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Why Infiniti is in the pricey F1 sponsorship game

Red Bull Formula One driver Sebastian Vettel of Germany drives the RB8 during a training session at the Jerez racetrack in southern Spain February 9, 2012. REUTERS/Marcelo del Pozo (SPAIN - Tags: SPORT MOTORSPORT)

Marcelo del Pozo/REUTERS

It's 11:45 in the morning on Tuesday, February 7. In the adrenaline-fuelled world of Formula One racing, this day has the edge on most others.

It's the first day of pre-season testing in preparation for the new season. It's also the first chance the teams have to see if their new cars are likely to possess the qualities needed to win races and championships – namely, bulletproof reliability, razor-sharp handling characteristics and sheer, blinding speed.

A small crowd is gathered at the back of the Red Bull Racing Formula One team garage. They stand behind a glass enclosure and watch as a swarm of mechanics and technicians adjust the shiny, new RB8 racer that sits idle.

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The front door of the garage is opened to reveal another group of interested onlookers: photographers and rival team members who are seeking a first glimpse of how Red Bull – the dominant team in the sport – has redesigned the front nose of the RB8 to comply with new guidelines.

Though most are focused on the nose, one person is not: Andreas Sigl. Although he's decked out in Red Bull team gear, the Global Director for Infiniti Formula One is interested in one thing and one thing only: the size and position of the Japanese automobile manufacturer's logos on the RB8.

When Infiniti decided to jump into the world of Formula One sponsorship in September 2010, Mr. Sigl was the man behind the move – and it was a bold move. The sport is notoriously expensive, but its global reach is undeniable; F1 eclipses all other sports in terms of television ratings, including the World Cup of soccer and the Olympics.

"When we began to look at the idea of sponsorship, we decided we needed a sport with a big global footprint," Mr. Sigl explains, "We considered tennis, sailing, the World Cup and the Olympics. But if you're an automotive brand and you sponsor tennis or sailing, you need to tell a completely different story. The pinnacle of auto racing is F1 and where our business road map is taking us is the same as where F1 is headed."

F1 has been headed into emerging markets such as Eastern Europe, China, India and the Middle East for the past few years. The Infiniti brand was launched in the United States in 1989, spread into Canada a year later and has gathered momentum from there: the Middle East in 1996, Russia in 2006, China in 2007, and Central and Western Europe in 2008.

In 2011, the luxury car maker reported annual global sales of 145,000 units. Their five-year plan targets annual sales of 500,000 units by 2016. "We can't get there incrementally," Mr. Sigl acknowledges when considering this target. "We need a big change."

Formula One does big really well – the operating budget for an F1 team has been as high as $300-million (U.S.) a year. But Mr. Sigl and his colleagues arrived at a different way to bring Infiniti into the sport – not as a chassis builder, or engine supplier or manufacturer, but as a sponsor.

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"The problem with this type of sponsorship is that it's very difficult to determine the ROI," explains Richard Powers, Sports Marketing Expert with the Rotman School of Management at the University of Toronto. "Infiniti has decided to take a risk, others such as Honda and Toyota have tried it and failed. It's not like you can drive that F1 car down the road – it's pure brand positioning."

Example: Although Infiniti is known for engineering very potent V8 engines, the V8 that powers the RB8 is a Renault, and it's labelled as such on the engine cover. (The plan is for Infiniti to partner with Red Bull Racing on technological developments in the future, but this isn't happening quite yet.)

The other interesting aspect of this deal: Infiniti is merely an associate sponsor and, arguably, one very much in the shadows of Red Bull, the bombastic, youth-obsessed brand that joined F1 as a sponsor in 1995 and went on to become a manufacturer in their own right a decade later. So the question is: Do these factors have the potential to create disassociation in the mind of the Infiniti target customer?

"They're not building a car, it's just a brand association, so it's less risky," says David Plant, vice-president, media and entertainment, with consultancy Cameron Thomson Group. "F1 is a high-octane activity, so it makes sense that an energy drink is involved. But there's also a more aspirational aspect to brands in places like Europe; even a young sales clerk will aspire to a very luxurious purchase, such as an expensive car."

When quizzed on the notion that Infiniti should be sponsoring or racing its own cars, Mr. Sigl comes back to the cost-versus-benefit argument and the appeal of this truly global sport: "We had the discussion at Infiniti. People argued that we should race our own product. But you don't get the awareness by racing in smaller series. In terms of reach, there's nothing like F1."

Special to The Globe and Mail

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Editor's note: This is a corrected version of the story. The newest Red Bull Formula One car is the RB8, which has a V-8 engine. A previous version had incorrect information.

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