Today it’s my pleasure to introduce Frank Pudarich, owner of bespoke automotive marketing company Octane Garage.
Frank has a long history in the automotive industry, from managing Frank’s Paint and Panel, a hugely successful business which specialised in custom car restorations to consulting with Turtle Wax to build their brand in Australia. While working at Frank’s Paint and Panel, Frank graduated from university with a marketing degree and is also a licensed tradesman.
One of Frank’s roles as a marketing consultant is to review sponsorship proposals and determine how they could work with a businesses marketing programs. Having also been on the other side of the table, preparing sponsorship proposals for his own businesses, Frank is uniquely positioned to give us some great insights into the sponsorship process.
Leveraging your sponsorship dollars
Frank: As a marketing consultant I create marketing plans, decide on the spend and implement the marketing programs; and in most cases create them from scratch.
Kym: What sort of budget would you be looking at setting aside for sponsorship opportunities as part of a marketing plan?
Frank: It really depends on how much control you have over the program. For instance, I’ve picked up programs that are halfway implemented, so I don’t really have full creative control. Normally I suppose a way I would say it is “alright you’ve got X amount of dollars for sponsorship, let’s go and get programs that are that exact amount.”
For a marketing program to be successful you literally have to have a one for one with leverage. If you’re sponsoring something that’s worth $100,000 you’ve got to at least have another $100,000 in leverage. What I’ll have to say to people is that it’s cost us $100,000 to sponsor them and we’re going to spend another $100,000 to tell people that we’re sponsoring them. At least a one for one, otherwise no matter how good the programming is or may seem on paper, if you don’t have enough money to leverage it properly, it’s not going to be successful.
Kym: Let’s say the sponsorship investment was $100,000 and you didn’t actually budget that $100,000 to leverage the opportunity, that’s just a gift or a donation and it’s not really sponsorship?
Frank: Yeah, and you have cases where you hear stories about marketing being spent for certain aspects within the program rather than its actual marketing potential. Whether it’s hospitality, whether it’s guaranteed sales within that program. For example he may be a customer of yours, so you would spend that money to keep the relationship.
Kym: If you don’t have that leverage is it more a kin to affiliate marketing, a way to maintain that relationship?
Frank: Yeah, it’s more of a loyalty program than a marketing program, and in that case it should be coming out of a sales budget because it’s a loyalty program. You’re paying X amount of dollars realistically to keep him loyal to your brand. It’s not about generating sales, which at the end of the day that’s what the definition of marketing is.
Marketing 101 – What to include in a sponsorship proposal
Frank: Sponsorship, in particular motorsport sponsorship, these days is not in my opinion a very successful branding exercise. So the exposure that you may or may not get on television or magazine or print articles is good, but it’s not the be-all-and-end-all. It certainly isn’t something that piques my interest in particular. What you’re looking for are the extra leverage opportunities; to have access to the vehicle and incorporate it within our own marketing plans.
For example, if I’m attending a trade show, is there an opportunity to have a big wall display at that event? Are there unique opportunities which our competitors aren’t using and that is going to be unique to us? Also, whether or not the person writing the proposal has a clear understanding of who our customers are; that’s marketing 101.
If you’re going to put together a proposal, you’ve really got to identify and do your research and understand the company that you’re pitching to, you’ve got to understand who their customers are, what their likes are, what they want.
At the end of the day, the sponsorship program is a tool; you’re selling a tool that the marketing department will use to incorporate within their own marketing plan. So it’s all those leverage opportunities are what you’re looking for.
Kym: What’s your experience of the industry with people sharing that information with sponsorship seekers?
Frank: That’s a good question. It’d be hard to say. I know from back when I was working at Frank’s, when we were on the other side of the fence and we were the ones putting together sponsorship proposals and programs, I knew that unless you had personal working relationships with those companies, it was very hard to find out any information.
There’s only so much you could find out on the Internet, but the Internet is growing as more companies become a lot more transparent in their business practises. There are opportunities there; I just think that you have to be a little bit creative whether it’d be a matter of just talking to an entry level person or sales staff. If nothing else, who their customers are and what their business structure is, because the more information you could obviously find out, the better you could tailor it to an individual company.
Delivering sponsorship value and managing expectations
Frank: Not necessarily. I have had one experience where us sponsoring the team was probably the worst possible thing for that team and it ended up folding relatively quickly. There was a program at Frank’s where we would re-build the car and we’d use it within own marketing, advertisements, trade shows etc.
But from that relationship his expectations of how that car and team would perform increased, because all of a sudden he’s got a legitimate sponsor that wasn’t a family friend or wasn’t a business relationship. This was a purely professional working agreement. He increased the spend and he decided to do more events, and in the end the car went down to test one day at Eastern Creek and that was it, the rest of it was just marketing that we did because the car was stagnant and he never raced it again.
They had a product failure and all of a sudden he didn’t have the funds to support this increased program that he’d promised, so we used it for what we needed at our own cost, but it was probably the most unsuccessful motorsport sponsorship in Australian history. So it was one test pass and that was it. Sometimes that jump from amateur to professional can be too much for people to cope with.
Kym: Once you go into a commercial relationship your responsibility and the pressure to perform is actually increased significantly. Because you want to go rounds, or you want to spend more time at the front or whatever it might be. So people need to take that into consideration; do you really want the added costs and pressure of being sponsored?
Frank: A good example is merchandise. You can have an amateur level team that will offer you a full signage on a vehicle for say $10,000. You’ve got to take into account how much is it actually going to cost them to rebrand their vehicle and the merchandise. For example a race suit these days, you’re probably paying $1,500 to $2,000 to get embroidery and a custom suit done.
So if it all looks good on a PowerPoint presentation, you’ve actually got to look at the financial implications of that. Sometimes people don’t take that in to account, all the added costs that are involved when you’re actually making that commercial jump into a sponsorship.
Kym: It’s like the cost of sales not being factored into the bottom line?
Frank: Yeah, that’s exactly right.
Kym: When you look at it, it’s too good to be true because they haven’t considered that it costs $3,000 to wrap the car and $2,000 for the suit and $5,000 to paint the trailer and so?
Frank: Yes, when you’ve actually send them the contract to sign which has all that stipulated, then they actually take that to a solicitor to look at and the solicitor would start asking questions, that’s when they normally come back and realise all the expenditure costs. Once they can see it in black and white from the sponsor going, “Yes, we’re happy to accept it, but we want XYZ,” then they start looking at how much it’s actually going to cost. That’s normally when the alarm bells start ringing.
Kym: Amateurs need to start thinking about how they’re going to need legal representation to sign documents and so on. Is that the case?
Frank: It protects both parties and it would be in their best interests to do it. For example you’ve got to consider things like intellectual property; owning the intellectual property of your particular vehicle for example.
Kym: Okay, so there’s a lot more to this than meets the eye. There are legalities and contracts and clauses. Are there any performance based clauses?
Frank: You normally have stipulations in contracts so both parties have it crystal clear; so we want X amount of payment and then in return for that we get XYZ of exposure, access to hospitality, access to the vehicle for an ad creative etc. It’s stipulated in their contracts so everyone has a clear understanding what they’re obligated to do.
Read part 2 of my interview with Frank Pudarich.