IPL's taking the game deep despite a tough economy

Cheering cricket fans at an Indian Premier League (IPL) Twenty20 cricket match between Gujarat Titans and Chennai Super Kings at the Narendra Modi Stadium in Ahmedabad on March 31, 2023. Image: Punit Paranjpe / AFP

If the back-to-back thrillers are anything to go by, Indian Premier League (IPL) 2023 doesn’t seem to have lost any of its charm despite big-ticket absentees like Jasprit Bumrah, Rishabh Pant, Shreyas Iyer, Kane Williamson and Jonny Bairstow. Off the field too, the world’s most-watched franchise cricket league has reinforced its credentials as recession-proof, enabling its partners to fight off macroeconomic headwinds and rake in viewership and ad revenues higher than the previous editions.

The first hints of the premium that the IPL could command despite a tough economic climate, worsened by the Russia-Ukraine war, came last June, when the media rights for the 2023-2027 cycle were auctioned for a cumulative Rs48,390 crore, up from Rs16,348 crore in the previous five-year cycle. Star Sports retained the TV broadcast rights for Rs23,575 crore, while the digital rights went to Viacom18 (and its streaming platform JioCinema) for Rs20,500 crore.

Between the auction and the tournament that started on March 31, large multinationals unravelled, thousands were laid off both in India and abroad, and a funding winter hit the startup ecosystem. But by the end of the first fortnight, JioCinema was expected to have lapped up Rs2,500 crore and Star Sports about Rs2,000 crore of ad revenues, says Anupriya Sapra, co-founder and COO, ITW Mediaworx, the media services arm of ITW Consulting. The former, meanwhile, has 23 sponsors, television (TV) has 12 to 14, while the league itself has 10. With the first fortnight as a barometer, it would be safe to say that the total buys in terms of the money raised for IPL 2023 are higher than previous years.

“One match during the IPL on each of the platforms has the potential to generate up to Rs60 crore in ad revenues, with playoffs potentially generating Rs75 crore per match,” says Sapra. “If we apply a 20 percent increase from the current base, Star might close the tournament around the Rs2,500 crore mark and Jio might end up at closer to Rs3,000 crore. A total of Rs5,500 crore in ad revenue from the current economy isn’t bad at all.”

Another industry insider pegs TV to corner a larger share of the ad revenues, somewhere around Rs3,200 to Rs3,300 crore, with digital finishing up between Rs1,500 crore and Rs1,700 crore. [Star and Viacom18 declined to participate in the story.] Either way, the combined value is higher than the Rs4,000-odd crore ad revenues that the Star-Hotstar combine is estimated to have lapped up for IPL 2022. This despite a fall in the number of advertisers for the current edition. According to data from TAM Media Research based on the first seven matches of the tournament, IPL 2023 had 35+ advertisers and 60+ brands on TV, down from the 60+ advertisers and 95+ brands the previous year.

The number of advertisers isn’t an indication of the total value of ad revenues, says Sujata Dwibedy, chief investment officer, Amplifi, the media investment and innovation arm of Dentsu International. For Star Sports, she says, a lot of advertisers come through spot buys (unplanned and a one-time buy). “For TV, sponsors comprise around 35 percent of the revenue, while the rest are spot buys. These create a huge value for broadcasters and can happen during any phase of the tournament, so the entire inventory isn’t sold out at the beginning of the tournament even though the majority is blocked in the beginning itself,” says Dwibedy.  

Also read: How Brand WPL will be built over the long term

A Big Hit

The spot buys are likely to be propelled by the huge eyeballs that the tournament is garnering. The last over of the match between the Chennai Super Kings (CSK) and Royal Challengers Bangalore (RCB) at Bengaluru’s Chinnaswamy stadium on April 17 saw a concurrent viewership of 2.4 crore on JioCinema, eclipsing the previous highest record of 2.2 crore at the fag end of the CSK vs Rajasthan Royals (RR) match at Chennai’s Chepauk stadium on April 12. The platform is streaming the tournament for free. Data from the Broadcast Audience Research Council also confirmed that Star Sports’ cumulative reach went up by 23 percent from last season, to 307 million viewers, for the first 10 matches of the tournament. Star also claimed to have clocked 6.230 minutes of watch time in the first 10 games, the second-highest viewership span, excluding the Covid seasons.

What probably hasn’t gone up at such a brisk pace are the ad rates. Industry sources claim both TV and streaming platforms were pushing for rates far higher than last year’s, but eventually they settled for only a marginal increment. TV rates, which went for about Rs15-16.5 lakh for 10 seconds last year, are expected to be priced at Rs14-16 lakh this year for common feeds; while digital, which charges brands based on the number of viewers it has reached, is hovering around Rs250 CPM (cost per mille/per thousand impressions) for ROS, as against Rs150-160 CPM last year, according to sources. [An ROS is a ‘run of schedule’ media buy in which the network places the ad across a variety of segments, but an advertiser has limited say in where (or when) their ads are run.] 

“The expectation for a connected TV is around Rs6 lakh for a 10-second spot,” says Sapra of ITW. “JioCinema has monetised the on-the-spot rate model for connected TVs. While this is common in the West, it is an industry-first initiative in India. This was introduced for FIFA a few months ago.”

Despite the fact that the tournament is being broadcast on two competing platforms, experts don’t expect it to eat into the revenues for either. “While digital has less ticket price (the net unit cost), TV has gone that extra mile to create new innovative associations. So, while they might not have got much inflation on the rates they were expecting, they've managed multiple clients and created packages to lure advertisers,” says Dwibedy.  

For instance, TV has broken down its long-term inventory, as it would have earlier, into piecemeal, inexpensive packages. Which means marketers can pick and choose their options and come in for, say, only 50 matches, or just HD. Digital, on the other hand, offers targeted advertising, and, by proliferating into 12 languages, has opened up individual sponsorships for each of these. “With a number of innovative measures, I’m expecting both platforms to improve upon the ad revenues compared to the last year,” says Dwibedy.

The growth is expected to come despite advertising costs in IPL shooting up about 8x as compared to prime time TV shows, and marketers would need to buy up anywhere between 80 and 90 seconds to register recall. It’s because IPL as a platform doesn’t merely give visibility, but also credibility. “When I look at IPL as an opportunity as a brand, you are authentically partnering with a platform that is an extension of what you stand for,” says Shreya Sachdev, head of marketing, Puma India. The company is an associate sponsor on JioCinema and a kitting partner with RCB. “Second, it talks to a very wide audience, cutting across geographies and demographics. It’s one of those rare platforms where I don’t necessarily need to be targeted, as counter-intuitive as it may sound as a brand. And that’s what works for us.”

Also read: The whole picture: Apart from content, what can attract more eyeballs on TV?

Startups vs legacy companies

If the economic slowdown has indeed left its footprint on the IPL, it’s in the way in which startups have invested in the 2023 edition. As TAM data indicates, ad volumes for startups have decreased by over 54 percent during the first seven matches of IPL 2023, as compared to the previous year—in IPL 2022, on the other hand, the volume had risen by 68 percent in comparison to 2021.

And the trend has cast ripple effects into team sponsorships as well. Ajit Ravindran, co-founder and managing director, Meraki Sport and Entertainment, notes, “This is a year when, after a long time, we saw that a few teams had unsold inventory getting into the start of the tournament. This is indication of either the pipeline not having many options or that the value being sought was not justified. Which tells you that despite IPL being recession-proof, advertisers have gone for value over hype.”

It’s not unlikely, given that over 25,000 employees have been laid off by 88 startups since the beginning of 2022, including unicorns like Byju’s, Dunzo, Ola, Unacademy, MPL and Vedantu, according to Inc42’s layoffs tracker. The volume of startups deals also reached a nine-year low in February, while funding in startups in the first quarter of the calendar year 2023 fell by 75 percent to $2.8 billion compared to the corresponding year-on-year period, when it stood at $11.9 billion, says Tracxn that covers startups.  

“IPL began as a platform dominated by traditional household brands. But with the evolving economy and startup boom, the past few years saw a number of young and emerging brands at both the central and team level,” says Nikhil Bardia, head of sponsorship sales & talent, RISE Worldwide, a subsidiary of Reliance Industries that also owns Mumbai Indians. “In the post-pandemic era, traditional brands have stepped up in ad sponsorships as startups exit, matching the deal value or spending the extra penny. This is because of the economic inconsistencies coupled with in-stadia activation opportunities as fans return to the grounds.”

During the first seven matches of the tournament, TAM recorded a 4 percent increase in ad volumes for legacy companies as compared to IPL 2022, while the volumes last year were 12 percent lower against those in IPL 2021.

The return of the legacy companies is further visible from the top five advertiser categories recorded this year vis-a-vis last. While the top two—gaming and pan masala—remain consistent, soft drinks, telcos and biscuits have grabbed the next three, pushing out edtech, online shopping and e-wallets from 2022. It’s a given perhaps when you consider that edtech leads the startups layoffs list, with 19 companies sacking over 9,000 employees since the slowdown hit.

Says Sapra of ITW: “Brands such as PhonePe, Byju’s, Cred, Unacademy, which were among the highest contributors, are largely absent this year. The actual number and contribution of startups versus legacy brands will be clear by the end of IPL, but it's safe to say that legacy companies are in the driving seat now and that is unlikely to change till next year.”

That the legacy companies are making a strong comeback is evident from the landmark three-year deal between RCB and Qatar Airways as title sponsors for a record Rs25 crore per season. The agreement, which was brokered by JSW Sports, the sports management and consultation vertical of JSW that co-owns Delhi Capitals (DC), is reportedly the second-highest IPL sponsorship deal, after the nearly Rs100-crore deal that fintech startup Slice had signed with Mumbai Indians (MI) for three seasons.

Also read: Fun and Games: How sports tourism is picking up pace in India

The Escape Hatch

While startups have pulled back on their ad spendings, they haven’t bowed out altogether. They are exploring avenues for smarter spends. Earlier, startups would stick to the cut-copy formula of splashing dollars on the IPL before going in for an IPO, but now they are looking for niche packages, like content-led partnerships with a franchise on social media. “The way the IPL is evolving right now, it is able to cater to a vast category of brands where big marketing budgets are sitting with the old-style conglomerates but the new-age startups are also finding their paths,” says Divyanshu Singh, COO, JSW Sports. “At DC, we have significantly expanded our revenue streams into content, licensing and merchandising. Our revenue over the last three years has grown by 80 to 90 percent.”

Bardia of RISE Worldwide cites the example of leading D2C brand Happilo, which was the front-of-the-jersey sponsors of RR till last year, but have tied up with RCB for a less-premium right chest logo this year. “The sheer impact and reach of the IPL make it compelling for brands to be associated with it,” says Bardia. At the end of the day, he adds, brands look to unlock maximum value, and are increasingly looking at multi-franchise as partners to reach out to a larger demographic set. “At RISE Worldwide, we have done nine multi-team deals. Such has been the demand that we closed deals worth Rs400 crore, with a 30 percent increase in the number.”

Unprecedented reach is what makes a Mumbai-based F&B startup like Hunger Inc, the owners of well-known restaurants like The Bombay Canteen, O Pedro, take the plunge and allocate 50 percent of their season’s marketing budget to sign up its confectionary label, Bombay Sweet Shop, as the official snacking partner of the Mumbai Indians. “The collaboration will help us amplify brand awareness not just in Mumbai but also with approximately 12.4 crore cricket viewers across the country,” says Sameer Seth, founder and CEO at Hunger Inc.

To borrow a phrase from cricket, IPL is taking it deep despite economic uncertainties.