Economics of Criket's biggest events

Mumbai, February 19: With the two biggest cricket events ' the ICC World Cup 2011 and Indian Premier League (IPL) 4 ' are set to take place in quick succession this year, most advertisers have to choose one over the other. Industry experts believe that IPL-4 will garner more viewership, and make more moolah. Companies are hungry to leverage the game to get more visibility but not at any cost, with most brands taking a calibrated approach.

Analysts suggest that ad spends on cricket are expected to increase by as much as 54% compared with last year, and contributing 20% to the total advertisement pie on television. Analysts also expect general-entertainment channels, films and multiplexes to lose out as 90-days of cricket fever grips Indian television.

Risk for advertisers

While the World Cup, whose first match was on February 19, concludes on April 2, IPL-4 commences just 6 days after, on April 8. The World Cup is expected to generate ad revenues of around Rs700 crore, while that from IPL 4 is expected to be higher, at Rs800 crore, and could even touch Rs900 crore. Average viewership rating for IPL-4 is expected to be at 5, with the World Cup expected to fetch 3.5. 'IPL 4 is set to be bigger than the World Cup in terms of ad revenue. Ad rates for the 2011 World Cup are double that of the 2007 edition. And the rates for IPL-4 are 25-30% higherthan for IPL-3,' Emkay Global Financial Services Ltd's media analyst Naval Seth wrote in his report last week.

Analysts say that the biggest risk for advertisers during the World Cup is the possibility of India exiting early or performing poorly, in which case viewer interest would drop, meaning bad business for advertisers. While ESPN Star Sports will air the World Cup, IPL 4 will be aired on Set Max. Cola major PepsiCo, which is a major global advertiser for the World Cup, will advertise heavily during IPL-4 too. This makes Pepsi one of the few brands to advertise for both the cricket events.

Like Pepsi, its rival Coca Cola India too is bullish on both the cricket events over the next 90 days. 'Both the ICC World Cup and IPL-4 provide us with opportunities that will help our brands reach out to the relevant target audience and amplify the core creative idea. We will be leveraging both the properties ' the World Cup as well as the IPL to reach out to our target audience,' said a Coca Cola India spokesperson.

FMCGs save for IPL-4

But most other fast moving consumer goods (FMCG) companies are picking one of the two ' the World Cup and the IPL ' this year, as ad rates for both the events have gone up significantly. These companies are already under severe pressure from surging raw material costs and are looking at bringing ad spends down. The World Cup is being touted as the riskier affair, as IPL is likely to out-perform it on viewership. A majority of FMCG companies are thus setting their eyes on IPL-4 this year.

'It makes sense to advertise during IPL as the viewership of the game is independent of a team's performance, unlike the World Cup, where India's performance is directly linked to viewers' interest in the game. IPL, on the other hand, will have assured eyeballs,' says Mayank Shah, group product manager at Parle Products Ltd, which makes Parle-G, 20:20 Cookies, and Hide & Seek brand of biscuits.

A report by Edelweiss Securities Ltd said that most sectors which advertise heavily, like FMCG, auto, consumer durable, and telecom, are facing huge pressure on their profit margins, which means some slowdown likely in ad spends. 'Advertisers across categories such as telecom, automobiles, insurance, FMCG and durables say it will be impossible for them to cough up money to advertise during both events,' the report said. This has forced companies to stay loyal to either the IPL or the World Cup this year.

Consumer durable manufacturers, too, are focusing on extracting maximum bang for the buck from one of the two events. 'With the budget limitations, we had to choose one of the two. We could not invest on both. And we are going with the ICC (World Cup). We do not have any plans for the IPL so far,' says Yasho V Verma, chief operating officer, LG Electronics India Ltd.

LG's rival, Samsung Electronics, on the other hand, will focus more on IPL, for which it is the on-air sponsor for mobiles. 'We have the launch of a lot of new products coinciding with the IPL. So, naturally we will have a lot of ad campaigns during IPL-4,' says Ruchika Batra, general manager, Samsung Electronics. The sponsors for the World Cup work on a seven-year commitment with the ICC while IPL calls for a yearly agreement where advertisers can decide how much their media plans permit them to commit.

Reading below the line

Most consumer companies that do not want to cough up huge spends during the World Cup on television are taking recourse to below-the-line activities and using the digital medium to garner customers. Companies like Procter & Gamble and Hindustan Unilever are focusing largely on recruiting customers through below-the-line (BTL) promotional activities at modern retail outlets.

For instance, Quick service restaurant (QSR) player Yum Restaurants India, which operates KFC and Pizza Hut stores in the country, is depending more on the digital medium rather than television. 'The television medium is too cluttered. We have chosen to stay off it, and won't go recruiting customers through television. KFC is the official restaurant partner for the World Cup, so we will use that to reward our consumers. We are using a lot of in-store promotions, such as specially designed World Cup buckets at KFC,' saysSandeep Kataria, chief marketing officer, Yum Restaurants India said.

Similarly, retail chains are looking to cash in on the World Cup fever by launching exclusive cricket merchandise for consumers. Future Group-owned hypermarket chain Big Bazaar, which has signed up to be the authorised, licensed merchandiser for ICC World Cup 2011, has launched an exclusive range of personal care products like gel toothpastes and bathing bars.

Another retail chain, the K Raheja-owned Hypercity, has launched exclusive merchandise for the World Cup - shirts, signature bats, et al. Television manufacturers like Panasonic, LG, Toshiba, Samsung, Sony and Videocon are all offering attractive deals on their high-end television sets during the World Cup.

Interestingly, during the World Cup in 2007, automobiles, telecom, and food and beverages sectors collectively formed 51% of the total advertisers. This year, insurance and mutual fund companies are likely to leverage the opportunity to advertise their products as consumers look for tax saving investments before the end of the financial year in March.

'Most brands may choose to focus on one or the other even depending on their objectives, but I think, given that the ICC World Cup and the IPL are two biggest blockbuster properties in the next three to four months, brands which need to be visible during this period will probably need to be present on both,' sums up Giriraj Bagri, vice president, marketing, Castrol.