Even as the suspension of Chennai Super Kings and Rajasthan Royals hits the Indian Premier League’s already scandal-sullied act, industry sentiment indicates that sponsors and advertisers will still turn up for the next season of IPL
By ALIEFYA VAHANVATY & SALONI DUTTA
On July 14, 2015, when the Justice Lodha Committee delivered a verdict suspending two teams of the Indian Premier League (IPL) - Chennai Super Kings and Rajasthan Royals – for illegal betting, there were fears that for advertisers spending huge money on the game, the IPL would lose its sheen. However, in the week that has elapsed, advertiser sentiment indicates that the IPL may be down, but it is not out.
MONEY, MONEY, MONEY
Though controversy has always dogged the IPL since its inception, advertisers have nonetheless found the property hugely attractive because the matches guarantee eyeballs in a cricket-crazy nation that thrives on the short format of the game. Therefore, revenues garnered by IPL have risen steadily, and this year itself, IPL 8 broadcast rights holder Multi Screen Media (MSM) made around Rs 1,000 crore from sponsors and the sale of advertising time. Four years ago, this figure was only around Rs 600 crore. This year, the cricket World Cup preceded IPL 8, but there was no advertiser fatigue, despite strong apprehensions. In fact, IPL 8 earned almost Rs 400 crore more in advertising revenues compared to the World Cup’s haul of Rs 600 crore.
While some industry experts have been quoted in the media as saying that post the Lodha Committee verdict, the overall brand value of IPL is likely to dip by 15-20 %, others believe that this is a temporary trust deficit phase and IPL will soon rise from the ashes. “IPL is currently suffering from a trust deficit and advertisers may become wary of it. However, if the processes are streamlined and the new teams are constituted, this situation could be salvaged, given the huge fan following that T20 cricket has in India,” says Farokh Balsara, Partner and Head – Media and Entertainment, EY.
ADVERTISERS: ALL IN THE GAME
Beverage maker PepsiCo India Holdings Pvt. Ltd is the title sponsor for the IPL for a five-year period up to 2017, but is unlikely to renew its bid after its present contract expires, according to a report in the Economic Times. The paper quotes an executive with knowledge of internal discussions at Pepsi as saying: “Title sponsorship is a direct association with the brand image, which directly risks getting impacted by controversy.” Talking to IMPACT, a spokesperson from PepsiCo said, “We remain committed to ethical conduct in sport and expect that issues surrounding IPL are adequately and swiftly addressed. The faith of cricket fans is important and needs to be restored in the interest of the game.”
In 2012, PepsiCo had reportedly paid the IPL Rs 396.8 crore - double of what the previous title sponsor DLF had offered - out-bidding leading telecom giant Bharti Airtel to become the new title sponsors.
Meanwhile, other IPL sponsors are maintaining a brave face. “The verdict has just been announced and we are reviewing our position in the matter,” an Aircel spokesperson told IMPACT.
There is also the possibility that the entire chain of events may work favourably for the advertiser with heightened viewer interest. “If in the next IPL season, there is more interest in the new teams that come in place of CSK and RR, and how they fare, it might actually work in favour of advertisers in terms of eyeballs,” says Kartik Jain, Executive Vice President & Head Marketing, HDFC Bank.
IPL 8 had 12 brands as lead sponsors for on-air advertisements which included Vodafone, Amazon, Hero MotoCorp, Vimal Pan Masala, Paytm, Intex Mobiles, Cardekho.com, Magicbricks.com, PepsiCo, Raymond and Parle Products. The on-ground advertisers were led by PepsiCo as the title sponsor, followed by Yes Bank, Hotstar. com, Vodafone, McDowell’s No.1 and Ceat. Similarly, there were a score of brand associations for the IPL franchises. Some teams like Kings XI Punjab had as many as 16 to 18 brand associations.
Media reports have indicated that though the verdict is unlikely to financially hurt title sponsor PepsiCo or team sponsors such as Aircel and UltraTech, in all probability, the BCCI may have to compensate sponsors financially for any loss of opportunity to market their brands. Players such as MS Dhoni and Shane Watson - who are brands in their own right – are attached to the two suspended teams, and advertisers who may have hitched their brandwagon to their popularity may have to do a rethink as well.
THE PLANNERS’ OUTLOOK
According to a sports marketing consultant, sponsorship deals inherently ensure that the sponsors are protected. So while there may be a three-year deal on paper, the payment would possibly happen only on an annual basis. Therefore, if CSK and RR don’t play for the next two years, their sponsors may also not be required to keep their end of the deal. As for media planners, some feel the absence of CSK and RR may not be as much of a problem for IPL sponsors as for MSM, which may not be able to match the ad sales revenue of the previous IPL season because there will be fewer matches. Others are optimistic that TV advertising will not suffer and all will be well with IPL. “Nothing will happen to IPL... there are still nine months to go...
I’m sure a solution will be found,” says Shashi Sinha, CEO, IPG Mediabrands India. “There’s no bigger property than IPL in India, so people will surely find a solution. What may suffer is ground sponsorships and associations... people will be very careful about teams, where they don’t know the background of the players. But TV advertising will not suffer because finally it is a platform where you get viewership and brands chase that.”
THE BROADCASTER’S DILEMMA
According to experts, a six-team IPL is not a financially viable proposition from the broadcaster’s standpoint because reduced number of matches would mean reduced on-air advertising slots for MSM. The host broadcaster sold ad inventory for Rs 5 lakh per 10-second slot for the initial matches in 2015, a premium of 10-15% over the Rs 4.25 lakh per 10 seconds that it charged in 2014. Before the suspensions, MSM had been projected to rake in about Rs 650 crore in advertising revenue for about 45 days of IPL 9 in 2016. However, when contacted for their take on what advertisers have been talking about and how advertising slots will be affected, MSM refused to comment.
THE FINAL SCOREBOARD
While it is inevitable that there will be changes in the next season of IPL, exactly what those changes would be and how it will alter the fortunes of the game, the players and advertisers will only become clearer in the days to come. If at all, ground sponsors may use the current turn of events as an opportunity to get out if they feel the value is not there, but indications are that television advertisers will not step back. One may argue that most MNCs have strict ethical guidelines and would perhaps not like to be seen associating with a property linked to a scandal. But at the same time, controversy has been IPL’s second name over the years and this has never been a deterrent.
As for the audience that is so dear to advertisers, it does not look as if people will stop watching IPL. Cricket, after all, wins – it has always had an almost monopolistic hold on the sporting affections of India’s 1.2 billion people.
‘Advertisers go where the audience is’
Marketers and advertisers only go where the audience is. Now the guess or speculation that every marketer will have to take is one, will IPL happen? Will it happen in the same avatar and will that new avatar attract the audiences? And that’s anyone’s guess today. I think most marketers will prefer to adopt the wait and watch strategy to see how this pans out. But yes, if cricket is tainted, audience faith is going to reduce and therefore it will force marketers to think twice.
AJAY KAKAR
Chief Marketing Officer, Financial Services, Aditya Birla Group
‘If contracts are transparent, it shouldn’t matter’
You cannot take out cricket from anybody’s mind in India. If their IPL contracts are fair and transparent, it should not hamper the advertisers’ trust. If it does, it’ll be sad. The game has been under controversy from the beginning. But IPL’s spectators have kept increasing. Just because there’s controversy, it doesn’t mean you need to stop advertising where there is a great target audience. It’s better that you clean up the act, not destroy it. If you have a wound, you won’t cut off your foot!
BHARAT DHUPPAR
Chief Projects Officer & CMO, Omkar Realtors & Developers Pvt. Ltd.
‘Controversy may create more interest’
Advertisers will go by the viewership of the property. It might work the other way round and create more interest in the IPL! If viewership goes up, so do the ratings and advertiser interest. Brands associating with IPL directly as sponsors may fear brand rub-off, and perhaps think twice. If I was in their place, I would re-look at the association. But as an advertiser looking at pure reach and eyeballs, obviously we have to see how it goes.
KARTIK JAIN
Executive Vice President & Head Marketing, HDFC Bank
‘Erosion of trust, but only short term’
In the short term, we will definitely see a certain erosion of trust. Earlier too, when controversies broke out around IPL, people were wary about associating with the brand and tournament. But once the games actually begin, it’s the performance that counts. Even the last time around, once IPL kicked off, how people play and the quality of the game took over, and set the benchmark. So in the long term, IPL will recover, but in the short term there are issues they’ll have to battle out.
VASANTHA V KUMAR
Director of Marketing & Communications, IBM India & South Asia
‘It does impact the advertiser’s trust’
Clearly if there’s any controversy surrounding any property, it does impact the advertiser’s trust adversely... Especially if the controversy is around a property related to something like cricket, about which the entire country is so passionate...
VEETIKA DEORAS
Head - Brand Marketing, Digital Vertical & Corp Communication, Tata Capital
‘Brands associated with both teams will have to answer their boards and share-holders’
Indranil Das Blah, COO of CAA KWAN, a celebrity and sports management agency, tells Simran Sabherwal that if IPL manages to pull through the next two years, it will emerge stronger than ever
Q] Will Brand IPL suffer post the Justice Lodha Committee verdict?
Without doubt in the short term... the brand will suffer in the next two years; to what degree depends on how the BCCI reacts to the situation. One of the options they are contemplating is retaining the same two teams, but with ex-cricketers running the teams. If that happens, some sort of credibility will be retained, there will still be eight teams and MSD will still be the main guarantee for CSK. And RR will also have the same players. But there is a lot of uncertainty until the BCCI finally decides what IPL 9 is going to look like.
Q] Will the team’s brand franchisees be affected?
Yes, definitely. While it won’t affect brands directly, advertisers and sponsors will definitely re-evaluate their association with IPL. This will depend on how important the platform is in their overall strategy, whether they decide to stick on if CSK and RR are managed by other owners; or they decide it is too controversial, and consider other options. Now that is a call that only individual brands can take, but brands associated with both teams will be forced to answer a lot of questions by their own boards and shareholders before associating again with IPL.
Q] What are the options in this scenario for the broadcasters, MSM?
I don’t think they have any options at all. The contract with the BCCI very clearly states that IPL will have to have eight teams and a minimum of 64 matches. That is essential for advertisers, for revenue, for sponsorships, for the entire ecosystem to survive. If either of these numbers are not met, MSM will have to re-negotiate the contract which means that the financials of the IPL, the very model of the IPL, may not be able to sustain itself.
Q] Has advertiser trust in the property taken a hit?
No, I don’t think so. The IPL is the biggest entertainment property we have in the country, season after season, and despite numerous controversies, people have flocked to the stadium or watched it on TV. But, yes brand IPL has been hit particularly badly this time. If it manages to pull through the next two years, injecting credibility and trust back into the system, it will emerge stronger than ever before, because the property on the field is great.
Feedback: aliefya@exchange4media.com
