Uncertainty is looming over brands after the 14th edition of the Indian Premier League (IPL) was suspended on May 4.
An IPL Media advisory noted that "The Indian Premier League Governing Council (IPL GC) and Board of Control for Cricket in India (BCCI) in an emergency meeting has unanimously decided to postpone IPL 2021 season, with immediate effect."
The biggest sporting event getting postponed is now a missed opportunity for advertisers including Dream11, UPSTOX, PhonePe and Rajshree Silver Coated Elaichi, which were the top brands between April 9 and 23 during IPL 14, according to data by Broadcast Audience Research Council India (BARC).
Experts from the ad industry explain the impact on advertisers, due to pause on IPL 14.
Pause on advertising
Frequently Asked Questions
A vaccine works by mimicking a natural infection. A vaccine not only induces immune response to protect people from any future COVID-19 infection, but also helps quickly build herd immunity to put an end to the pandemic. Herd immunity occurs when a sufficient percentage of a population becomes immune to a disease, making the spread of disease from person to person unlikely. The good news is that SARS-CoV-2 virus has been fairly stable, which increases the viability of a vaccine.
There are broadly four types of vaccine — one, a vaccine based on the whole virus (this could be either inactivated, or an attenuated [weakened] virus vaccine); two, a non-replicating viral vector vaccine that uses a benign virus as vector that carries the antigen of SARS-CoV; three, nucleic-acid vaccines that have genetic material like DNA and RNA of antigens like spike protein given to a person, helping human cells decode genetic material and produce the vaccine; and four, protein subunit vaccine wherein the recombinant proteins of SARS-COV-2 along with an adjuvant (booster) is given as a vaccine.
Vaccine development is a long, complex process. Unlike drugs that are given to people with a diseased, vaccines are given to healthy people and also vulnerable sections such as children, pregnant women and the elderly. So rigorous tests are compulsory. History says that the fastest time it took to develop a vaccine is five years, but it usually takes double or sometimes triple that time.
"Some brands will be impacted because their slots are now blocked along with their marketing budgets. While there will be value additions and reimbursements, the bigger challenge lies with the stalling of marketing campaigns for multiple products and services and that accounts for hundreds of crores. Because the league is in a limbo, the (marketing) budgets will also be in a limbo," says Avinash Joshi, COO, Natter, a digital marketing agency.
He adds: "The publisher slots may go vacant in this scenario because nobody is watching (IPL) now. These are tough times because the money either is going to get staggered or it gets locked or the campaign objectives are not met. Many publishers will have to quickly lock new deals to avoid these situations."
In addition, brands may hold back other investments in marketing because of the unpredictability in the market.
Adding to this, Rikki Agarwal, Co-Founder & Chief Business and Operating Officer (CBO) of Blink Digital points out: "Advertisers like CRED and Dream11 rely on IPL for user acquisition. For them, this is the one big window and they do not invest in any other property. This is why they will ask for a pause on the inventory bought. That is what we have also done. We have asked them (Star India) to pause it."
Sharing similar sentiments, Harish Shriyan, executive director, Network Advertising says that "there are brands who only advertise during IPL. And that kind of money doesn't come on board otherwise."
Plus, the inventory cannot be adjusted in other properties as no alternate property would be as big as IPL, he added.
No property is as big as IPL
Concurring with Shriyan, Agarwal states, "There will be very few clients who would agree to adjust in other properties because IPL is expensive. There is nothing in India that matches their rate. So, adjusting to some other property would be a compromise for an advertiser."
This year at IPL 14, Star India charged around Rs 14 lakh for 10 seconds. Compare this with other big properties like Bigg Boss or The Kapil Sharma Show, the ad rates are in the range of Rs 3-5 lakh for a 10-second slot.
The midway halt
Another important aspect is that IPL 14 has been suspended mid-way. So, far 29 matches were played out of 60. A lot of advertisers are more focused on matches happening towards the end of the league.
In fact, even Star India, the official broadcaster of the league charges a premium for such matches. During the 13th edition of the IPL, Star India had increased ad rates by 15-20 percent for the playoff matches.
Joshi said that while some brands take a full package deal, many others focus on specific matches like quarter finals, semi-final and final matches, as they have higher viewer ships in comparison to matches at the beginning of the league.
"So, advertisers with such deals might have issues unless their deals are not set in stone. Mature brands with deep pockets, normally do not put all their eggs in one basket and therefore may not find themselves in a tough spot. For the ones, who may have put all bets on IPL with a major part of their budgets, will have to rewire their marketing calendars and spends," he predicts.
This means that advertisers who have opted for yearly deals or those who have gone for package deals, both, will have to rethink their contracts.
So, in this case, can force majeure be invoked?
Experts say that force majeure does not come into the picture as Star doesn't allow that in its contracts.
Siddharth Mahajan, Partner, Athena Legal, explains that force majeure covers the kind of events, which makes it impossible for one to fulfill obligations under the contract.
He said that the consequences of force majeure are dependent on the terms of the contract between the advertiser and the broadcaster.
"So, if IPL does not happen this year then the contract can be terminated as the event did not happen and the obligation could not be fulfilled. And if the league takes place at a later date this year, then the contract can be fulfilled and commercials can be adjusted. But someone who wanted to advertise during summer months wouldn't want to advertise at a later date when the IPL happens. Then the advertiser can ask for a refund," points out Mahajan.
Experts note that while advertisers do not want to exit deals, they are looking to rework them to get additional ad inventory.
Even Joshi thinks that the publisher (Star India) and advertiser will find a middle path.
Yet, he believes that IPL 14's suspension will be a setback for brands.
Tough times for advertisers
Says Joshi: "These two months are a celebration. A good number of brands keep budgets parked for IPL. Makes good sense as this is the time when we see audiences taking to the OTT side and subscribe to Disney+Hotstar premium as well. Recovering from last year, brands and advertisers started picking up pace with the economy looking up. The outlook was good and before momentum could be achieved, tough times are again on the horizon. From brands’ and advertisers’ perspectives, it's become tricky."
Last year, the overall revenue of the advertising industry fell to Rs 62,300 crore from Rs 87,800 crore in 2019, according to an Ernst and Young (EY) report. It was expected that ad spends would show a positive growth in 2021 as key sporting events would see the light of day this year including IPL, Asia Cup, ICC T20 WC and the Olympics.
But with IPL 14 getting suspended, it will be tough time for brands, predicts Joshi.