In 2004, Santander boasted some of the largest banking profits in the world. Yet its brand recognition remained low. Despite a sweep of takeovers of European and Latin American banks, Santander ranked 35th in global recognition. This was partly because the acquisitions retained their existing brand identities, so there was little public association with the group.
To address this, in 2005 Santander launched a strategic project to unify all entities under one collective identity, to grab attention and to associate the bank with positive values of trust, leadership, innovation and strength. Santander felt that by doing this, it could improve perceptions of product quality, boost sales, confidence and profitability for investors, strengthen corporate culture, shield against the financial crisis, and give customers and staff a greater sense of belonging.
As part of this grand project, sponsorship was seen as one way to raise recognition, by connecting the brand with something that had broad cultural appeal. Of the endless choices available, sports seemed the most attractive in terms of achieving the widest coverage, while inspiring loyalty and excitement at the same time. Soccer and motorsports enjoyed the biggest followings and heaviest media coverage among Santander’s key regional targets, but soccer was already saturated with sponsors.
Formula One Racing, on the other hand, had great potential. By placing their logos on the track barriers, the cars and the drivers themselves, sponsors were guaranteed pole positioning. Side benefits included: direct cash returns, as consumers bought more of the sponsor’s products; special events to gain access to VIPs; and user rights for photo ops and advertising tie-ins.
The highest category of sponsorship – team title sponsor – promised maximum visibility, and as such, was the costliest. Cheaper options were available, but less likely to raise brand awareness to the desired degree.
Choosing the right team was also critical. A team that made it to the winner’s podium could represent the equivalent of $4 million in advertising value per Grand Prix, according to some estimates.
Accelerated Brand Recognition
Santander’s entry into Formula One with Team Vodafone McLaren Mercedes presented three advantages. First, McLaren was located in the United Kingdom, where the Abbey bank was rebranding. Second, Spanish world champion Fernando Alonso had signed with McLaren for the 2007 season, bringing Santander another step closer to its newly acquired home markets. Third, aligning with a team as successful as this champion guaranteed massive media coverage.
Santander paid an estimated $25 million to McLaren, plus extra for the title sponsorship of the British Grand Prix. On top of the initial cost, Santander needed an internal budget to exploit sponsorship at the corporate level, as well as to adapt sponsorship to local circumstances.
The explosive combination of British team, German car and Spanish driver attracted support from all three countries, and accelerated brand recognition. Santander believed it contributed to its success in Britain, delivering $300 million of cost savings a year ahead of schedule, and a $1.5 billion rise in profits at Santander U.K. in 2009, as reported in the Financial Times.
Internally, the sponsorship increased the ease of doing business, and lifted not only employee morale but client trust. Santander reported benefits of 5 euros for each euro invested. This was especially important, considering the pressure that was on the bank to improve efficiency in light of a 20 percent reduction in its 2009 marketing budget.
Applying the Brakes
Having achieved 3rd place in a 2009 industry ranking by Brand Finance, Santander seemed to have achieved the high-profile, unified brand it desired. With its three-year contract with McLaren soon coming to an end, Santander felt it might be time to review its objectives.
Moreover, some new issues arose surrounding the partnership, and Santander was going to have to decide how to deal with them: McLaren had been fined for using illegal information obtained from Ferrari; Alonso had left for Renault, owing to personality clashes.
Should Santander continue its existing sponsorship deal?
But if Santander left McLaren, how would it continue building its brand? Should it follow Alonso to Renault, or switch to Ferrari, the team with the strongest global following?
The current credit crunch made investment outside the bank’s basic needs harder to justify. There was always the option of secondary sponsorship with less visible positioning, which would maintain some recognition while saving money.
Although several financial firms had historically been active in Formula One, in recent years their presence had dwindled due to the crisis, with Credit Suisse abandoning BMW Sauber, and ING and RBS not renewing their deals with Renault and Williams, respectively.
Maybe it was time for Santander, too, to seek out a new promotional platform and leave Formula One altogether?
The case study, “Santander and Formula One,” by IESE Prof. Julián Villanueva and Julie Ziskind, is available by clicking here.