Gotta Spend Money to Make Money (helping ROI)

Money is the root cause of all evil. But try as we might there’s no denying that it makes everything in the world happen, especially in INDYCAR. Everything is based on sponsorship. Teams need sponsorship. Drivers need sponsors to get the ride (and as we discussed Drivers do all the heavy lifting) or they pay for it themselves. The money paid for sponsorship can seem ridiculous (1 million dollars for primary sponsorship for five races). Even so, money seems to always be in demand and because of that teams are consistently searching for revenue streams. As unbelievable at it seems, just before this past season Chip Ganassi was searching for a primary sponsor for his team! This is where fans may help. By increasing interaction with current sponsors, fans can ultimately increase the number of teams. If the interaction, on all levels, increases that would increase the Return on Investment of sponsorships and therefore increase the interest of other sponsors.

Okay, momentary economic chat. Sponsors want to make sure they’re putting their getting some value out of the monies they’re putting into a product or services or an advertisement. That value is the “return on investment” (ROI). High-level, ROI is a measurement to determine the amount of return an investment gives in relationship to its costs. It’s the net cost of the investment (Gain received by the investment minus the cost of the investment) divided by the cost of the investment, then make it a percentage. To use real [simplified] figures:

Pizza Hut spends $10 on advertisement and gets a $15 increase in their sales. The ROI would be $15-$10/$10 so 0.5 and turning that into a percentage there was a 50% ROI.

Let’s say Pizza Hut spends the million dollars to sponsor a car for five races during the 2018 season, and they determine that thanks to the sponsorship they increased sales by 5 million their ROI would be 80% ROI.

That was pretty simplified math and terms for a very involved and multi- upon multi-million dollar world. Looking specifically at INDYCAR I’ll break it down a bit more.

Cost of Investment

As mentioned in the sister-blog to this, the cost of investment primarily is sponsorship with INDYCAR. To recap those numbers. In 2014 for a full year, a company would pay between 5-9 million dollars for their logo on the side of the car. It’s 1-2 million for something on the front wing, and $100,000 – $300,000 for a decal on a helmet. This is  ‘property’ investment, it would also include signage at tracks. It’s wherever a logo is slapped on. The second form of sponsorship is the more engaging form – activation sponsorship. This would be media engagement including social media engagement with fans. Ever seen a booth where they say to tag them on Twitter/Instagram if you post? That’s activation sponsorship, and it may be one of the cheapest forms of advertisement out there.

Another cost of investment is paying for (in the sponsorship contract no doubt) drivers to mention the brand. Drivers mention it. Announcers mention it. It’s become almost a fun joke of how many brands are mentioned.

 

Gain of Investment

The gain is a bit harder to quantify, especially with a lot of sponsors in INDYCAR are Business to Business (B2B) sponsorship. Larger financial institutions and construction supplies – these are not the things that most of us watching will engage in. There are many Business to Consumer (B2C) sponsorship though. Just a short list: Butterball, DHL, NAPA, Fuzzy’s Vodka, PNC Bank, Menards, Verizon, Lucas Oil, and Shell gasoline. Of and of course Firestone is on every tire. I was going through photos to get pictures of all these cars and would like to add more: Pennzoil, Sirius XM, and Lilly Diabetes. The B2C companies are where fans can get involved.

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Fan Involvement

Money talks. As a fan, if you want to support your favorite driver and your favorite team, choosing brands that are their sponsors. Go to Menards and not Lowes if you like Simon Pagenaud or Penske. When your phone plan is up if you can switch to Verizon. I actually did this at the start of last season switching so I could have full access to the app and beca

Oh social media both a blessing and a curse. It tends to be a negative place. There are some articles that are talking about how millennials are trending to be more positive on social media. However, the larger and more widely known fact is that most people will complain about something then be complimentary. And a fan base can turn, remember when Lilly Diabetes lost their mind and everyone got up their shit?

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If eighty-percent of tweets about a business are negative. Let’s strive as fans to flip that number, at least when it comes to the business who are INDYCAR sponsors. You’re getting homework.

If, and oh hello Holiday Season, you find yourself shopping and the decision is between an INDYCAR sponsor and a non-INDYCAR sponsor: choose the INDYCAR sponsor. Don’t forget to tweet/IG about it and TAG the sponsor. You get extra credit for tying it back into them being an INDYCAR sponsor.

If you have an INDYCAR sponsor as a service provider (say Verizon or NAPA or DHL) and they do something good, say something about them online.

I don’t have a magic crystal ball that tells me the future…but…an engaged fan base makes it easier to sell sponsorship to businesses. The phrase “our fan base is loyal and will purchase from you if you sponsor our [team/car/series]” is like catnip to businesses. A loyal fan base means loyal customers. This is how we get more teams and ultimately more spots for all of the drivers.

Sources

 https://www.investopedia.com/terms/r/returnoninvestment.asp#ixzz5XVfH6HaZ

https://www.sd.team/feed/motorsports-sponsorship-roi-simplified

https://www.graymatter.co.uk/thoughts/uncategorized/complaint-vs-compliment-sea-change-social

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