How IPL suspension will add to adland's woes

Industry watchers note that the suspension of IPL will have a huge impact on ad revenues with brands having to pull back campaigns and the overall market sentiment getting affected

e4m by Misbaah Mansuri
Published: May 5, 2021 8:51 AM  | 10 min read

In a major development, the 2021 edition of the Indian Premier League was on Tuesday suspended after multiple Covid-19 cases were reported within its bio-bubble. As of Tuesday afternoon, there were confirmed positive cases in four of the eight teams, which would mean quarantine for half the franchises.

 The announcement came after an Indian cricketer in both Sunrisers Hyderabad and Delhi Capitals camp tested positive for coronavirus on Tuesday, a day after there were positive cases reported in the Kolkata Knight Riders and Chennai Super Kings teams. The suspension has indeed created a lot of chatter. 

 However, the question that begs to be answered is whether the suspension of such an impact property will affect the ad industry.

A rocky road ahead?

Rohit Ohri, Group Chairman & CEO of FCB India, asserts that the impact of the IPL suspension on advertisers and market sentiment will be huge, with ads and revenues being pulled back.

“Many companies planned to start advertising towards the end of the IPL when the viewership is the highest. That opportunity is now lost. The season was doing very well in terms of viewership given the lockdown. Further, there will be a negative human impact as well given that the IPL was the one ray of light in these dire times. However, the decision to suspend it, given the current situation, is a right one,” he remarks.

According to reports, the pandemic has wiped $63bn (£47bn) of revenue from the global advertising market this year, a decline that is double the rate of the Great Recession after accounting for inflation.

The industry was hopeful that 2021 will bring cheer to the industry. But with the suspension of the big-ticket sporting extravaganza, does it mean that the road to recovery only gets harder now for brands and agencies? Would it lead to them further tightening their purse-strings when it comes to advertising? 

Ashish Khazanchi, Managing Partner, Enormous Brands, notes that the suspension of IPL will certainly have a near-term adverse impact, both on the business objectives of advertisers and even more importantly on the market sentiment.

 Khazanchi notes that heavy investments may be held back because there's going to be unpredictability on how the returns on investments may turn out to be. He says that the first time advertisers, however, are probably going to be the least daunted going by my extensive work with them for a few important reasons.

"One, their businesses are heavily digital-enabled. That part of the world will roughly continue unfazed and may actually gain shares at the expense of the traditional business models. Two, they have a much higher risk appetite than the traditional business. The older businesses are usually in a consolidated mode, while all startups are in an aggressive growth and acquisition mode. They may actually take advantage of lesser media saturation to build a share of voice. The cancellation is somewhat likely to cast a little shadow of uncertainty even on the World Cup. But only the next few months will tell us the way for sure,” he remarks.

Prior to Tuesday, the organizers had pushed ahead with the tournament, despite the withdrawal of several high-profile players and calls for a postponement.

Naveen Gaur, Deputy CEO, Lowe Lintas states that with only 29 of the 56 matches played in this year's IPL, there will be an impact on media revenue. “Most of the IPL centric campaigns were conceptualised during the first two months of 2021 when the pandemic was dormant and industry outlook in the near term was buoyant. Unfortunately, a week into the IPL, we knew that things are going to get worse with the pandemic. The big spenders who bank on IPL to grab eyeballs will certainly face a temporary setback as they pause a large section of their advertising outlay and expected rewards or targets,” he says.

Gaur expounds that with lockdowns and curbs in various parts of the country, some off-focus categories will need to adapt and ensure that they are still relevant to their consumers. “On the other hand, some vital categories like Healthcare, FMCG, Insurance, Edtech will witness increased activity,” he observes.

Meanwhile Chetan Asher, Founder & CEO - Tonic Worldwide hints that for advertisers the impact will be in terms of redrawing their plans, redirecting their investments to other mediums. “This could range to even evaluating if advertising investments allocated for IPL can be directed towards driving support and on-ground impact in worst-affected cities. More so for first time advertisers, they can be nimble, drive change and emerge stronger. With the bio bubble breached and the current situation in the country, suspension of IPL was inevitable and probably the right thing to do,” Asher asserts.

We shall overcome

Hari Krishnan, CEO - Mullen Lintas says that the suspension of IPL is another setback adding to the already turbulent landscape that brands and consumers are grappling with.

“Everything that has happened in the last 3 weeks and is continuing to happen with regard to the raging pandemic will naturally have an impact on brands and the advertising and marketing industry. On top of that, suspension of IPL is another blow. Today, there’s just one degree of separation between brands, consumers and covid impact. There are far more basic and primal worries now that are occupying the consumer’s mind and non-discretionary purchase would once again be deprioritized. That’s something that brands would be cognizant of,” he says.

Krishnan however notes that it was an expected move and is the right thing to do, given the spike in Covid cases.

“With every passing day, the organizers, sponsors and consumers alike were all asking the silent question about whether it’s appropriate to carry on with the event. So even though it’s a setback at many levels, it’s also something that probably wasn’t totally unexpected either. However, just like last year, everyone is hopeful of a quick recovery out of this temporary slump,” he remarks.

In the last year itself, traditional media had a torrid year, accounting for the near-entirety of the advertising market decline in 2020 due to the pandemic. Globally, spend was down by a fifth (-19.7%), or $62.4bn, to a total of $253.9bn, with linear TV (-16.1%, down $29.9bn) seeing the largest absolute cut to ad budgets. 

Shradha Agarwal, COO and Strategy Head- Grapes Digital observes that last year too, the pandemic made a dent on the biggest sporting event with the IPL ecosystem’s value plunging by 3.6% to Rs 45,800 crore during season 13 from Rs 47,500 crore IPL 2019. “When brands started buying inventories for IPL and bidding for the sponsorship, the Covid cases in India were going downhill. At that time, Star Sports roped in 18 sponsors and over 100 advertisers across multiple sectors. Even several startups have invested a large amount of their marketing budget on IPL this year,” she explains.

Agarwal feels that the move will definitely affect brands, marketers and agencies as there are several creative works, campaigns that are yet to be launched as brands were waiting for the IPL to enter its second phase.

 “In May, many brands would have come out with ads and campaigns because the IPL advertising inventory is sold through long term contracts that are signed before the tournament begins. This will also impact digital agencies that are ready to launch their campaigns with influencers based on IPL.

 "There are few possibilities. Firstly, the IPL is suspended and not dropped hence, advertisers will wait for the league to resume or some clients would cease the campaign and work on Plan B because the budget was allocated for a specific period and if the quarter changes they will back out. Small advertisers might take the route of moving to regular inventory instead of investing for the remainder of the season in one go,” she explains.

Agarwal opines that since the sponsorship budgets are always huge for Star and Hotstar, all the money is blocked. IPL is not called off, so the broadcasters will expect advertisers to stay and not back out. “The organizers will also look for renegotiations with advertisers, but if the event is cancelled then it will impact them,” she remarks.

Anil Nair, CEO, VMLY&R India asserts that the suspension will definitely affect everyone who has had some stake in this year’s tournament and will be a further blow in what is turning out to be another tough year.

“This is an unfortunate development for the brands, agencies and broadcasters. Given the sheer timing of the IPL coinciding with the rising Covid cases and deaths. It's been a brave decision to suspend this year’s edition out of deference to the prevailing situation.

"Though it will be a setback for everyone involved, especially given the investments both monetary and the bespoke, creatives and campaign that brands would have invested in especially for the tournament. Not to mention the opportunity loss and the sheer impact that IPL could potentially have from a brand-building perspective.

"Having said that, it's prudent for brands to take it in their stride given the prevailing atmosphere and to divert their brand-building efforts to other avenues especially given the uncertainty on the current Covid situation and hope for an improvement before the festival season this year,” he says.

Reflecting on a more optimistic side, Dheeraj Sinha, CEO & Chief Strategy Officer - South Asia, Leo Burnett notes that brands who have heavily invested in the IPL 2020 have already had 4 weeks of on-air time and will wait and watch for its return news, hoping that IPL can deliver on its promise which it mostly does.

“The suspension of IPL is part sentiment and part medical situation arising within the teams. Businesses which have demand will look to pivot and redirect their campaigns on other available platforms for advertising such as GECs,” says Sinha who believes that the Indian ad industry like other reeling tribulations that it has fought through, will tide and shine through this too.

Ashish Bhasin, CEO, APAC and Chairman India, dentsu too feels that given the prevailing pandemic situation, it was the right decision to postpone the IPL and is hopeful that the ad industry will weather this storm too. “The health and safety of all the players and everyone involved I think is paramount and keeping in mind the situation in the country and the prevailing mood in the nation, in my view it is the right decision.

"IPL is the single largest property on Indian television, appealing to a wide target audience, across the geographies. It has unparalleled reach and has always proven to be an excellent vehicle for brands and I think that will continue to be so and that will not change," he notes.

"Given the fact that several parts of the country are going into lockdown, there are emergency measures been taken in different cities and towns to curb the pandemic, the severe shortages and difficulties being experienced, lives being lost to the pandemic, I think it is more appropriate to focus on that then on commercial issues for now. I’m sure the commercial issues will get discussed and resolved in an appropriate manner,” Bhasin asserts.

The tournament began on April 9 in Mumbai and Chennai with the eight teams restricted to two venues before moving to Delhi and Ahmedabad as the caseload in India increased.

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