Has IPL become too expensive for advertisers?

12 Mar,2012

By Rishi Vora

 

After Rahul Dravid announced his retirement from international cricket on March 9, senior journalists, fellow cricketers and fans pondered over the future ofIndiaas far as test cricket was concerned. While that’s an issue selectors for the Indian cricket team have to sort out soon, officials from IPL and Multi Screen Pvt Ltd have to come up with real quick ideas to woo key advertisers, so that they remain invested in the property, especially after the 10 per cent hike in the ad rates for Season 5.

 

The 10 per cent hike in ad rates means that advertisers will have to pay upwards of Rs5 lakh per 10 second spot. Last year, afterIndia’s fabulous performance in the World Cup, MSM hiked ad rates by about 25 per cent.  The season delivered an average rating of 3.91, lowest ever in four seasons.

 

So season 5 was always going to be a challenge considering the slowdown andIndia’s continued poor run inAustralia. However, despite these challenges, MSM has managed to rope in a few sponsors already. Pepsi, Vodafone, Tata Photon and Idea have been signed on as sponsors and, furthermore, the broadcast partner is in process of finalising a few more deals.

 

But, as a matter of fact, there are a few advertisers who have raised concerns over low returns against large investments on IPL and two amongst those – LG Electronics India and Godrej that have been sponsors from the start of the tournament have decided to pull out this year. They don’t think it’s worth the money anymore.

 

LG Electronics India’s Chief Marketing Officer, L K Gupta told MxMIndia: “It is true that we’ve opted out of IPL this year. While it is the single largest property on TV, the fact of the matter is that there is only a certain level to commit marketing funds and the return we get in terms of TRPs does not really justify the high level of spending. Last year we felt the pinch, so we decided to stay out this year.”

 

Godrej too is said to have opted out on similar grounds.

 

Maruti Suzuki, which as a policy spends about 23 per cent on sports every year, of which cricket commands a reasonable share, has always restrained from being associated with IPL. Shashank Srivastava, Chief Marketing Officer explained his stance: “We invested in the World Cup last year. We don’t invest in IPL because for a company like ours, one needs to put in a lot of spike. IPL gives you good reach. In terms of viewership, it gives you good returns for 5-6 weeks which is something ideal for new launches or new product offering. So the money which goes in on buying IPL, and in return what you get for a brand like Maruti is not much.”

 

A senior media professional who requested anonymity said that India’s richest league commands nothing less than Rs65 crore for presenting rights and Rs45 crore for being an associate sponsor. He said: “This is serious money you’re talking about. They (MSM) have increased by 10 per cent on ad rates, and they are under tremendous pressure to cut down further.”

 

Nitin Jain, Co-Founder, DoMor Communications said the broadcast partner will eventually have to come down to last year’s price which was around Rs4.5 to 4.75 lakh per 10-second spot. “I’m sure the broadcaster is in talks with many clients, but from what I understand, it is going to be a game of who blinks first.”

 

Buying his point is Nimbus sports COO Yannick Colaco who said: “I think advertisers are just waiting to see if the rates can be brought down. It’s pretty usual for advertisers to do this as a practice to get better deals out of the broadcaster.  IPL is a big tournament and advertisers will eventually look to advertise on a property of that scale, so I think it’s just a matter of time before they (MSM) sell out and a formal announcement is made.”

 

It is learnt that MSM has initiated talks with Cadbury, but it is not entirely clear if the chocolate brand has signed the deal officially. On-ground sponsors for season 5 are DLF, Hero Motocorp, Karbonn Mobiles and Volkswagen.

 

Set Max officials could not be reached but it is said that this year the attempt is also to sell smaller packages of 20-25 matches to cash in on advertisers with limited budgets. Also, it is not leaving any stone unturned in promoting the mega event. It is believed that a whopping Rs45 crore is being spent to bring the IPL fever back among viewers.

 

It will be interesting to see how things turn out to be for all stakeholders of the mega property.

 

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3 responses to “Has IPL become too expensive for advertisers?”

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