In-depth: Is the IPL title sponsorship fee paid by Vivo sustainable in future?

With Tata Group coming on board as the title sponsor of Indian Premier League (IPL) it looks like some stirring plans are underway. Market experts look at the development as a good marketing case study for the future as Tata Group is going to consolidate its digital businesses in the wake of IPL.

The Indian multinational conglomerate agreed to pay Rs 670 crore for the 2022 and 2023 seasons of IPL. Tata will pay Rs 301 crore as the title rights fee and Rs 34 crore as an incremental fee for the increased number of matches every year.

With a look at the chart above, it is clear that the Chinese brand Vivo in the year 2018 paid more than four-times the existing rate, along with an additional Rs 150 crore for air-time. While the move could possibly be to rule out the competition in the market, experts agreed upon the fact that Vivo became a household name in a Samsung-dominated market only after the IPL.

However, no brand has been able to match the fee paid by the Chinese mobile manufacturer when it dropped out in 2020, and for 2022 and 2023 seasons. This raises the big question: was Vivo’s aggressive bid sustainable, and can the title sponsorship get the same amount again? 

An industry expert said, “Typically, brands opt for such expensive properties as title sponsorship of IPL if they are looking for major imagery change or rapid awareness. Tata is in a long run for this. When you go behind a property like a title sponsorship of IPL, the mathematics is never only about annualised returns. One doesn’t do an ROI calculation at an annualised level. It will never work out this way.” 

“Getting title sponsorship of IPL is about long-term equity building. It finally boils down to how desperate you are to make a mark. The property gives you the mark. There are so many brands like Oppo and Vivo which have literally built their brand on IPL. There’s no faster way in India and that’s a fact. India was a Samsung-dominated market, but Vivo became a household name only after IPL,” he said.

Vaishali Verma, CEO, Initiative India, agrees and mentions the significance that IPL holds in terms of reach and penetration.

“Of course, it is a very high-stake sponsorship when you spend that kind of money. Brands picking title sponsorship of IPL don’t look at it for the short-term. Typically, it is a three-year or five-year horizon because you have invested in it from a long-term perspective. The reason is simple; there is no other platform which is bigger than IPL in the country today. As a media platform, it gives you the kind of scale and depth, both, in terms of reach, as well as penetration. And we’ve seen that over the last many years,” Verma said.

“From a viewership perspective, it is unprecedented. It gives you an unparalleled scale and reach. In terms of the cost involved, at what cost the sponsors should be willing to pay, it all depends on how the sponsors calculate, what is the valuation they are doing at their end,” she added.

While long-term equity building and valuation are on one side of the business, sales and ROI are the other half and hold equal importance for any brand. 

Bodies like TAM, BARC and Repucom do ROI evaluations for brands in terms of the media value one derives from these partnerships. For example, how much total exposure brands are getting by investing behind this kind of property, how many times the brands’ logo appeared, brands’ names mentioned, among other types of calculations. 

But a leading media agency head told BestMediaInfo.com that media value is not the sum-total of ROI.

“If you’ve spent Rs 100 crore, calculating media value you got for that Rs 100 crore is not ROI. Many times, the reports look inflated. It looks like you’ve got 200% of the value that you invested. But it’s not. When you put your filter, quality assessment and everything, it comes out to be about 70-80%,” he said.

The other aspect of ROI comes from social media conversations that are generated about the brand. The social chatter generated itself is another big factor, which happens outside the TV ecosystem. 

Another aspect of measuring ROI is through sales and equity built in the long run. Most of the times brands don’t enter these types of partnerships for boosting sales. They do it for equity building. Once you become a big brand, then you sell. 

An industry expert decoded the procedure of how ROI is calculated.

“There are two-three ways to do this ROI calculation. Firstly, one has to understand that when a brand takes up the sponsorship of a big gaming property like IPL, it’s never done for a year. Therefore, the traditional metrics of measuring ROI do not work here. One has to do a long-term equity exercise on it. There are econometric models with which you can actually measure the long-term equity impact of investment behind properties like that. In the short term, if one has to measure the value extracted, there are different analogies to do it.”

Bhavana Mittal, Chief Growth Officer and Executive Director, Bert Labs, echoed the same sentiment and recalled the ‘Vodafone ZooZoos’ launched in 2009, which created a huge impact. “If you use it well then the brand recall is very high. Now whether it will translate into numbers or not, I can’t say. Pepsi has launched a lot of their campaigns here, if you remember the ‘Vodafone ZooZoo’ campaign, we know what's happening to Vodafone, but they used the platform very well because you have a vast audience and you have two-months of their time.”

Info@BestMediaInfo.com