Wednesday, November 24, 2010

10 companies that belong in NASCAR

The championship is decided, and it's on to another NASCAR season. The forthcoming season, even more so that this past season, is wrought with financial uncertainty. Sponsors are difficult to find, even for top teams like the 24.

Chances are there will be races next year, even the in Sprint Cup circuit, without a full field.

One problem is certainly the slow economy. But, one could argue that in a slow economy, companies need to connect with consumers more than ever. There seems to have been a hesitancy recently among many race teams to take the responsibility to go out and find sponsors, relying instead on drivers to bring along sponsors.

That's not working out especially well. Just ask Front Row Motorsports, which went through all sorts of contortions to keep its cars running in the top 35, rotating rookie Kevin Conway into whichever car was most comfortably above the cutoff.

Sponsorship of a race team is a tough sell, because it's not cost-effective purely as advertising. It is really a marketing avenue, that is almost unmatched in potential.

What I'd like to do is to examine potential sponsors for NASCAR's national series, particularly the Sprint Cup series, and ask "why aren't they in this sport?"

There are a several criteria that I think make sense to use to determine a potential NASCAR sponsor's suitability.

One, does it have sufficient revenue and profit for a top-level sponsorship to make financial sense? A full-year Sprint Cup series primary sponsorship costs in the neighborhood of $15-20 million, so you're probably looking at companies with at least $1 billion in profits, for the top series.

Secondly, are the companies' primary operations should not be highly regional. It wouldn't make sense, for instance, for a company like PG&E, which is really a single-state operation, to market to a national audience.

Finally, is NASCAR a good fit for the company? Unlike in past years, sponsors need not be automotive suppliers, but there are probably some companies which just don't fit culturally (fewer and fewer all the time, in my opinion, but they still exist).

So, here's my list. Some of these may have a small or occasional presence already, but I am suggesting they go "all in":

1. Wal-Mart - Where the heck are they? I thought they'd certainly be sponsoring the 24 car in 2011, but they apparently want to be involved in NASCAR in a broader role. They are going to be the primary licensed merchandiser in their sector. I suppose that makes sense, and that they would have a potential conflict of interest if they were on the quarter panels of one particular car is at least plausible

2. Chevron - I understand that there are some limitations on oil company sponsorships, due to the exclusivity deal NASCAR has with Sunoco (another issue for another day, perhaps). But I think they could get around it by using Chevron Delo oil or some other related product.

3. ConocoPhillips - see above.

4. Hewlett-Packard - I think they'd be a good fit, because of their fairly extensive consumer presence, and a very significant small business product line, which could be enhanced by a NASCAR marketing program. With $7.5 billion in profits, they could certainly afford it.

5. IBM - They're not quite as good a fit as H-P, since they have less of a consumer and small business presence. But, NASCAR is sometimes used for institutional presence marketing, and IBM could use racing to keep their name front-and-center, and it would seem to them to be pocket change.

6. Proctor & Gamble  - This company had a large presence for many years in NASCAR, and was one of the pioneers of non-automotive-related sponsorship. They have largely dropped out of the sport, although they do still do associate or one-race sponsorships in the lower series. In these difficult times, they are the sort of company that still prospers, and could probably get themselves a good deal with a good team.

7. Johnson & Johnson - This is another healthy company with many well-known consumer (Q-Tips, Band-Aid, Listerine, Tylenol) and prescription products which would be a very good fit with a NASCAR team. They have been in the sport in the past, but not recently, I think.

8. Kraft - not as profitable as P&G or J&J, but still a solid company with potential to leverage NASCAR exposure.

9. Microsoft - While some other tech companies might not fit well in NASCAR, Microsoft, with its gaming products, seems like it could make NASCAR work for it. It might be a way to get an edge with its struggling mobile phone platform, as well. It's still profitable enough that this would not be a huge gamble.

10. Staples - Competitor Office Depot is heavily invested in the sport. You could argue that it makes it more difficult for Staples to stand out. But Lowes' presence in NASCAR certainly didn't keep The Home Depot out.

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