Sport is playing its part in the Santander story

Spanish banking firm Santander signed a major five-year sponsorship deal with the Ferrari team at September’s Italian Grand Prix. As well as being the biggest deal of the year in Formula One, it marks a significant moment in the company’s quest to become a truly global player.

Shortly before the announcement that Santander was to become a major sponsor of the Ferrari Formula One team, the convoy of vehicles carrying the Spanish banks’ guests got lost on the way to Monza where the press conference was being held in the build up to September’s Italian Grand Prix. It was a minor hitch in what was otherwise a typically slick operation. In any case, the slight delay was of no concern to the guests. Given that the sports industry had been waiting months for confirmation of one of Formula One paddock’s worst kept secrets, a few extra minutes were nothing.

The inevitability of the deal did not detract from its importance, however, both to Ferrari and to Santander. For Ferrari, securing a high profile partner at such a difficult time commercially is a reminder of its unparalleled appeal in Formula One. For Santander, it is a significant upgrade not only to its Formula One sponsorship, but to its overall sports sponsorship portfolio.

Remarkable as it may seem, aside from its three-year partnership with the McLaren Formula One team and title sponsorship of selected Grands Prix, the Spanish bank’s only other global direct sports sponsorship deal in recent times has been with the Copa Libertadores, the premier club soccer competition in South America. The Ferrari deal changes all that. It is the biggest in Santander’s history, even if the company is understandably reluctant to reveal exactly how much it has paid. The importance of the deal was further underlined by the fact that the announcement was made at Ferrari’s home race, at Monza, by Ferrari president Luca di Montezemolo and the colourful Santander president Emilio Botan, who handed the Italian one of his traditional red jackets during the press conference.

As well as significant branding on the team’s Formula One cars, the bank will also be in position to take advantage of Ferrari’s position as the undisputed number one brand in Formula One, through merchandising and licensing. As Juan Manuel Cendoya, Santander’s charismatic senior executive vice president in charge of communications, corporate marketing and research, proudly puts it: “We have studied very much all the figures and we are sure that this sponsorship will be one of the best made over the last 50 years worldwide. I am sure. It goes very well with our path to be one of the leading banks worldwide and it gives us an amazing opportunity, and the returns will be enormous.” That kind of statement is not arrogance; it is simply a reflection of the genuine excitement being felt by Santander’s marketing team, led by Cendoya, who have been working for months to secure the deal.

Securing a partnership with Ferrari is evidently a coup for Santander. The simple fact is that the Ferrari Formula One team does not have many major sponsors. Santander’s sponsorship does not give it title rights to the team – that remains in the hands, somewhat controversially, of tobacco firm Marlboro – but the company is certainly on a par with Shell, the team’s long-term fuel supplier. Cendoya is understandably reluctant to place the bank in the pecking order of Ferrari sponsors and says simply: “In Ferrari, we are on the podium and the podium is a very good place to be. Ferrari has a process and they are going to announce the car and image later on. We are a main sponsor; we are not a title sponsor. I cannot say more.”

The bank has expanded massively in recent years in comparison with many other financial institutions around the world, which have been crippled by the onset of the global financial crisis.

Santander is the fourth largest banking group in the world, with 90 million clients around the world and 170,000 employees. Within continental Europe its main subsidiaries are the Santander Network, with nearly 3,000 branches; Santander Totta in Portugal; and Santander Consumer Finance. It is establishing itself in the UK, having purchased Abbey National in 2004 and then Alliance & Leicester and Bradford & Bingley last year – at a stroke doubling the number of banks it owns in the UK. The group also has a large presence in Latin America, with over 6,000 branches in Brazil, Mexico, Chile and Argentina.

“When you have 90 million clients in retail banking,” Cendoya says, “you know perfectly how important are the reputation and the image that you establish with your clients and your staff. That’s why we are starting this sponsorship and we feel very happy. It’s a unique moment for us even if it’s very challenging for Banco Santander.” Whereas other banks have been brought to their knees, however, Cendoya insists that Santander has escaped the crisis “relatively unscathed”.

The Ferrari deal is part of a group-wide strategy designed to promote a single Santander brand, which is being rolled out across the various banks that the group owns around the world. Spreading the single brand message is at the heart of the sponsorship strategy that Santander has adopted, both in Formula One and through its sponsorship of the South American continental club soccer competition the Copa Libertadores, of which Santander is the title sponsor.

“The importance of being a unique brand is very important to us. We have very clear ideas. We have a lot of power worldwide in terms of branding, in terms of television and so on. Everyone knows very well that our history didn’t reflect very well a single brand because over the last 15 years we did a lot of acquisitions, and the priority at that moment was not to adopt a single brand; the priority at the time was, in each case, to integrate banks, implement our technology platforms and so on.”

He adds: “In 2004, some months after the Abbey National acquisition, we realised that we were a very unknown bank in the UK. We realised that it was very important to develop our brand because it is vital in terms of business. I would like to stress this. For us branding is equal to business, is equal to strength, equal to return to shareholders. We are not talking about colours. We are not doing everything with Ferrari simply to have a red colour and to have opportunities to meet in Milan; we are doing it because it is so important to transmit and persuade people about our branding.”

Much more of a surprise, at least to the casual observer, was the announcement – nestled away on the Monday afternoon following the Italian Grand Prix and the news of the Ferrari deal – that Santander would be extending its partnership with McLaren after all, rather than switching from the British team when it becomes a Ferrari sponsor in 2010. In reality it makes perfect sense. Santander’s partnership with McLaren began in 2007 when Spaniard Fernando Alonso joined the team. However it turned out that it was Alonso’s teammate, Lewis Hamilton, and not the double world champion, who was at the centre of the bank’s activation strategy, at least in the UK. Hamilton’s undoubted commercial appeal was the primary reason why Santander decided to continue its sponsorship of the team even when Alonso left in acrimonious circumstances at the end of 2007. The Brit has since appeared in a number of well-received adverts for Santander – which bought out Abbey National in 2004 – in the UK.

In a wider sense, the partnership with McLaren in the first three years was a toe-in-the-water deal for Santander in Formula One – albeit, at an estimated US$16 million annually, a very expensive toe indeed. Cendoya believes that the experience can only help as it ramps up its new deal with Ferrari. “We have the advantage that we have been with McLaren for the last three years. This is very good for us because we started with McLaren at a low level, in a low-key way, being the fourth or fifth sponsor at McLaren. During those three years we have tried to learn about how to exploit the sponsorship, how to develop links with clients, [account] holders and employees, how to launch new activities and so on.”

By any measure the McLaren sponsorship has been a massive success. According to the McLaren press release outlining details of the extended deal, Santander’s brand awareness rose in the UK from 20 per cent to 82 per cent between 2007 and now. Though largely explained by the group’s decision to rebrand recent acquisitions Abbey, Alliance & Leicester and Bradford & Bingley under the Santander name, the success of the Hamilton adverts in particular was seen as critical to conveying the new message. Cendoya certainly believes the sponsorship has been a huge success. “In the first year, the return was probably five euros in return for every euro of investment, the second year it was four euros to one, and the third we don’t know exactly yet [as the 2009 sponsorship has not yet ended]. That’s the return on investment, including commercial campaigns.”

Overall the bank estimates that in the last year it has achieved a €360 million return on investment through its Formula One and soccer sponsorships, 75 per cent of which comes from Formula One. Cendoya believes that will only increase, especially when Santander branding is displayed on Ferrari merchandise, which represents 85 per cent of all Formula One merchandise sold around the world each year. He says: “With Ferrari I also think the intangible part is enormous. Our sponsorship in terms of marketing presence on clothes and cars is enormous and I would like to offer, in six or seven months, a good view on what return on investment we are expecting.”

Aligned with becoming a single-brand bank is the target of becoming recognised as a truly international brand. In that respect an “alliance”, the word used by Ferrari’s Luca di Montezemolo at the Monza announcement, with Ferrari, perhaps the most recognisable sports team in the world, makes sense. “If you are with Ferrari, it is evident that you are not just a local competitor but have global capabilities”, Cendoya explains. “That’s what we are showing to the market with this sponsorship. We are trying to convince the market every day through our relations with journalists, shareholders and so on. Look, for example, at the operation that is now underway in Brazil. The market there knows very well how Santander is a very good bank, a Brazilian bank on the one hand but on the other hand a global bank – a strong and attractive brand.”

“If you want to enter new markets there are two possibilities: to enter without previous experience in the market or, if you already have a global brand and image, it’s much easier. People understand who you are, know you and trust you.”

Santander’s switch to Ferrari has been interpreted by many as an indicator that Spain’s Alonso may also be poised for a move to the team. Common wisdom suggests that Alonso has signed some form of contract with Ferrari and will drive for the team in either 2010 or 2011. Cendoya rightly points out that Santander is not in charge of driver selection and intriguingly suggests that, for example, the commercial appeal of current Ferrari driver Felipe Massa might be an effective way of growing the brand worldwide – the implication being that, even with Alonso on board, the bank’s popularity might only increase in Spain by one or two percentage points, whereas the potential gains in other markets are significantly greater. Cendoya says it is all about “creating an emotional link” between potential new customers and the bank.

“How many Spanish people, for example, are today very happy because we are with Ferrari? I don’t know, but in my opinion a lot because I received more than 700 emails giving felicitations for this agreement. Every employee in our bank can guess a figure but it could be 10 million. In Brazil there are 50 million fans of Formula One – 80 per cent of them are Ferrari fans and they now feel happy and proud of being part of the Santander group.”

He adds: “We are talking about passionate fans, we are not talking about casual fans. The same is true in Germany and the UK and even Spain, which is more linked to the Fernando Alonso boom. Those figures are very impressive and we feel with Ferrari we can develop more of an affinity between the audience and our bank.”

“When you are in Formula One, supporting automotive sport, you are reaching a very broad audience and a lot of people that have never before had a relationship with a bank. This is vital and crucial. We are establishing a very important relationship with young people, with people who have never been to a Santander branch.”

The single identity makes life easier at an operational as well as an awareness level. Says Cendoya: “If you are working with a combined, common approach you have marketing policies, branding policies, commercial and publicity policies and so on. You can manage everything in a very common way and you create a lot of synergy. That’s a big strength for our global businesses. For example, we are now an important player in wholesale banking in Europe. We are now number four; five years ago we were number 30. The problem in the past was that the brand, our image, our reputation, our awareness was behind our results, our market capitalisation. Now we have an image that goes together with our results.”

In line with other major sports sponsors, Santander is intending to activate its Ferrari partnership internally as well as externally. Cendoya believes it can be used as a motivational tool, as he explains: “When you have more than 170,000 employees fixed with contracts – and we have more suppliers and so on – you need to give them some motivational tools. You need to have differentiated tools that reflect what we are: an international bank that is aspiring to be one of the leading banks worldwide. We want to provoke aspirations in our employees and we also want to differentiate ourselves from their local competitors – that we can get very well with Ferrari or, in the past, with McLaren.”

But despite the undoubted lure of Ferrari as a romantic and attractive brand, the decision to invest so heavily over five years is, Cendoya makes clear, a cold, rational business decision, just as was the decision to sponsor McLaren three years ago. “We started at the McLaren team, with an English pilot and a Spanish pilot at the beginning. We had a low presence in the team but we paid a lot of attention to every penny, peseta, euro that we were spending. We don’t give money away. We have given a lot of attention over the last 100 years to caring for the money of our shareholders. If we are investing in this agreement, and investing a sum of money in Ferrari, it is because we are sure that – and I have all the figures – it is going to be very profitable for our bank and for Ferrari.”

“We are going to support the sport,” he adds. “We are going to attain a lot of tangible and intangible advantages from this sponsorship. Ferrari is more Latin. Ferrari is something different, it’s unique. We are two companies that are linking and creating an alliance. That’s what Luca di Montezemolo said: it’s an alliance between two big and leading companies. The value of Ferrari is amazing. We have done a lot of surveys in terms of awareness and audiences over the last three years to know perfectly what, for example, the directors of our branches think of the sponsorship and how the link with Formula One is helping the business.”

Cendoya beams when he talks about the marketing possibilities that the partnership with Ferrari opens up for Santander. As he puts it: “Ferrari can give us lessons about Formula One. We know this year has been a very problematic one from the Formula One perspective. But we know the importance of Formula One, we believe in this sport, we believe in the massive audiences, and we believe that there are a lot of values we can use together with Ferrari.”