Brand spend on sports properties expected to touch Rs 1000 crore

Sports properties seem to be popular these days, especially with marketers. According to a GroupM ESP report, in 2013, advertisers spent Rs 4,109 crore on sports properties in the country. This is estimated to have increased phenomenally with more properties being introduced this year. With the ICC Cricket World Cup 2015 scheduled for early next year, ad spends during the first half of 2015 is expected to shoot up. The list gets longer with the Indian Premiere League (IPL), Pro Kabaddi League and the Hockey India League (HIL), all scheduled in the first quarter of next year. With such a packed calendar ahead, how are advertisers prepping to spend on the various properties? 

Ad spends to increase substantially?

Atul Sharma, GM, Starcom MediaVest estimates brand spends on sports properties to be around Rs 1,000-1,200 crore during the first half of the year, with Rs 1500 crore not being an unrealistic number. On the other hand, Dinesh Vyas, GM, India, MEC estimates it to be lower than this. “According to my estimation, the sports genre does not make for more than 1-2 per cent of the entire television advertising. So Rs 1,500 crore seems unlikely, it could probably hit Rs 1,000 crore if everything goes well,” he said. 

Bulk of the ad spends will be directed towards the ICC Cricket World Cup 2015 and the IPL, says Sharma. “Only cricket will move the needle a bit here and there, I don’t think there will be much of a change in the other sporting properties,” he said, adding how a bit of inflation is expected around IPL with advertisers being charged a premium for both this and the World Cup. “Revenue targets are really steep on these properties,” he pointed out, estimating the increase in spends on sports properties to be around 20-25 per cent.

Some brands that may have been spending 10 per cent of their marketing budget on sports, may push it up to 40-50 per cent on TV spots during this time, says Sharma. “It will be steep hike for individual brands because these are opportunity buys on specific events. So somebody who associates with these properties will spend a disproportionate amount of money in their portfolio. But at an overall level, the impact is not going to be so high. If it is 50 per cent for a particular brand that typically spends about Rs 10 crore, the spend goes up to Rs 20-30 crore or even Rs 40 crore. It maybe high in the brand context, but at an overall category level it is going to be about 20-25 per cent,” added Sharma. 

Brands will not just spend on cricket, but other sports as well, feels Vyas. “If you look at the CAGR (compound annual growth rate) from probably 2010, and if you look at the split of monies going to sports as a genre, why do you think Star TV launched new sports channels? Primarily because they were looking at the sports genre to generate as much as revenue throughout the year,” he said. He further added that this was seasonal and not a constant stream of revenues for them and the reason why they introduced many sporting events throughout the year.

He pegs the increase in ad spends on sports properties at 15-20 per cent in the first half of 2015, provided the controversy ridden IPL takes place. “Chances are, they (IPL organisers) might have to wait for a year, for the dust to settle down before they can really come up strongly. If IPL doesn’t happen, my view is that spends will be equal to that of this year. But if the IPL happens, you can certainly expect an increase of 15-20 per cent in the sports genre,” he said.

Sanjay Chitkara, Head Corporate Marketing at LG Electronics, which is an official sponsor of the ICC Cricket World 2015, expects the largest part of their investment in sports to be during the first half of the year. “We are the global partners for the ICC Cricket World Cup 2015 and that is happening in the first quarter. So major investments are scheduled for the quarter,” he said. When asked about whether they expect to make further investments in other sports properties later during the year, he said, “Currently we are focusing on the ICC Cricket World Cup 2015 and our whole energy and focus is directed towards the event. We expect to benefit from our association with the ICC World Cup,” he said.

Vyas added that the ICC World Cup is a property that is suitable only for clients with deep pockets. “If you don’t have Rs 20-25 crore, you will not be able to buy advertising space in the ICC Cricket World,” he said. Which is why other sporting properties may seem to be an attractive proposition for other advertisers.

Brands to spend carefully on sports

While the ICC World Cup will definitely draw bigger ad spends, other sporting properties, such as the Pro Kabaddi League, may have certain challenges to face.

For the Kabaddi league that received a healthy response in its first edition, thanks to the novelty and the hype, the second edition will have to be carefully thought out. “The second year will be a calculated investment,” says Vyas. “Even for clients like a Maruti, Reliance or PepsiCo who have put in their monies this year, next year they would take a calculated decision if they feel that despite spending Rs 25 crore, the property did not generate enough response,” he added.

A cluttered calendar is also a worry. “With two major properties about to clash, advertising spend will automatically get diverted, diluted and distributed across the properties. Some clients will only concentrate on IPL, some on the ICC Cricket World Cup, and yet others on Pro Kabaddi or anything else, and continue to do that,” Vyas said.    

According to Mayank Shah, Deputy Marketing Manager of Parle Products, the ad spends for the year is tied to the performance of the economy. “If the outlook is good and the business is growing, ad spends would increase, especially with the number of sporting properties going up. But the quantum of the spends is doubtful. Advertisers would rationalise where to put their money. A better rated sports property would get more money compared to those not garnering that kind of viewership and they might just become a platform for smaller players who may not be able to afford bigger properties,” he said. 

It is evident that even if cricket commands the biggest advertisers, other sports too will draw their fair share of spends, pushing up the overall numbers for the category.
 

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