The sport of Formula 1 is considered the pinnacle of motor racing. Although it does not have a large footprint in the United States (it has one race in Texas), it has races on every continent. But how does the sport make its $3 billion in revenue?
The revenue stream for the sport comes from three sources:
The first revenue stream is from race hosting fees. Circuits pay the sport to be able to host and run a race weekend. This is the largest source of income for the sport and is how Bernie Ecclestone has been able to get revenues (and profits) to skyrocket. Because emerging economies want to get their countries on the map, they are willing to pay as much as $80 million per race.
The second revenue stream comes from TV rights. Sky reportedly paid F1 over a billion Dollars for six years of exclusive coverage starting from 2019. Thanks to these gigantic figures, the TV viewing figures have dropped considerably as free to air TV can no longer afford these fees.
The third revenue stream is from long-term advertising deals. Heineken has agreed to pay $150 million for the next five years to promote the sport. In addition, there are trackside advertising deals that also contribute directly to F1 and not the circuits.
Now with the sale of F1 to Liberty Media, it remains to be seen what track they will take when it comes to marketing the sport.
Nike’s marketing schemes are dominated by customer expression and emotionally-evoking messages.
Nike has redefined the way sports marketing, and even general marketing, is seen today. Their industry dominance as well as global reach has made them one of the powerhouses in the market.
A Defined Image
Throughout the years, Nike developed itself into that company with the “swoosh” logo.
It’s safe to say that pretty much everyone can associate the swoosh logo with Nike. They’ve ultimately separated themselves from their competition by not only releasing unique designs and products, but also by partnering up with athletes that are well-known by the public.
Steve Doctrow, who is the Executive Vice President of Marketing for Rogers & Cowan, worked with Nike on several high-profile campaigns. According to Doctrow, the integration of brands and media can substantially raise exposure.
Nike didn’t become a successful company overnight. They rose in popularity because they created a buzz in the scene. They made their product easily identifiable to the public, which increased their overall marketing success through word-of-mouth. They also promote powerful messages to their viewers in commercials and advertisements which factors in to the recognition of the brand.
Raising Awareness To Build Sales
Another important factor that Nike feels strongly about is the emotion that their products carry. If you notice, they place a strong emphasis on how customers express themselves through the use of the product. This not only helps build up awareness for the industry giant, but it also increases overall sales.