The ICC World Cup fever has gripped all. The ad spends on cricket in India itself are expected to shoot up enormously. According to media planners, the ad revenues from the ICC World Cup and IPL-8 are estimated to be around Rs 2000 to 2,500 crore this year.
According to a SportzPower - GroupM ESP report, media ad spends across domains in 2011 World Cup that took place in India recorded Rs 30 billion (Rs 3,000 crore). According to the Pitch magazine report, ad spends on TV for cricket were estimated to have crossed Rs 2,000 crore in 2011. This included the India-South Africa series, estimated to have generated Rs 130-crore revenue, ICC World Cup 2011 bringing in Rs 700 crore, IPL-4 Rs 800 crore, India-West Indies series Rs 100 crore, Champions League T20 Rs 120 crore and India-England series Rs 160 crore.
It has been four years since then. In 2015, which again is a World Cup year, we take a look at how the ad spends on cricket are expected to grow.
Ad spends on cricket
The previous year, the economy witnessed a slowdown, affecting the ad spends of brands. In 2013-14, the Indian economy slowed down to 4.7 per cent, with investment sentiment at an all time low.
However, investment sentiments were positive in 2014. According to the National Council of Applied Economic Research (NCAER) and RBI estimate, growth was estimated over 5% in 2014, after the new government came into being. The UN World Economic Situation and Prospects 2015 report says the economy is estimated to increase to 5.9 per cent this year and 6.3 per cent in 2016.
This is likely to bring about an increase in ad spends in 2016. Media planners expect brands to increase ad spends on sports, especially cricket, by 20-25 per cent during the first half of 2015.
In 2011, the ICC World Cup and IPL were estimated to have brought in Rs 1,500-crore ad revenue. They were the highest ad revenue gainers for cricket and sports on the whole. According to media reports, compared with the 2007 World Cup, ad revenue in 2011 increased by 50 per cent. The ad revenue for the 2011 World Cup was estimated to be around Rs 700-750 crore, while it was around Rs 350 crore in 2007.
Apart from the World Cup, the Indian Premiere League (IPL) is another property in the country that rakes in a lot of ad revenue.
IPL-2 in 2009 is estimated to have brought in TV ad revenue worth Rs 400 crore, in spite of it being held in South Africa due to the Lok Sabha elections that took place during the same period.
The following year, IPL-3 ad revenue shot up to Rs 650-700 crore, a 62.5 per cent rise from the previous year. The fourth edition too recorded a rise in ad revenue to Rs 800 crore, a 23 per cent rise from the previous year.
According to media reports, IPL-5 in 2012 was estimated to have brought in Rs 750 crore through TV ad revenues alone. The following year, the figure was estimated to grow by around 27 per cent for IPL-6. The ad revenues increased to Rs 950 crore.
However, in 2014 due to the Lok Sabha elections, which took place during the same period, the first half of the tournament was held overseas. This led to a drop in the revenue for Multi Screen Media (MSM). According to some media reports, it resulted in revenues dipping to Rs 800 crore during IPL-7 last year.
Expected growth in ad spends
It would not be ideal to take 2014 IPL revenue estimates into consideration, as it was muted due to the elections. We can take the example of the 2013 IPL-6. As per estimates, the IPL-6 TV ad revenue shot up by a minimum of 20 per cent. According to media planners, the expected revenue from IPL-8 could be around Rs 1,000 crore.
Growth in the economy during 2010-11 fiscal touched the highest point of 8.5 per cent before the slowdown. This could be one reason that led to 50 per cent growth in ad revenue in the 2011 ICC World Cup, compared with 2007. Besides, the 2011 World Cup was played in India, which could be another reason for this increase.
With the economy growing again and India expected to retain the World Cup, we can peg the projected growth of ICC World Cup 2015 ad revenue to be a minimum of 30 per cent. The rising inflation in 2011 and increasing ad rates can push this up further to Rs 1,200-1,500 crore.
“In 2011, it was World Cup and IPL close on heals, just like this year. We will see the combined spends of the February-May 2015 period to be about Rs 2,500 crore,” said Anita Nayyar, CEO, Havas Media Group, India and South Asia.
Apart from these two tournaments, the other major cricket tournaments in the calendar are -- the Carlton Mid ODI Tri Series between India, Australia and England to be played in Australia in January. Also, there is the Border-Gavaskar Trophy between Australia and India the same month. As these tournaments are scheduled just before the World Cup, we cannot expect much ad spends from brands towards them as they will be looking towards spending on the World Cup or the IPL post that.
However, the Carlton Mid ODI Tri Series and Border-Gavaskar Trophy will draw in advertisers who cannot afford to spend on big-ticket events such as the World Cup and IPL, but want to leverage the international cricket platform.
Besides, there will be the Champions League T20 tournament, apart from other cricket tourneys that are yet to be decided for the year. Each of these tournaments might not bring in as much revenues as the IPL or ICC World Cup, but will bring in revenues exceeding some other sports properties in India. With this, we can expect TV ad revenues for cricket to grow even more in 2015.
“I am sure it (TV ad revenues for cricket) will go up. Costs are there and inflation is there too. The other aspect is that India is the reigning world champion and we can expect them to do well. The sentiment is positive,” said Balakrishna PM, Chief Operating Officer, Allied Media. He added that there would be an increase in the ad rates since the 2011 world cup and 2014 IPL.
However, some media planners feel that the World Cup being held in Australia and New Zealand might prove to be a dampener and affect the ad spends.
“Starting with macro environment, a lot of things are not going that great for such big-ticket investment like the World Cup. While weekend India matches are savior, it will be difficult for the 2015 World Cup to stand against the might of 2011 World Cup played in India and in prime time -- both in terms of viewership and revenue. At the same time, we can expect shifts in the World Cup consumption on digital platform, especially weekday matches,” said Shekhar Banerjee, SVP and Head, Madison Media – PINNACLE.
Though we might peg a significant increase in ad spends on cricket for few months, it has to be remembered that in 2011 the tournament was played on the home ground. Apart from that, taking into consideration that several other sports properties have come up recently, many brands may think of spending on them rather than cricket. With the World Cup being in the last quarter, brands will be monitoring their budgets and spending accordingly. Hence, it remains to be seen if these estimates will hold true.