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Pepsi’s exit is strategic; not expected to affect IPL brand associations, say marketers

Pepsi’s exit is strategic; not expected to affect IPL brand associations, say marketers

Author | Collin Furtado | Wednesday, Oct 21,2015 9:01 AM

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Pepsi’s exit is strategic; not expected to affect IPL brand associations, say marketers

PepsiCo exited the Indian Premier League (IPL) after making its intentions clear a week earlier, to the BCCI, citing that the tournament brought disrepute to the game. The league had come under the scanner after a series of spot-fixing scandals in 2013. The result of this has lead to two teams being suspended for two years along with owners and players being banned from the game.

It is the first brand that has taken such a tough stance on IPL by choosing to exit with two years still remaining on the contract.

Pepsi had signed the five-year deal for Rs 396 crore in 2013, which amounted to approximately Rs 80 crore per year. Vivo has now been signed on as the title sponsor in place of Pepsi for the next two years for an estimated Rs 200 crore.

While the BCCI has managed to get its way out of such a tight spot this time, are there chances of other brands taking cue from Pepsi? Will marketers think twice about associating with IPL?

When controversies strike a property or a celebrity for that matter, brands immediately pull out of their association to avoid any negative backlash. This was seen during controversies that hit Tiger Woods and Lance Armstrong. Even in the current FIFA crisis, many brands are considering backing out.

While many believe it is time for the BCCI to clean up its act and create more transparency in the tournament, others are of the notion that as long as IPL delivers good viewership, brands will be attracted. IPL has also delivered good results for many brands and many will continue with their association. Brands associate with big ticket properties for the media mileage as well as the goodwill it brings them.

Will Pepsi’s exit impact IPL brand associations?

Sanjay Tripathy, SVP - Head Marketing, Product, Analytics, Digital and Ecommerce, HDFC Life doesn’t think that the exit of Pepsi will affect brands wanting to associate with the league. “IPL is a very strong league and produces good results for brands. So I don’t see it having a large impact. In fact, another brand, Vivo has taken the title sponsorship rights soon after Pepsi’s exit.” He further said that Pepsi’s association these past three years has provided the results for the brand. It depends on what the objective of the brand is at a particular time and once that is achieved, a brand can move on Tripathy opined. IPL serves the objective of building the brand’s image. He however felt that trust in the IPL has been affected (however mildly) for brands and created a greater need for transparency. 

Anisha Motwani, Marketing and Digital Strategist, Max Group of Companies said, “What is most important for brands is their reputation and it takes many years of multiple actions by organisations to create goodwill for the brand. The whole reason for getting associated with celebrities or large properties is that the reputation of the brand gets enhanced. Positively or negatively, both ways works. A positive aura enhances a brand and a negative aura does to that extent impact the brand. From that perspective, there will be a little caution. But having said that, finally IPL is a very strong established property and strong brands do come out of controversy. I am confident that IPL is such a strong brand that it will come out of this controversy.”  

Was it a strategic exit by Pepsi?

Brand objective is something that a few other marketers talked about. Many felt that this was a smart move for Pepsi to exit IPL, and one which it would have been waiting for. While the tainted reputation of IPL was one reason, many feel that the cola giant had achieved its objectives in the three years of its association with the league and needed an exit. The exit also saved the company an estimated Rs 160 crore left on the contract, apart from the added marketing and ad spends during the tournament.

Sai Narayan, Head – Brand, Policybazaar.com commented, “Pepsi moving out of IPL after sponsoring it for the past three years is a pretty smart move. Pepsi has become well established through its association with IPL. If you notice, Pepsi is also associating with other sports. The task of the brand which was to ride on the biggest reach property -- IPL, was pretty much done. I think it would have been good savings for a brand like Pepsi. After all Pepsi is not a new brand. For instance, Paytm sponsoring the India vs South Africa cricket series is a big one. An e-commerce brand sponsoring India cricket will give it instant reach. The value it will generate for such a brand will be much more than what they would have spent.”

Another senior marketer felt the same. “Pepsi has leveraged IPL well, over the last three years. Sticking with the league would result in spends being parked on the league instead of being used more wisely for the brand. The issues surrounding the IPL proved the best opportunity for it to exit. However, I don’t think this will stop marketers from relying on the IPL. It continues to be one of the most watched events in India and brands will flock to it,” he said.   

A marketing manager of a financial institution which is one of the official sponsors for IPL said, “We have not changed our stance. We are long term partners. There has been conflicting stories on why Pepsi left the league and honestly it does not fall into our gambit, we were never in that space.” He added that there are new sponsors such as Vivo and other brands associating with other BCCI tournaments recently, so the churn continues to happen. 

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