Are advertisers willing to pay a 25%-30% premium to advertise during the Indian Premier League (IPL) this year? Unlikely. Star India, which paid a whopping Rs 16,000 crore and bought out the broadcast and digital rights of IPL, could find it difficult to sell its inventory at least in the first two seasons, say media planners.
The broadcaster is known to have increased ad rates for IPL by over 25% (IPL ad rates in the last 10 years had seen an escalation of just 5%-10% year-on-year). Last year the average ad rate for IPL was at Rs 6 lakh for a standard definition channel and Rs 8 lakh for a high-definition channel.
An advertiser would typically pay such a premium only if the viewership and consumer engagement with the property is likely to go up, but media planners don't see that happening. "Star has committed they are going to put IPL only on their four sports channels and the reach of sports channels is not comparable to a GEC or a movie channel. Unless they put it on Star Gold (just as Sony aired IPL on its movie channel, SET Max) viewership will not go up, it will rather go down," points out the CEO of a leading media buying agency.
Though the Star India head honcho, Uday Shankar, in an earlier interview with Business Today, had talked about launching regional sports channels or airing IPL on its regional general entertainment channels, media planners claim that as of now the broadcaster is only offering its four sports channels and its OTT platform, Hotstar.
Star, as of now is not willing to budge from its current pricing. "They are saying I have TV and digital, and you have to pay me more for it," says a senior media planner.
In fact, Star India, is also aware that selling its entire inventory at a 25% escalated cost would be difficult. They will rather stick to their stand, as they know that if they rationalise the pricing, it will be impossible to hike it again, explains this media planner. In fact, Shankar of Star had confidently said that those who need IPL will surely pay a premium for it.
Star India needs to earn Rs 54 crore per match to breakeven its IPL spends and the 54-crore per match revenue will surely be a far cry at least in the first season.
Though most advertisers are currently skeptical, Hitesh Gossain, Founder of sponsorship platform, Onspon, is expecting last moment buys to happen. He even expects Star to rationalise rates marginally. "They will check the tonality and decide," he says.
However, it's unlikely that IPL will see too many established companies advertising. "It will be challenger brands in categories such as mobile handset, new banks mobile wallets etc. IPL is not meant for brands which are serious," points out Gossain.
In fact, Vineet Sodhani, CEO of media company Spatial Access, says that the newer brands want to be seen during IPL not just because they want to reach out to more people but also give confidence to the trade that they mean serious business. "When a new handset brand enters the market most traders are doubtful about how serious they are, but the moment they are seen in IPL the trade takes them seriously," explains Sodhani.
In fact, media planners, says Sodhani, are actually advising seasoned advertisers not to advertise on IPL. "The brands who want to benefit have to make serious spends, not spend Rs 20 crore just to be present on IPL. If it is just to get reach even shows such as Bigg Boss will give them the desired reach."
Advertisers for sure are giving a serious thought whether they need to be seen in IPL by paying a 25%-30% premium. It will be interesting to see Star India's moves in the weeks to come.