Indrani Sen: Effects of Suspension of IPL 2021

10 May,2021

Indrani SenBy Indrani Sen

 

The last one week advertising and marketing industry has been buzzing with speculations on the consequences of suspension of IPL 2021. Star Disney has been very prompt in offering possible solutions to sponsors and advertisers. As per the contracts, all IPL ad deals are non-cancellable, but as a special case if the sponsors and advertisers do not want to continue with the existing deals, the broadcaster has offered to cancel the deals from their end and allow their clients to negotiate fresh deals for the remaining IPL tournament as and when it gets rescheduled. Alternatively, the clients can keep the existing deals in abeyance and utilise the balance as and when BCCI finds a new window for scheduling the rest of the matches and a new venue for holding the same. The sponsors and advertisers will pay on pro rata basis for 29 matches which have taken place of the scheduled 60 matches.

 

It is too early to get a feedback on the decisions of the sponsors and the advertisers. My guess is that most sponsors will stay with the existing deals as investment in IPL 2021 is a part of their long-term marketing and advertising strategy. Some of the advertisers who have peak seasons during summer months or have some immediate growth targets, may consider the other option. However, one thing is certain that cancelling the existing deals and renegotiating later will cost the advertisers more for purchase of similar time over the TV and OTT platforms. Strategically by offering an option of cancellation, Star Disney has probably ensured that most of the existing IPL deals continue with them.

 

It is being estimated that BCCI and the franchise teams will collectively suffer a loss of INR 2500 to 3000 crore if IPL is cancelled totally. If it is rescheduled later, the loss will be considerably less, but the additional cost of the logistics of arranging the matches outside India will reduce the profit margin and will shrink BCCI’s central revenue pull available for sharing with the eight teams.

 

The biggest losers would be the ancillary industries who were directly or indirectly associated with the IPL tournament, e.g., ground management, hotels providing bio-bubbles, travel, production, agencies providing on ground display, etc. Even if the tournament is rescheduled abroad, there would not be any scope of recovering their financial loss, which admittedly is on a much lesser scale than the tournament revenue, but is a very high percentage of their annual income.

 

The situation is also complicated with the advertising and media agencies. Most of them will suffer a loss of projected revenue during the first half of 2021 due to suspension of the tournament. Their clients will insist on renegotiating the deals with them and will try to reduce the commission or fees. It will be difficult to find suitable programme/ content for rescheduling the advertising campaigns and to achieve the target reach required for achieving the sales objectives during the first half of 2021. However, all the leaders of the industry have agreed unanimously that postponing the tournament was the right decision under the current COVID situation in the country.

 

What about the consumers, the viewers who make IPL the big blockbuster event? The day after BCCI announced their decision of postponing the 14th edition of IPL and rescheduling it at a later time outside India, The Indian Institute of Human Brands (IIHB) and the Rediffusion Consumer Lab (or Red Lab) announced findings of a survey indicating that the cancellation of the tournament may be a blessing in disguise for the advertisers during the rapidly spreading second wave of the pandemic in India.

 

IIHB and Red Lab conducted a small survey among 482 consumers (271 males & 211 females) over three weeks (April 17 & 18, April 24 & 25 and May 1 & 2) to judge change in their attitude, if any, towards IPL as the second wave of the pandemic continued to increase across the country. The questions mainly concentrated on three broad areas (1) the appropriateness of holding IPL in India this year (Should the IPL have been played at all this year? Given the pandemic, should the IPL have been played overseas again?); (2) the respondents intensity of watching IPL (Are you watching more/less/same of the IPL as last year? Do you think watching IPL every evening provides an escape from all the pain, grief and death all around? IPL were to be cancelled; would you miss the game?) and (3) the respondents recall of ads and celebrities and effects on brands (Do you remember ads and celebrities from the IPL telecast? Given the current mood, do the ads on IPL attract you? Would you buy the brands being sold?).

 

Over the three weeks, the number of respondents not available or not contactable decreased steadily. The positive sentiment towards conducting IPL in 2021 also decreased from 81% to 58% over three weeks and the number of people agreeing that IPL should have been played outside India went up. There was a 33% drop over the three weeks in the positive answer to the question “Do you think watching IPL every evening provides an escape from all the pain, grief and death all around?” Percentage of people watching less of IPL 14 compared to IPL 13 also went up over the three weeks. The recall of advertisements as well as celebrities were very good across the three weeks, but the intention of buying the brands dropped from 84% to 52% over the three weeks.

 

IIHB and Red Lab concluded that the sensibilities of the consumer were getting hurt with the cricket extravaganza continuing during the pandemic and there was a growing discontent with IPL 2021.  It appears that continuing with the tournament in India might have got the sponsors and advertisers the desired exposures but would not have translated the same to desired consumer spends on the brands. The partial or total lockdown imposed by many state authorities will also contribute to the dip in sales.

 

It is very difficult to take any guess at this stage about the condition of the pandemic in our country in September when a window is available for rescheduling the IPL. We do not know when the current second wave will end and what will be the final death tolls, if there will be a third wave of the pandemic in September as predicted by many medical practitioners and health experts. Only one thing is certain, we will overcome this coronavirus one day.

 

Post a Comment 

Comments are closed.

Videos