Right time to cancel IPL, but over Rs 4,500 crore of advertiser money stuck in the works: Experts

Experts weigh in on the monetary fallout of the IPL cancellation, that's expected to cast a shadow of uncertainty on the World Cup too

The widely discussed 'bio-bubble' got breached. Cricketers, support staff, groundsmen associated with the Indian Premier League tested positive for Covid 19. This forced the otherwise reluctant Board for Control of Cricket in India (BCCI) to suspend the league albeit for the time being. 

This league is not just a launchpad for cricketers like T Natrajan, Pandya brothers, Rishab Pant, Shreyash Iyer and hundred others. It also serves as a massive platform for the brands. From FMCG brands like Tasty Treat to auto brands like Tata's Nexon, Harrier, Altroz and now revamped Safari, brands wait for IPL to launch their products.

The coronavirus outbreak in March 2020, followed by the nationwide lockdowns forced BCCI to postpone the tournament. It was held in the third quarter of the financial year instead of the first. Yet brands, especially ed-tech ones, fantasy gaming platforms, fin-tech and food delivery apps utilised the tournament's reach as an opportunity. In 2021, the tournament was back in the first quarter and the pandemic was long forgotten. Crowded political rallies and election strategies were making headlines instead.

Come April and the second wave hit the country like a Tsunami, catching it completely off-guard. IPL started on April 9 and as brands signed cheques, they had no clue that the tourney would be disrupted halfway. About Rs 1,000 crore has been spent on BCCI's sponsorship inventory while official broadcaster Star India is also estimated to have raked in more than Rs 3,250 crore.

Karan Shroff, chief marketing officer, Unacademy which is one of the advertisers on the platform, feels the tournament already had a good run. "It would have been very unfortunate had it either not taken off or called off a few days in. The fact that it almost ran for a month did give us the visibility, the eyeballs, the reach that the league would usually do," Shroff says.

He adds "The way I see it, being postponed for a few weeks or months or whatever the duration will give us another burst in the future from an outreach perspective." As a brand, he says Unacademy is fully aligned with BCCI's decision.

Ashish Bhasin, CEO APAC and Chairman India, dentsu also opines that given the prevailing pandemic situation, "It is the right decision to postpone IPL for now."

But there is no denying that IPL is the single largest property on television in India and Bhasin says it is something that appeals to a wide target audience, across geographies. "It has unparalleled reach and has always proven to be an excellent vehicle for brands and I think that will continue to be so and that will not change," he adds.

However, this disruption brings forward a commercial issue. Should advertisers get their money back from both BCCI and Star India on a pro-rata basis? The brands think they must and many media planners suggest that BCCI and Star India can consider that as an option.

The counter-argument is that brands have already leveraged the mileage and the broadcasters might find it difficult to get new advertisers for the remaining part of the tournament. Also, Star and Disney India will have to pay BCCI Rs 3,269.6 crore as it acquired the global media rights for five seasons for Rs 16,348 crore.

Sources in Star India were quoted saying close to 90 per cent of the inventory was sold before the first ball was bowled. The broadcasters sold slots at close to Rs 12 lakh per 10-second. Brands that associated with the broadcast as sponsors, got the slots at a much cheaper rate. But now their money is blocked.

"Given the fact that several parts of the country are going into lockdown, there are emergency measures been taken in different cities and towns to curb the pandemic, the severe shortages and difficulties being experienced, lives being lost to the pandemic, I think it is more appropriate to focus on that then on commercial issues for now. I’m sure the commercial issues will get discussed and resolved in an appropriate manner,” says Bhasin.

Star India refused to comment on the way it is going to handle the situation from an ad-sales point of view.

A fin-tech marketer feels IPL has helped it to emerge as a popular choice. According to the marketer, the money staying with Star India is like a "Fixed Deposit" as whenever IPL takes place in whatever circumstances, it will only add to the return on investment. "Yes, the cancellation of IPL will force us to rethink our strategy for the Cricket World Cup scheduled to take place later. Many brands might opt out of it as there is a significant part of IPL yet to be played," adds the marketer.

Ashish Khazanchi, Managing Partner, Enormous Brands too feels that the suspension of IPL will certainly have "near-term adverse impact. Both in terms of business objectives of advertisers and even more importantly on the market sentiment. Heavy investments may be held back because there's going to be unpredictability on how the returns on investments may turn out to be," he says.

He agrees with the fintech advertiser that, "The cancellation (of IPL) is somewhat likely to cast a little shadow of uncertainty even on the world cup."

The cancellation/postponement might as well be a boon. With pyres burning across the country throughout the day, it seems many Indians have opted out of watching the franchise-based domestic tournament. The country has a shortage of essentials like oxygen beds, doctors, healthcare staff and the scarcity grabbed significant attention. There were elections too and that too in multiple states including high-profile ones like in Bengal and Tamil Nadu. This impacted the television viewership and reports suggest the advertisers were unhappy.

IPL's viewership after 17 matches is less than what was in 2020 after the same number of games played. In fact, according to BARC India, the live matches (17 of them) fetched 105 million viewers while it was more than 115 million viewers after 14 matches in 2020.

Overall, while the advertisers would like to get the money back to spend on alternative opportunities, they are not very disappointed with the dollars staying with Star and Disney India or BCCI for IPL. "Even with the cloud of uncertainty, IPL shines bright," says a digital video on demand marketer.