, but is worth of a mention nevertheless.
Before exploring the linguistic discourse and looking at different examples of brands, I will first provide an explanation to what is actually meant by luxury goods, what are the previous and current examples of those brands in F1 and what actually these brands could “want” from F1. Let’s begin.
When it comes to the definition of a luxury brand, Keshkar (2019) explains that: “These brands are luxury because their characteristics are unique and exclusive and only a special group of people can afford to buy and use them. ‘Luxury goods’ are not ‘necessity goods’, that is to say, ’luxury goods’ are Veblen goods for which the quantity demanded increases as the price increases, an apparent contradiction law of demand of the Consumers actually prefer more of the good as its price rises.”
For the sake of this article, we can differentiate two different types of luxury brands - luxury goods, such as champagne, watches, tech and more, and so-called luxury services/hospitality, such as expensive hotel chains. What is meant here by the words “expensive” and “luxury” is the aspect of those goods/services having a price point usually inaccessible to a general public, with a lower to mid income status. You’re usually not working a (for example) fast food chain job flipping sandwiches while wearing a €5.800,00 watch. Unless you do, then please let me know where exactly, because I’d love to apply. To have a more coherent look on F1, let’s look at some examples.
When it comes to the luxury brands present in the sport previously, we’ve seen brands such as: Hugo Boss, Bang & Olufsen, Chandon, Emporio Armani, Marriott, Michael Kors and Sisley, to note some.
Currently, these are the remaining and new brands that approached F1 or a participating team with a sponsorship: Rolex (F1), Ritz Carlton (Mercedes), IWC Schaffhausen (Mercedes), Hublot (Ferrari), Tag Heuer (Red Bull), Aston Martin (Red Bull; a mention due to the title sponsor status, not the actual supplier or brand of the team, which in the case of Red Bull was Honda), Hilton (McLaren) and Richard Mille (McLaren).
So what’s the deal? Why would companies like the examples we’ve seen above would like to sponsor an F1 team or the sport? I’d like to look at two different factors here: the linguistic discourse of Formula One as well as racing drivers (athletes) as product/brand endorsers.
The first one, linguistic discourse, boils down to how language functions and how meaning is created in different social context; how values, beliefs and assumptions are communicated through language. I know you might be a little bit lost, so what is my point here? Well, think closely about the language that is used when describing Formula One. Words or descriptions such as “luxurious”; “dangerous”; “prestigious”; “hard to get in”; “expensive”. Of course, these might not be the words used by fans or people who work in the industry, but more by the outsiders when the sport is mentioned. Also words like “innovative” or “technological” and similar are important. But why? Because by association, such meaning can be transferred onto the sponsoring brand. There are many factors that can influence such transfer (for example the fit between the sponsor and the team), but on a general note this is something particularly beneficial to the sponsoring company. Due to an association with such a “prestigious” and “dangerous” sport, the status of the brand can be elevated higher than it already is, and eventually could potentially lead to the consumer willing to pay such a high price point for the product. In basic words, the brand is perceived to be even more “luxurious”, because they sponsor a sport that is already “luxurious” itself.
What also can be a beneficial thing for the actual brand is if the team they sponsor is more successful than others. This creates the imagery of being a part of the winning group, and lead to consumers being more willing to buy the product; after all, who would not want a watch that has something to do with the best team on the grid?
As noted by Keshkar (2019): “As Oxford references shows, the sports of upper classes are more partial to sports such as golf, tennis, and swimming that stress individualism and aesthetics and may be expensive to play for one reason or another; the lower classes typically favour sports like boxing and basketball that stress teamwork and physical strength and do not require as much money for participation.”
In the particular example of F1 we can observe a certain detachment between the regular bread eater and the amount of money poured into the sport: obviously nowadays most of the fans are in no position to afford participation, sponsoring, or even the more expensive tickets to the races, so Formula 1 or motorsport in general might be an exception from what Keshkar has observed. But as much as it might be the case now, it wasn’t fully the case a few decades ago.
The demographic of the F1 audience has changed slightly in the past couple of years and it definitely became much more younger than before, but especially before that was the case, a lot of wealthy people and celebrities were involved on a regular basis in F1. Presence of such brands was in a way justified, not only to attract those audiences to the sport but to cater to them once they were already supporters. What about now though? Since we already noted that the financial status of the audiences has changed “slightly”, why would luxury brands still pour money into the sport, where the majority of watchers could never afford their products?
Luxury brands regardless of the product or service they propose, are not driven by rational utility - they balance with the imaginary, in order to attract customers with the prospect of “STATUS”. You see, most of us will never be able to afford regular purchases from these types of brands, but all of us probably at least once in their life thought “once I’ll get rich I’ll buy XYZ” or “once I have XYZ I’ll be cool/respected/etc”. The reason why such brands still sponsor F1 (but it can be said also on a more general note) is because they rely on advertising to enhance the desire for their products, which loops back to the perceived social status that comes with owning products of those brands or using their services.
It is further enhanced by the concept of an athlete as a brand endorser. What does it mean exactly? As noted by Brison, Byon and Baker III (2016): “The assertion behind the use of athlete endorsers is that these individuals will not only generate awareness and attention to the product/service being advertised, but the characteristics associated with them will also be transferred to the product (…).”
For the case of luxury brands, it makes a lot of sense to use athletes as brand endorsers.
As explained by O’Keefe (2005): “Athletes present a special case as endorsers because our attitudes and knowledge about them derive not only from seeing them in contrived situations (e.g., movies or events) but also how they behave and perform in spontaneous situations on the field of play. This authenticity may create a different kind of relationship with fans and could result in the high levels of brand adoption by sports fans of brands endorsed by athletes.”
This presents a perfect combination: not only customers are more willing to go for the product because of the familiar face of an athlete, but additionally, the characteristics of the athlete can be passed onto the product itself. Of course we’re speaking here on a more general level, in our case: “the athlete is a driver who drives fast and risks his life” which will pass the association onto the product they’re promoting. It is a common practice in marketing to engage athletes in endorsement, especially when there is a certain correlation between the athlete (and his sport) and the product. Additionally, athletes promoting/endorsing a brand provide a sense of quality for the consumer, as it is commonly believed (which is not always the case) that they would not promote just “anything” but only proper products. Each and one of us can probably recall at least one case of this type of advertising, and it is estimated that the highest paid athlete when it came to endorsements (Roger Federer, ATP) earned $86,000,000 from brand deals. Using an athlete endorser can not only elevate the opinion about the product, but might result in a higher brand recall or even in brand loyalty, as it has been proven that invested sport fans can showcase a higher sponsor recall and recognition, and in certain situations also enhance the loyalty to a product and influence purchase intentions (Donahay & Rosenberger III, 2007; Gwinner & Swanson, 2003). How exactly does it play out with F1 and luxury brands we will see with the use of our examples.
We will look at 3 different watch companies that are using either the discourse, the sport or the drivers as endorsers. These brands are: Richard Mille, Tag Heuer and Rolex.
The softest example out of those 3 is the Richard Mille one. As you can see, they simply use the linguistic discourse through association with their slogan “a racing machine on the wrist”. A “racing machine” of course implies two things: that the watch is super fast and super precise, just like a racing car is. There is not much more to that ad, as it does not involve any particular imagery just the depiction of the watch, but it definitely draws from the association mentioned before.
The second example is the Rolex add. In here, we have three different things to look at: the slogan of “If you were racing here tomorrow you’d wear a Rolex”; the depiction of the watch and the racing car and the description text underneath the pictures. The slogan already implies the affiliation through purchase: racing drivers wear Rolex; if you want to be like one - that’s what you need. Then of course we have the imagery that is enhancing this particular affiliation, depicting a racing driver during a race (correct me if I’m wrong, but its Sir Jackie Stewart at Nürbürgring if I’m not mistaken and my poor old eyes are not deceiving me) and the actual watch in question. Underneath, we can read in the description “So to say that GP racing drivers have a highly developed sense of timing is something of an understatement. Their life depends on it”. This ties once again with the discourse used in the Richard Mille ad, the precision aspect of such a watch and the reasoning why presumably “ALL” racing drivers choose a Rolex, since their lives depend on the precision and what not, which is supposed to once again elevate the brand and the product. Since their lives depend on it, they for sure know what’s a good right? I think by now you already see the pattern and understand what Im saying. Interestingly, Rolex as an example has been investigated before in the field of sport sponsorship. As noted by Keshkar (2019):
“Rolex, as a luxury brand, is present at the most prestigious events in golf, sailing, tennis, motor sport, and at equestrian tournaments. Given the longevity and strength of these relationships, in its sponsorships, Rolex is seen not merely as a sponsor... but also as a partner in these sports. (…) Prestigious sports events are important for Rolex to introduce its luxury products to doers and followers of such sports. It’s obvious that Rolex consumer segmentation is focused on a special social class which rarely can be available in lower class sports events. Luxury brands sponsor prestigious sports events and teams as part of their marketing strategy and for this purpose they also hire celebrity athletes as influencers.”
Lastly, the third example is a little bit different than the previous ones, since it’s the Tag Heuer ads that are using F1 drivers (and not only) as the brand endorsers in their advertisements. For their “Don’t crack under pressure” campaign that has been going on for many, many years, they used arguably the two most “mainstream" recognised drivers - Ayrton Senna and Michael Schumacher (1991-1994). Those two ads are pretty similar to each other, depicting both drivers in deep thoughts, accompanied by the “Don’t crack under pressure” slogan, the logo and depiction of the watch and a short description text underneath. Tag Heuer is known for using only top athletes in their advertisements, and till today, both Schumacher and Senna, are recognised as the best drivers F1 has ever seen. Having both of them as endorsers not only portrays the value for the customer (“the watches must be great quality since THEY promote them”) but also carries the attributes of the endorsers to the product (enhanced by the use of words such as “resistance”, “precision”, “endurance”, which arguably could be attributed to both Ayrton and Michael, but that’s a topic for another article), which is something we mentioned before while discussing why athletes are being used as endorsers. Having two of the most recognisable F1 drivers in their advertisements does not only provide a sense of quality but surely drives engagement. Additionally, what is interesting to think about is the fact that during the period of time this campaign was run, internet was not a wide-spread thing - but the international presence and recognition of the sport meant that many people were familiar with the faces of the endorsers used here, even to people that did not follow the sport closely, which surely enhanced the popularity of the campaign. Of course, the actual numbers are a corporate secret and we won’t know how much did it actually transfer to sales of their product, but it surely did help with building a certain brand image that lasts till today.
This article could possibly go on and on since we could discuss things here in further detail, with more theories and more examples but I tried to provide at least some understanding with this more surface-level analysis of the relationship between Formula 1 and luxury brands. To sum it up: luxury brands are interested in sports such as F1 because the association with them provides a further enhancement to the status they (the brands) are supposed to represent, and sponsoring the sport provides them with a place to advertise in basically a non-invasive way despite the financial status of the audience that is currently vastly different to what it used to be decades ago. Luxury brands rely on such advertising to enhance the desire for them, and using a high-speed, costly and dangerous sport and athletes participating in it to promote their products or services helps to create a certain image of them, that can be then further translated into sales. What I did not mention before is that they provide something back to the sport, actually enhancing the status of F1 to the audiences that follow it (kinda like an ouroboros in a sense). Additionally, the use of an athlete endorser provides the consumer with a sense of authenticity that can improve the consumers opinion about the brand and their product and might result in better brand recall or even in brand loyalty.
I hope you enjoyed this little dwell into the world of sport sponsorship and we’d love to hear from you if you recall any different examples of what we’ve talked about here, or if you actually ever considered a purchase based on the sponsorship in F1 (does not have to be luxury brands, just anything goes).
Brison, N. T., Byon, K. K., & Baker III, T. A. (2016). To tweet or not to tweet: The effects of social media endorsements on unfamiliar sport brands and athlete endorsers. Innovation, 18(3), 309-326.
Cheong, C., Pyun, D. Y., & Leng, H. K. (2019). Sponsorship and advertising in sport: a study of
consumers’ attitude. European Sport Management Quarterly, 19(3), 287-311.
Donahay, B., & Rosenberger III, P. J. (2007). Using brand personality to measure the effectiveness
of image transfer in formula one racing. Marketing Bulletin, 18.
Gwinner, K., & Swanson, S. R. (2003). A model of fan identification: Antecedents and sponsorship
outcomes. Journal of services marketing.
Keshkar, S., Lawrence, I., Dodds, M., Morris, E., Mahoney, T., Heisey, K., ... & Faruq, A. (2019). The role of culture in sports sponsorship: An update.
O'Keefe,B. (2005, September 5). America's fastest growing sport. Fortune, 48-64
The visuals of the examples of advertisements were found through the trusty google image search, and they’re mostly scans of already unavailable advertisements from the past.