Digital Transformation in Formula 1: A Case Study of Oracle and Red Bull Racing

Written by Heather Li

Oracle was just announced as the title sponsor for Formula 1 team Red Bull Racing in a deal estimated to be worth almost $500M, officially changing the team name from Red Bull Racing Honda to Oracle Red Bull Racing. For those outside the sport, this may seem strange – why would a racing team want to work with a computer technology company over a traditional car manufacturer? 

Formula 1’s adoption of innovative and data-driven technology allows the sport and its business to operate at a high level of efficiency and development, which provides an entertaining and exciting sports environment for fans while generating billions of dollars in revenue for the teams and companies involved. 

We see this reflected in the newest deals and relationships being signed this season, including Oracle becoming Red Bull Racing’s title sponsor. Oracle and Red Bull’s deal shines a light on the greater evolution of motor racing in Formula 1 (F1). The sport is changing to be tech-focused and driven to achieve greater speeds and more dramatic races and this trend of more B2B advertising and sponsorships by tech companies point to that change. 

To understand a little more about how F1 has become digitally transformed in this new era of cloud computing and data analytics, let’s consider a Red Bull Racing’s execution of digital transformation through McKinsey’s guiding principles of digital transformation. 

 Source: McKinsey’s “A roadmap for a digital transformation”

1. Defining Value: Is Oracle’s $500M Deal with Red Bull Racing Worth It?

Tech partnerships and advertising in F1 is all about storytelling: through the racing action, these companies can show how their technology is used in an impactful way. Using a sports lens that viewers relate to and understand, these firms are able to tell a story about what their technology is, how it is being used, and the impact it has on performance and results. Ariel Kelman, Oracle’s EVP, said that “It’s a great storytelling vehicle for technology companies … it helps better explain in a more broadly understandable way, the magic of technology”. If you can show how the technology is being used, it becomes a more powerful alternative to traditional marketing strategies.

“You’re not just telling people, you’re showing them”

Being associated with high-performing, technology-driven sports team is also a strategic positioning move. Oracle made a calculated decision with Red Bull: they want to be associated with winners and have the flexibility to incorporate modern and creative approaches to marketing with a partner that also wants to try new strategies to generate awareness. Their Red Bull partner has a similar view of technology as a strategic resource to success where they are now and into the future.

 2. Launch & Acceleration: Powerful Partners Amidst New Regulations

In the face of new F1 regulations that limit team spending, these new tech partnerships present an opportunity to gain valuable racing insights while staying on a tighter budget. In the past year, Oracle has enabled Red Bull to implement both on- and off-track initiatives while operating on a tighter budget through its cloud computing capabilities, called Oracle Cloud Infrastructure (OCI). 

1. Race Simulations: Lots of racing is done off-track, including conducting race simulations to predict and analyze car performance that help the teams make accurate decisions on race day. Last season in 2021, Red Bull’s lighthouse project took advantage of OCI to run 1,000x more simulations and accelerate simulation speed by 10x. 
2. Fan Engagement Platform: Red Bull launched a new fan engagement platform, Red Bull Racing Paddock, powered by OCI, that also provides another source of revenue for the team and a new, progressive format to interact with fans. Fans are able to submit questions, earn digital rewards, and access more content on the new program, and Red Bull has already seen a 9x increase in member sign-ups.

Tech sponsors conduct “value in kind” deals, providing race teams and F1 itself access to advanced technology, including data security, cloud computing, and analytics that are becoming so important to running a successful team and getting the results they need. 

Other partnerships across F1 also seek to take advantage of new technological developments such as cloud computing, data analytics and processing, machine learning, and more. Aston Martin’s F1 team named a US information technology firm, Cognizant, as a title sponsor. F1 has also partnered with Amazon’s AWS, which enhances fan experience through making key data insights accessible during races. 

Almost every aspect of the race and fan engagement is driven by technology and analytics which has created a strong digital culture in these companies and in the sport.

3. Scaling Up: New Capabilities 

Future Ventures: Looking forward, Red Bull is planning to further utilize OCI in ventures outside of F1 racing, changing its operating model as just a racing team. Red Bull aims to be the fourth F1 team to manufacture their own engines through its Red Bull Powertrains program, which they hope to accomplish by leveraging OCI and other Oracle resources. Red Bull also will bolster their junior driver development program and eSports team through OCI-powered analytics and machine learning. 

Cryptocurrency, the future of F1?

Zooming out, what does Red Bull’s partnership with Oracle say about F1 and technology in the future? Oracle and Red Bull’s new relationship shines light on the changing dynamics of the sport, and communicates Oracle and other tech companies’ confidence in Red Bull’s ability to keep up and be a leader in technological advancement on the race track. 

The next big names in technology, cryptocurrency and blockchain, are making big strides in F1 as well. Cryto.com signed a $100M dollar deal with F1 to develop exclusive F1 NFTs and provide a new form of engagement for fans. Red Bull just signed the largest crypto deal in international sports with Bybit, and other teams have also signed deals with other crypto platforms. Cryptocurrency is the next step for F1 to adopt technological advancements into their digital strategy and further strengthens the digital culture in the sport. 

Formula 1’s focus on digital transformation has been a key factor in pushing the sport to greater achievements on and off the track. Looking forward, I expect to see F1 incorporate digital capabilities in its other goals, including their sustainability and DEI initiatives, furthering its transformation to be technologically driven.

With gratitude: A special thanks to Greg Lunsford at Oracle for communicating and providing resources for this article.