Will brands play ball with IPL despite higher sponsorship costs?
Yes, say experts, who reason that there are enough big brands between traditional and new-age categories that will spend on IPL irrespective of the pricing
With the Board of Control for Cricket in India (BCCI) almost doubling the Indian Premier League (IPL) media rights base price to Rs 33,000 crore, the probability of the media rights value touching Rs 50,000 crore or above is very much in the realm of possibility.
While the BCCI is expected to laugh all the way to the bank, the IPL media rights might end up being a winner's curse. Experts say winning the IPL media rights is one thing while monetising it is a different ball game altogether. They also point out that the IPL is already the costliest media property in India with a 10-second spot costing a whopping Rs 15 lakh.
The outlays required for becoming a broadcast co-presenting sponsor on IPL are anywhere between Rs 140 crore and Rs 200 crore on TV and Rs 150 crore on digital. For associate sponsorships on TV, the outlay required is Rs 90 crore to Rs 115 crore. The outlays on digital for associate and powered by sponsorships is Rs 30 crore to Rs 60 crore.
Experts further point out that the outlays required for becoming an IPL sponsor from 2023 onwards will easily double since the payouts by the media rights owner to the BCCI will see a significant increase. Add to that, there are very few companies in India who can afford to buy TV and digital sponsorships of IPL due to the steep pricing. The question, therefore, that begs an answer is whether the current set of advertisers can afford to sponsor IPL at higher outlays?
According to Pitch Madison Advertising Report 2022, 20 out of the 50 top advertisers had ad budgets in excess of Rs 500 crore. The remaining 30 companies had ad budgets in the Rs 200 crore to Rs 450 crore range.
The report further stated that 15 new-age companies/start-ups had entered the top 50 list, altering the composition of the report's Top 50 advertisers' list. The 15 new-age brands are Dream 11, BYJU’s, PhonePe, Upstox, My 11 Circle, CRED, Netmed, MPL, Policybazaar, Unacademy, WhiteHat Jr, Swiggy, Netflix, Coin Switch Kuber, and Coin DCX.
In recent years, these new-age brands have also emerged as key sponsors of IPL across on-ground, TV, digital, and team jerseys. An analysis of Disney Star's broadcast and digital sponsors of the last two years reveals that a significant percentage of sponsors/advertisers are from new-age categories like fin-tech, ed-tech, e-commerce, crypto, fantasy sports, and health-tech.
While agreeing that the outlays for IPL sponsorship will see a significant jump in the coming seasons, a veteran ad sales executive said on condition of anonymity that there is a need to look at ad monetisation for IPL through a fresh lens.
"The outlays for IPL will certainly go up from 2023 and there are only so many brands who can afford to spend that kind of money. One way of monetising the property through advertising is to widen the advertiser base by creating packages with lower outlays," he stated.
He also stated that the frenzied ad spending on IPL by new-age brands is driven by the funding being pumped into the Indian internet economy by private equity investors. "The ability of these companies to advertise on IPL will also depend on the kind of funding that these companies are able to mop up from the market in future," he added.
The executive also said that the increase in ad rates of IPL can only be undertaken if the property continues to see growth in viewership. "This year, the viewership has dropped since fatigue has set in due to the increase in the number of matches. Considering the drop in viewership, the BCCI has to justify the base price that it has set to TV and digital rights," he stated.
A senior ad sales executive said that the IPL monetisation should be done differently than how it was done in the past. He also sounded confident that there will be enough takers for IPL sponsorship at higher outlays.
"All said and done, there is no other property in India that is as impactful as IPL. Even after the drop in reach, it is still the top media property in India. There will always be enough takers among advertisers for the IPL even if the outlay is very high. New-age brands are very bullish about IPL since it allows them to build their brand and get a massive share of voice in a cluttered environment. With digital becoming a way of life for many people, the internet economy will continue to spawn new unicorns every year. These unicorns will turn to IPL to build their brands and drive user growth," he added.
A sports media executive said that there are enough big brands between traditional and new-age categories that will spend on IPL irrespective of the pricing. "Due to the high entry barrier, brands that advertise on IPL get a disproportionate share of the voice without any clutter. Ad monetisation strategy for IPL will have to be reworked to derive maximum value. It will be very different from the way IPL is monetised currently. Considering the outlays involved, IPL might not have a long tail of advertisers, but It will continue to be the big boys' club," he added.
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