The LCR Honda team has been the talk of the paddock this year, with the Playboy logos adorning the bike at several rounds this year. But Playboy aren't on the bike at every round, to the confusion of some of the casual fans, instead, you are as likely to see Italian equipment manufacturer Givi on the bike as you are Playboy, or oil giant ELF, as it is all part of team boss Lucio Cecchinello's ingenious scheme for attracting more sponsors into the sport, by lowering the price of entry.
LCR's sponsorship program works with a series of single-event deals, rather than a single title sponsor, as most of the other teams do. This unconventional and highly innovative approach to raising funds had long interested us, so at Donington, we tracked Lucio Cecchinello down to explain the concept behind it.
MGPM: I wanted to talk to you about sponsorship, because I think you have one of the most interesting approaches to sponsorship, it's totally different to the rest of the teams. Instead of a title sponsor, you have single event sponsors, you are selling a single event package to a sponsor. First of all, how did you come up with the idea.
Lucio Cecchinello: When we arrived in MotoGP, in 2006, we had to face let's say the starting of a new era of sponsorship deals, because the fact of the new European rules forbidding advertising tobacco companies made a lot of trouble for everybody. And when we arrived in 2006, the European community started to say within one year, all the tobacco companies have to disappear in the motorsport field. So we arrived in a very tough period, because we proposed to some tobacco companies - because in 2006 there was still the possibility to do that - but unfortunately already all the tobacco companies said, "Sorry, we have no plan to continue in MotoGP, because anyway in 12 months, we are already finished, very sorry."
So there was a huge quantity of money that went way from the MotoGP class, it disappeared. So, MotoGP is not like Formula One, MotoGP teams did not have the skill, capacity, background, or commercial department able to sell their product, to sell our product. And from our side, where we came from the small and medium category, we always had contact with small and medium companies.
We realized our previous background was just to get in touch with small and medium companies, which are very flexible. They are very keen to consider sponsorship if they are let's say, passionate about MotoGP and motorsport racing; they are keen to consider a small deal if we can provide good hospitality services for their customers; they are keen to consider sponsorship because they are, let's say good friends, you know? Then, we had a good background in making such kind of small and medium deals.
When we arrive in MotoGP class, we felt, that, OK, now is the moment we are going to approach the biggest companies, without any kind of experience. And when we started to approach the biggest companies, tobacco companies immediately said "No because we are going to stop"; insurance company said "No, sorry, because we already involved in replacing tobacco company in Formula One"; banks said, "No, sorry, because we already do deal with soccer, or whatever, and we have two years planned, three years planned". Beer companies or alcohol companies said "No, sorry, because we are already involved in some kind of agreement with Olympic Games." In 2006 there was also the soccer World Cup, and many sponsors already had a deal, you know.
So we realized that in a few months, we realized that getting in contact with such big, worldwide companies, to make a deal, first you have have to propose a deal some years before, because they have a long term plan. Then also, there is a huge escalation to arrive to the key company people, and many times you are stopped because some bottom people don't believe in MotoGP. Maybe some marketing people have some more interest in sponsoring Formula One or soccer or whatever.
So, we felt that we lose time, and that time is going fast and we needed the money. So, how can we do this? Then I had inspiration because I was looking at the booklet of Dorna, it was Alice Grand Prix of Italy, A Style Grand Prix of Netherlands, Polini Grand Prix of Malaysia. And then I said, why don't study some kind of sponsorship format like Dorna made, for each race, which, let's say reduce drastically the global amount that we are going to discuss with each company. Let's say one eighteenth of the global amount which we are discussing.
So, in that moment, I felt, OK, then with this kind of sponsorship format, we can first, contact the small and medium companies which are very flexible and very fast to consider such a sponsorship deal, don't have a lot of company structure before you reach the key company people. And we are discussing about a very small amount compared with the millions you are talking about.
MGPM: So you're talking about hundreds of thousands instead of several million?
LC: Exactly. To give you some figures, we are discussing about 3.5 millions and 200,000. So we realized we could have access to a much wider number of companies, and also we could select the market. So let's say, some companies are more interested in the German market, Northern European market; some companies have more interests in the east, in the Asian market; some companies in the US market. So we could you know make a deal where the company can do some kind of sponsorship activity, customer care program, you know. Then we opened some kind of new market that nobody had done before.
The problem is that of course we have to study the bike lay out, every time we have to change the title name, we have to produce much more branding material.
MGPM: And you end up with something like your shirt, with lots and lots of labels.
LC: Yes, lots of small and medium companies who sponsor us. And this is a lot of work for LCR, and yet somehow is not good for the team identity, because we do not have a strong color that represents our brand, which is more recognizable to the public, you know. So there are in such kind of sponsorship formats or sponsorship policy some negative points.
The positive point is that if you look at the cake of our sponsorship deals it has many segments. If we have a 3.5 million euro sponsor, which represents let's say 60% of our budget, we give to the title sponsor a big decision for the future health, for the life of our team. Because once they say no, if in a few months we cannot find a new solution, we can be killed, we can die. And if you look at our cake now, it is divided by many many many segments.
MGPM: So if you have one race where you can't find a sponsor, then with a bit of saving, you can go on, you can still last the year. You're only injured, not killed.
LC: Exactly, exactly. And it is easier to persuade an existing sponsor to sponsor one more Grand Prix than it is to find a new sponsor. And to solve the problem of the team identity we work with two different items. First there is the number plate. The number is on a yellow background, which is quite unusual.
MGPM: A colleague of mine really likes it, because it reminds him of the old numbers [black numbers on a yellow background were compulsory until 1992] and thinks all of the numbers should be like that.
LC: Exactly. This is the first things people think of because they remember the past and it makes some kind of inspiration for the public, because we are the only ones who race like that. Second, our company colors, our track colors, our team clothing have the corporate color of our logo, you know, so somehow, we don't disturb other sponsors with another color, because we capitalize our image and this is our brand identity and our color identity. And there is a strip on the bike with our identity.
And the third point is also for this year, we made white wheels. Because if you look, everyone has black wheels except for the Repsol Honda, who have the orange wheels. So, we decided to have the white wheels, because it's a neutral color, that doesn't disturb any kind of sponsor for the bike, and also the white wheels are quite unusual, and represent a mass of color which are very visible from the stands. So, we hope that we can gain a little bit in our team identity. Of course we know that we cannot be so visible like Kawasaki, which was green, or Ducati which is red, or Yamaha which is blue or Honda, in the mind of the public they are orange [the Repsol colors]. But let's say we are doing our best to do this.
MGPM: Is it easier to find smaller companies to get new sponsors into the sport or are you still using old contacts?
LC: We are developing some kind of new marketing tools. We realized that LCR was quite able to get in contact with motorcycle parts producer, because we have GIVI, we have Arrow, we have Progrip, we have Rizoma, we have CARPIMOTO, we have MotoExpert, we have ELF. So, then already, some motorcycle accessories constructors are quite strongly involved with us and they spend important money, but not millions. And this amount, they can afford, they can use MotoGP to announce they have a product to provide, they can use also our structure to do relational marketing with their customers, with their potential customers. So this is already something we will continue to go ahead with, you know we continue to explore the possibilities of motorcycle constructor accessories, clothing like REV'IT.
Second assistance is that we still have contact with some company owners who are really passionate about MotoGP, motorsport, who have enough financial health to be able to spend many thousands of euros to be here. And third, now we are developing a new marketing tool which is how to get in touch with more companies with not such a strong effort.
So we studied and we realized that today everybody does much more business with internet. So we know that we cannot really contact companies via internet and send emails saying "Do you want to sponsor us?" This is not the right or the professional way to do it, this is a very low standard. So we realized that our potential customers first are the advertising agencies. So now, we are doing a huge database of advertising agencies and we are preparing some kind of sponsorship report, to be able to send every week, every race week to the advertising agencies. Not only with the results and a picture of the bike on the track, but also all the activities we do with the sponsors, with our corporate hospitality, services with our co-marketing activity, with our business-to-business activities, with for example our show bike exposure, with our rider appearances into the companies, showing them all the case history of what we are doing with the companies.
So we have the stress to reach some hundreds of advertising agencies all around the world, and then hopefully we continue sending them the information, saying "We are LCR, we are an independent team, we are very flexible, we are not very expensive, we can do a lot of small activities for the sponsors, we can help the sponsor to make a sponsorship activation program. Please consider that we are able to work with you and with the companies which you advise," you know. So it's a huge program.
That's why we are preparing a new website, a reserved website for the companies and the advertising agencies who want to know more about MotoGP championship, Team LCR bio data, Team LCR advertising program, Team LCR case histories, costs and benefits.
And then also another program we are doing at the moment is to enhance and improve our sponsorship impact program that we do for our sponsors. Because the problem is that now that company profits are decreasing, the companies that still have enough profits to put some budget into sponsorship are not so keen to consider sponsorship, because they are buying normally something untouchable, and to measure the return on their investment is something really very difficult. So nowadays the company owners are not so keen to consider spending money in a field, in a way, in some kind of services where they cannot have a clear feedback.
So how to do this? How to improve the appeal of our sales? So again, this is a new format which we will launch next year, it will be sponsorship deal will be split in two. One third will be a fixed rate and two thirds will be pay-per-view concept. It means that we are going to monetize the brand exposure. It's a kind of concept which you in the internet will know, it is like pay-per-click, and we are doing pay-per-view.
MGPM: How are you going to count the views?
LC: We will take the TV pictures from Dorna, we will monitor how many times we show this brand, this brand, this brand, how may seconds, then we will take the measured TV audience from the major TV networks. Then roughly we will calculate our sponsorship fee, the two-thirds of the sponsorship fee, giving them all the figures. And in any case, they also will fix a budget cap, so that the company knows that they are not going to spend more than X amount.
MGPM: So that if you suddenly become world champions and win every race, they won't end up paying a lot more.
LC: Exactly, exactly.
MGPM: That will just be in terms of TV minutes per viewer or something like that?
LC: Something like that. All this kind of news we will present in September, with our new sponsorship proposal.
MGPM: Do you think that other teams could learn from your sponsorship program?
LC: (Smiles) I hope not! I hope not, but in this world you cannot take a patent on ideas, so I expect that some teams will try and copy this idea.