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BW Businessworld

It's Time For Newer Revenue Formats For IPL

IPL will have to seek newer ad revenue formats, new advertiser categories and even innovate on format but it has the chance to make up for expected revenue loss due to the current slew of challenges

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Even before the Indian Premier League (IPL) tourney dates from September 19 - November 8, 2020 were confirmed, the platform had attracted intense industry attention. Despite the change in venue to Dubai, IPL signals first signs of recovery for several businesses. This road, however, is not without its challenges.

Soon after IPL Chairman, Brijesh Patel, shared details for arguably India’s largest on-ground intellectual property, IPL has presented several concerns to organisers and franchise owners, especially on the monetisation front. What was once worth its weight in gold, now appears a penny-pincher on restrained advertising and sponsorship purses.
 
IPL is not just going out of India, but it would also be observing social distancing norms. This will limit gate fee. In addition to this, there is dried up ad revenue in the market, and the public outrage against title sponsorship from Chinese brands such as Vivo has not helped.  

Also read: Patanjali Considering Bidding For IPL Title Sponsorship

While this is present day ground reality, IPL has always boasted a certain strength, which cannot be undermined. This is perhaps a reason why the likes of homegrown FMCG brands such as Patanjali are at present mulling investing in the platform – a first of sorts for the marketer.

Explaining the overall context, Shashi Sinha, CEO, IPG Mediabrands India explains, “IPL grabs the maximum eyeballs on broadcast and now even in newer channels. And hence, there will be many advertisers who would be willing to associate with the property. While this year has not chart out as expected, there will still be new advertisers that will keep the game going.”

Sponsorship Erosion & Replacement 
With Vivo making its exit from the 13th edition of IPL, BCCI has been on a run for tuning in Rs 440 crore alone on its exit. Also, with the prevailing anti-China sentiment, the other sponsors’ participation (Paytm, Dream11, etc.), that made BCCI earn nearly Rs 170 crore, can pose challenges too.
 
The exit of these sponsors will knock off nearly 20 per cent of the advertising revenue. Television broadcast, where the likes of Star India generated a significant amount of ad revenue from the Chinese company, will suffer a greater setback as Vivo advertised heavily on television. In the last edition of IPL, a jump of 20 per cent ad revenue to Rs 2200 crore on TV and digital platforms, was recorded.

In this bear market, it appears extremely difficult for the broadcaster to even come close to this number and hence, will have to rework its revenue projection.
 
On BCCI’s front, it will be a challenge to find a replacement at even half of the value that Vivo brought to the table.  
 
“These are tough times for all businesses and IPL is no different. However, it's only in difficult times that we see more innovations. At the same time, Indian market is very resilient and we have started seeing strong signs of a comeback already. Having said that, what will be important to see is whether IPL is able to drive marketing spends and provide the adequate RoI to the marketers. RoI will be the single most important parameter right now for all investments on the property,” asserts Mohit Joshi, MD – India, Havas Media Group.

Goodbye Gate Fee 
There is no denying that absence of gate fee is an added roadblock, where franchises are losing out money anywhere between Rs 2.5-3.5 crore per match, which is around Rs 20-28 crore per season.
 
Despite the distress, the franchises feel that having to see the IPL this year is godsend itself, considering the global pandemic. There is no greater joy than to come together and witness the game this year. All efforts are being put by the franchise owners and organisers to ensure that IPL 2020 is as successful as its previous editions, as the fate of a lot of domestic cricketers depends on it.
 
 “The biggest challenge is the gate fee. However, from BCCI’s point of view, it will not affect more than 15-20 per cent of the revenue,” explains Sinha.
 
Will Advertisers Still Buy? 
With Vivo keeping the window open for its return next year, reports are that Amazon, Byju’s and Dream11 are potential replacements eyeing this opportunity for 2020.
 
Industry experts appear optimistic about advertisers putting in money. While their budgets may not align with what was expected, it will eventually “work in the end”. The sentiment is positive also because IPL will mark the return of Live sports that had come to a complete halt in the wake of the pandemic.  
 
Joshi believes, “It is a great opportunity. After a long time, a live Indian sport is happening and will be telecast on media. Given this, there is significant excitement among marketers as well as viewers, who have been content starved for a long time. While there are constraints, I am hopeful that the season will go well and will see adequate client interest and revenues.”
 
Jai Lala, COO of Zenith from Publicis Media, expresses that events such as these are generally calendared. Most advertisers reserve money for such big-ticket items. “IPL is a successful event for advertisers from different categories. With festive season and cricket around the same time, it is sure to be a lethal combination. It should be a great opportunity for categories like auto and mobile to reap the benefits.”
 
Digital Domination
Considering there will be greater intake on IPL’s digital performance than the previous years and that the groundwork for that has already been done, given IPL is available on Star India platforms and Facebook, digital is sure to rule. Its growth has already been tremendous, owing to its viability, low-ticket value and distinctiveness.
 
Sinha adds, “The power of digital has increased and advertisers will leverage sponsorships and find interesting ways to promote.”
 
Joshi also expresses, “Digital will continue to attract much more interest of the marketers for two reasons --- more measurable return on investment (RoI) and lower entry cost compared to TV. More moment marketing opportunities would be created this year. Also, custom solutions like geo-targeting for the micro, small & medium enterprise segment would be important. Influencers and cricket celebrities will also play a key role this year in driving RoI and revenues for the brands.”
 
Alternative Revenue Recourses 

While this sure is an out of the ordinary situation, the hope for a successful event remains in attendance. There may be pressure to find newer advertisers but the monetary loss can be readjusted with new sponsors on the table.  

Lala believes, “More than the Chinese sentiment, it is to do with the ask of the advertiser. IPL organisers can aim for the festive budgets of brands. They may have to reach out to more advertisers than the previous year, but I am optimistic that they will act as an alternative revenue stream.”

Tough times create new opportunities. Already the rise in digital, even in the form of eSports, online gaming, native app integrations, virtual parallel properties and the likes are seen in positive light. As the industry also learns to collaborate more, there can also be a rise in integration between brands, ensuring more value for the consumer.