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Last Updated : Sep 30, 2020 07:37 PM IST | Source: Moneycontrol.com

Vodafone Idea AGM: Here's why shareholders are questioning spends on IPL and brand change

Industry insiders estimate that Vodafone Idea is likely to spend around Rs 800 crore in ad spends in FY21

Earlier this month, Vodafone Idea rebranded itself as Vi
Earlier this month, Vodafone Idea rebranded itself as Vi
 
 
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The expenses incurred by Vodafone Idea on brand change and marketing in the Indian Premier League (IPL) T20 cricket tournament at a time when the telecom firm is incurring losses came up for scrutiny at the Annual General Meeting (AGM) on September 30.

Earlier this month, Vodafone Idea rebranded itself as Vi and since then the new logo and the new campaign has been all over television.

In fact, Vodafone Idea had announced that from September 7 onwards, Vi ads will be on TV and digital platforms, followed by a high-decibel intensive multi-media campaign.

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And it's no secret that advertising on TV doesn't come cheap. Ads on popular channels, especially from the Hindi GEC category, can cost an advertiser anywhere around Rs 3.5 lakh and more for a 10-second slot depending on the popularity of the show.

Along with marketing cost, there is significant cost involved in rebranding. Experts say that rebranding is an expensive affair.

A look at some examples will tell us why rebranding comes at a high cost.

When Snapdeal in 2016 had revealed its new brand identity, the company had spent Rs 200 crore for rebranding.

Airtel in 2010 had spent around Rs 340 crore for a new corporate identity - a new logo.

When Hero parted ways with Honda, it spent around Rs 175 crore in May 2011 for a new brand identity - Hero MotoCorp.

Experts say the cost is high for rebranding because companies have to pay for everything. This includes cost of consultants and market researchers, who test whether the rebranding move is a good idea. Then comes the actual implementation, which includes signage on buildings, change of company letterheads, websites and name tags.

But Vodafone Idea is not just spending on rebranding and to market the new brand on TV, it is also spending on IPL 2020.

As a merged entity and with a new brand identity, Vodafone Idea as Vi is the co-presenting sponsor of IPL 2020.

A co-presenting sponsorship deal doesn't come at a low cost. In fact, for such a deal, media experts say, the rate quoted is around Rs 2 crore per game during the IPL. For this year with 56 matches, the overall co-presenting sponsorship deal is likely to be around Rs 112 crore.

Also, a co-presenting sponsor gets ad slot of around 180 seconds per game.

While Vodafone was lying low in the last two years during the IPL in terms of ad spends, the telecom company is known to spend around 20-30 percent of its annual marketing budget on the IPL.

In fact, a Pitch Madison Report 2018 estimates Vodafone’s ad spend during the IPL at around Rs 200-300 crore.

Industry insiders estimate that Vodafone Idea is likely to spend around Rs 800 crore in ad spends in FY21. Out of the Rs 800 crore, the company is estimated to spend Rs 130 crore during the IPL and the rest Rs 670 crore on branding, promotions, and campaigns.

During the AGM, Kumar Mangalam Birla, Chairman of Aditya Birla Group, which owns Vodafone Idea with Vodafone Plc, said "with the new brand we are geared to capture customer mindspace".

Even experts pointed out that Vodafone Idea's focus this financial year is to first control the fall in subscriber base and then through marketing attract new customers to the new brand.
First Published on Sep 30, 2020 06:06 pm
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