Suspension a short-term setback; brand IPL will continue to remain strong, feel advertisers

With the IPL being suspended till further notice, only brands focusing on summer may move to other avenues, say experts. Star India may end up losing Rs 400 crore in advertising, estimates say

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Suspension a short-term setback; brand IPL will continue to remain strong, feel advertisers

The suspension of the current season of the Indian Premier League (IPL) may create a short-term disruption for both advertisers and the broadcaster Star India but the overall value of India’s biggest TV event and sporting league is unlikely to take a beating, experts feel.

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The industry experts said most brands will still continue to stick their money with the IPL as there’s no other property that will deliver the way the cricket tournament does. However, brands may renegotiate pricing and other details. 

Anil Nair

According to Anil Nair, VMLY&R, CEO, India, “The suspension will be a setback for all the stakeholders involved given the time and effort involved. It will be a huge loss in terms of brand building and salience opportunity in an otherwise sideways kind of year.”

On whether brands would negotiate the deals, he said, “This kind of a force majeure will have lawyers and deal makers rushing back to their contracts and trying to mitigate the fallouts from this unforeseen development.”

Jai Lala

Jai Lala, CEO, Zenith Media, said only seasonal advertising may move away from the current season of IPL. “It is better for clients for whom time matters to remove the money and plough it somewhere else. Then there are advertisers for whom time is not of much importance but the property is of importance. So even if it happens in September or October, it will make sense.” 

Another global agency head on the condition of anonymity told, “Advertisers for whom this is not the only key season may also continue campaigns on other platforms depending on how well the first 4 weeks of IPL has impacted business.”

“If overall market demand is coming down due to Covid, then advertisers may actually see this as an opportunity to safe guard investments for later in the year,” the agency head added.

Shashi Sinha

With the entire country reeling under the distress caused by the second Covid wave, many brands were worried about the viewership. However, according to Shashi Sinha, CEO, Mediabrands India, “Viewership was dropping compared to 2020 which was an exceptional year but this year’s ratings were 6% better than 2019.”

“Not all clients are happy with the suspension as all the e-companies such as gaming and education were seeing traction. Also, the beverage category is a mixed bag as this was peak season for them,” he added.

Ashish Bhasin

Asked if IPL’s brand value will take a beating, Ashish Bhasin, CEO APAC and Chairman India, dentsu, said, “IPL is the single largest property on television in India and something that appeals to a wide target audience, across geographies. It has unparalleled reach and has always proven to be an excellent vehicle for brands. I think that will continue to be so and that will not change.”

Adding to what Bhasin said, Varun Gupta, Managing Director and Head Valuation Advisory, APAC, Duff & Phelps, A Kroll Business, said, “IPL’s ability to pull TV audiences continues unabated. Secondly, the value of any enterprise is based on its future cash-earning capacity. To our mind, while there will be some revenue loss this year, the future revenue-generation ability of the IPL is undiminished.” Gupta said the overall revenue for both BCCI and IPL teams will see some dip. 

The pandemic has had a negative impact on the IPL overall but experts feel the loss is likely to stay at the same level as last year in terms of brand value. 

Last year, the pandemic made a dent in India’s biggest sporting event. The IPL ecosystem’s value plunged by 3.6% to Rs 45,800 crore during season 13 from Rs 47,500 crore IPL 2019. When brands started buying inventories for IPL and bid for the sponsorship, Covid cases in India were going. At that time, Star Sports took on board 18 sponsors and over 100 advertisers across multiple sectors.

This year, several startups have invested a large amount of their marketing budget on IPL.

Shradha Agarwal

Shradha Agarwal, COO and Strategy Head, Grapes Digital, said, “This is definitely going to affect the marketers. There are creative works, campaigns that are yet to be launched as brands are waiting for the IPL to enter its second phase. In May, many brands would have come out with ads and campaigns because the IPL advertising inventory is sold through long-term contracts that are signed before the tournament begins. This will also impact digital agencies that are ready to launch their campaigns with influencers based on IPL.” 

Ashish Khazanchi

Ashish Khazanchi, Managing Partner, Enormous Brands, said, “Suspension of IPL will certainly have a near-term adverse impact both in terms of business objectives of advertisers and even more importantly on the market sentiment. Heavy investments may be held back because there's going to be unpredictability on how the returns on investments may turn out to be.” 

Dream11, the main sponsor of IPL, has already said in a statement that it supports the step taken by the BCCI as the overall health of the players and people involved is much more important.  The decision to suspend the season was announced by BCCI on Tuesday after some of the players tested positive. According to reports, the future plan for the tournament could be announced next week. 

Lloyd Mathias

“I think businesses should wilfully put aside commercial considerations in this moment of crises. Sales sentiment and business mitigation is secondary at this point in time,” said Lloyd Mathias, Business Strategist and former Marketing Head of PepsiCo, Motorola & HP APAC.

What will Star India lose? 

Experts said Star India may not lose a big chunk of the revenue as most brands will continue the partnership. According to one estimate, Star is likely to lose to the tune of Rs 400 crore. In the last season, the broadcaster made around Rs 2,800 crore through advertising.

“Brands will take some time to register and recover. The IPL in that sense is incomparable and unique and I don’t think it’s as easy as switching lanes as far as brands are concerned. Brands will have to activate their plan in case they were expecting pandemic-related disturbances or else prepare for the upcoming festival season, provided the pandemic abates and the situation eases. Pound for pound there is no comparison to IPL and what it is able to deliver as ROI to clients and brands. Also the existing IPL deals will need to be un-knotted before brands can take decisions to divert their media investments to alternatives.” said Nair.

Lala said, “IPL forms a huge chunk of revenue for Star as well as for BCCI and the impact from that sense won’t happen because it is a postponed event. It will happen at a later day so the revenues are more or less secured. If it gets cancelled then it's a huge loss.”

There will be some diversion to other platforms also, though, he said. “IPL definitely got a lot of viewership. Now that IPL is not there, some viewership will come back (to other platforms). Even from an advertising spending point of view, clients would want to reinvest in some other places,” he said.

An industry expert said on condition of anonymity that Star India was unlikely to return a lot of money as all these possibilities related to Covid would have been captured in their contracts with brands.

“I don't think Star will return the monies as contractually I think they are protected. However they will try and get advertisements to put money on the rest of their network to minimise loss of earnings as a group. The monies could be consumed now or even later in the year — may be a 3-4 month window, before the festive season starts.”

“Star will work with advertisers to ensure they are given good deals, sponsorships on other Star shows, etc., and try and make sure all pending monies are spent on the network. All pending investments will not be consumed now given that there is potentially a drop in demand for some categories. Therefore brands will conserve investments for later in the year,” he added.

He said other platforms may have minor gains at the cost of Star India.

IPL Suspension