F1 Return on Investment (ROI): Modeling Sponsor Exposure and Price to Predict Marketing Return

What is it about?

This study addressed the scarcity of research investigating Return on Investment (ROI) in sponsorship by modeling both the benefits (televised brand exposure) and costs (sponsorship price) in Formula One (F1) racing. The first analysis found that on-track team performance was the most significant predictor of sponsor returns, explaining 80% of the variance in sponsors’ televised brand exposure value. The second analysis modeled sponsorship price and found that costs were influenced by sponsorship level, the provision of value-in-kind (VIK) products, and industry congruence (automotive/high-tech). The final ROI analysis determined that only 10.1% of F1 sponsors realized a positive ROI (exposure value exceeding price). Furthermore, sponsors in the automotive industry were highly unlikely (2.71% probability) to realize a positive ROI via brand exposure alone. The results imply that F1 sponsorships are either overpriced, or sponsors are receiving returns through non-exposure benefits like B2B efforts.

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Photo by Gergana Stefanova on Unsplash

Photo by Gergana Stefanova on Unsplash