In-depth: IPL media rights up for grab, here's how sponsorships can remain affordable for brands

BCCI has floated the tender for IPL media rights for five seasons from 2023 to 2027. This year, with the league adding two new teams, IPL is already a 74-match tournament in 2022 in comparison to last year’s 60 matches. The number will gradually increase to 84 matches in 2024 and 2025, and will further increase to 94 matches in 2026 and 2027.

The increased number of matches is set to bring in revenues to the tune of Rs 30,000 to Rs 40,000 crore. And all this will make IPL unaffordable for many brands for picking sponsorships.

In effect, a brand that was paying Rs 150 crore for Co-presenting sponsor title on TV for 60 matches until last year, is now paying in the excess of Rs 200 crore for 180 seconds FCT per match. The brands were given an option to pick co-sponsorship with 150 seconds FCT per match that costs them Rs 160 crore.

Given the 10-15% inflation linked ad rate hike every year and number of matches going up by around 50%, a brand may have to shell out around Rs 400 crore for the co-sponsorship title.

Whichever broadcaster wins the IPL media rights this time will have to pay at least double of what Star India paid in the previous bidding. This also means that the broadcaster will ensure doubling of revenues by the end of five years.

Would brands be able to afford such rise in sponsorship cost?

Piyush Nangru

Piyush Nangru, Co-Founder, Sunstone Eduversity, (one of the associate sponsors of Lucknow Super Giants), said, “While ad rates keep increasing, brands can always find smarter ways to deploy their monies around this property and ensure the brand gets impactful visibility like at no other time of the year.”

Priyanka Kapur

Priyanka Kapur, SVP, Zenith, said that the tournament getting broader and longer has its fair share of advantages and disadvantages. She believes that it's going to make the overall entry costs higher but at the same time for the smaller advertisers who rise on IPL on limited matches, it gives more inventory and opportunity to leverage.

No matter how appealing IPL is as a property to garner reach; with the ad rates increasing in the future, whoever gets the media rights will have to come up with special sponsorship packages for brands to continue taking sponsorships at viable rates. 

Nangru, of Sunstone Eduversity, said that to keep the brands’ interests alive and justify the cost, BCCI and broadcasters will have to continue introducing new teams and innovative advertising formats and inventories even if the rates continue to rise.

For IPL to remain the apple of the eye for brands, “Sponsorships definitely will have to be worked out as special packages for the big advertisers to continue investing in the property. Also, it depends on whether these additions are going to affect the viewership and stickiness of the league. Currently, its USP is its duration and packed entitlements,” added Kapur of Zenith.

Suvid Bajaj

Suvid Bajaj, Head of Marketing, Spinny, suggested that going ahead the IPL broadcaster should offer options where someone can be there for a certain set of matches, sponsor in different ways, could go on air in the last set of matches or could be on air for alternate matches, so on and so forth.

He explained, “There will be different packages for the entire 90-day event. And brands depending upon their change of evolution or where they are will take part. There will always be some package of the IPL available for somebody to go ahead with. There are going to be different models and across a very wide spectrum of price.”

V Sudarshan

V Sudarshan, CEO, Techlutions and also Brand Consultant on IPL spends effectiveness, said that with the tournament becoming expensive, the brands won’t withdraw from IPL sponsorships, but will come down on the kind of sponsor they want on IPL.

He explained, “People who really want to spend big money will keep spending huge on sponsorships, but eventually they will realise that they cannot keep doing this. After spending a particular amount of money and time on IPL a diminishing marginal utility starts coming in. Brands will get a reach of 80-90% but an exponential increase is not possible. So, even though if one is spending crores, that 90% reach will only increase marginally in the future. Automatically, many brands would withdraw from it but new people would always be taking it up since there is no dearth of start-ups.”

Sudarshan commented, “If today the rate is X for 10 seconds and the broadcaster increases it to 1.5X for 10 seconds in the future, brands cannot continue increasing budgets for IPL. They will not withdraw from IPL but will come down on their spends and from their positions in sponsorship. If a brand was a co-sponsor or title sponsor, they will become an associate sponsor, an associate sponsor will book a high number of FCTs or may only do spot buying.” 

He further explained that if the ad rates increase and brands don’t want to increase their budget for IPL, then they can always reduce the number of seconds of advertising. Similarly, to match the budget, brands can move to OTT from TV.  Even though OTT rates are also increasing, it still costs lesser than TV.

Anita Nayyar

Anita Nayyar, COO, Media and Communications, Patanjali is of the opinion that sponsorships rates could only increase to a certain level, but the number of brands willing to spend heftily on IPL is also increasing. She said, “We all know everything that goes up comes down. On the other hand, if rates are increased, it means that the market has the potential to absorb that. With all the new-age start-ups, martech and fintech firms growing, the categories of advertisers are also increasing. The market should be able to absorb the increase in sponsorship rates, but to what level, is something that one will have to wait and watch.”

Sudarshan suggested that the IPL media rights owner should focus on getting more brands on board rather than increasing the ad rates in the future when the FCT size increases with the number of matches increasing.

He said, “The marginal increase in rates per 10-seconds is going to happen. If I was a broadcaster, I would focus on getting more brands than increasing the rates. One can have 10 main sponsors and many associate sponsors. Brands understand the marginal increase of 10-15% but the moment the broadcaster increases the ad rates exponentially, people will come and go.”

Shripad Kulkarni

On the other hand, Shripad Kulkarni, Marcom Advisor and former MD, Vizeum, said, “There is a reason why start-ups ended up in IPL. The moment one wants huge reach and very high level of visibility, then there aren’t many singular point options other than IPL. One gets the digital as well as the TV audiences through one event.”

Historically, with every passing year, IPL sponsors including DLF, Pepsi, Vivo, Dream11 have always paid increasing premium for the media sponsorships.

According to IPLomania syndicated study by Hansa Research, despite the steep crowding of the IPL landscape YOY the average ROI across brands has largely remained stable. Over and above that, most advertisers on IPL experience a healthy lift in their Brand KPIs (awareness, usership, future consideration). All this today justifies the manic spending by brands during this mega sporting event and evidently tips the scale in the singular direction – it merits brands to readily hop on to this bandwagon and join this celebration called ‘IPL’ no matter the expense attached.

Kulkarni further said, “Ad rates and sponsorship rates are the function of supply and demand. Going forward, as long as IPL continues to innovate and be popular, the number of brands willing to buy IPL sponsorships will also increase and so will IPL rates. Demand is the reason why brands that wanted massive visibility have bought sponsorships at increased rates irrespective of it becoming expensive every year.”

“Even for spot buys, if a brand spends Rs 40-50 crore elsewhere on marketing, it will still not get the impact or traction compared to spot buy in IPL,” he added.

The average advertising seconds per match has grown with every new IPL season, from a measly 5,000 seconds per match in 2016 to 9,000 in 2017, 11,000 in 2018 to now a staggering 20,000+ in 2021. This number is expected to rise further in the current tournament.

Praveen Nijhara

Praveen Nijhara, CEO of Hansa Research, said, “Each match is crammed with more FCT, yet all slots are sold-out much in advance. Clearly tells us that brands are hungry for more as they view this cricketing festival as a windfall. Consumer attention garnered during IPL can offer brands a fillip at the start of each financial year. Every single IPL match offers an overabundance of OTS – 40 breaks between overs, 20+ On-ground ads, 25+ Astons, 4 Strategic Timeouts, plentiful Fours and Sixes, and innumerable brand appearances on various associated properties. Now multiply this by 75 matches over 9 weeks and the count of brand OTS windows is mindboggling. So clearly, IPL is still going gangbuster among fans and brands alike. As for the BCCI and the broadcaster, for a clean shot over the ropes, they simply need to ensure the tournament is not dotted with any hiccups primarily engendered by the pandemic; the rest of the pieces shall dutifully fall in place.”

Bajaj of Spinny concluded that the other way to look at it is – if not IPL then what else? Because brands have to create platforms, they have to create awareness and strong perceptions. If there’s another platform that’s equivalent to IPL, then Bajaj said that surely brands will move that way. But if IPL is able to command that kind of premium, then the ROI for brands is obviously going to be there.

(With inputs from Nisha Qureshi and Roohi Gupta)

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