Corporates, who foresee the economy slowing even further, are contemplating as much as 50 per cent cut in their advertising budgets, according to media buying agencies.
The sports industry, especially cricket — as it remains the most popular sport in India as well as one that attracts heavy advertising — could be the big loser.
The Covid-19 outbreak has already put brakes on a busy sports calendar. While the Indian Premier League (IPL) has been pushed to April 15, the likelihood of the tournament happening in the first half of the year seems slim, say experts.
The T20 World Cup hasn’t been postponed (it was slated for October), though the tournament hangs on a thread as movement of international players remains uncertain. The Tokyo Olympics has also been postponed by a year.
Broadcaster Star-Disney has a lot at stake because the rights to the IPL as well as the T20 World Cup are with the media house. Even if the IPL gets pushed back further, the premium on IPL programming could fall sharply, said executives at top media buying agencies.
chart
Many are hoping the IPL could happen in September, just before the T20 World Cup in October. They point to Australian cricket coach Justin Langer’s statement a few days ago about IPL being the best tournament to prepare before the T20 World Cup for their reassurance.
“But selling IPL at Rs 8-10 lakh per 10 seconds, the average rate at which it is sold, would be tough in September when general entertainment channels (GEC) channels like Sony, Colors, and Zee have their popular shows such as KBC, Big Boss, and India Idol. With their spot prices available at Rs 2.5-3 lakh per 10 seconds, it will be tough for Star to command such a high premium,” a senior media executive said.
The challenge is not limited to broadcasters, but extends to IPL franchisees and even the Board of Control for Cricket in India. The board depends on bulk of its revenues of over Rs 4,000 crore from IPL.
“Imagine if it is cancelled, Star TV won’t pay any broadcasting and advertising rights which itself is Rs 3,300 crore per annum. Then, no sponsorship ads from the likes of Vivo. And, franchisees won’t pay their 20 per cent share of revenue. If it is postponed, the price of the rights will have to be renegotiated downwards and so will the deals with franchisees. So, everyone loses,” said a senior executive of an IPL franchisee.
Corporate houses are already diverting ad budgets meant for IPL to other programmes.
R S Sodhi, managing director, Gujarat Co-operative Milk Marketing Federation, makers of Amul, said: “We devote 20-25 per cent of our ad budget around sporting events. This year, major tournaments have been pushed back. So, some part of that money has gone into advertising on news channels and GECs and some will go into digital advertising.”
Kamal Nandi, business head and executive vice-president, Godrej Appliances, said: “Summer will be a washout for us because of the lockdown. I am ruling out any advertising during the April-June period. As far as advertising beyond that goes, much will depend on how fast things improve.”
There are others who portray an even gloomy picture. Shripad Kulkarni, media agency veteran and independent expert, said he saw advertising down by 10-15 per cent, if not more. “I don't foresee any major sports events happening this calendar year. For businesses, the biggest challenge will be to keep operations going and tide over the liquidity crisis," he said.
Ashish Bhasin, chief executive officer, APAC and chairman, India, Dentsu Aegis Network, said ad spends will take a hit. “Digital advertising will also not see the 28-30 per cent growth rate projected earlier for the medium,” he said.
No comments:
Post a Comment