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How Sony built its IPL revenues over 9 years
MUMBAI: Sony Pictures Networks (SPN) India’s most valuable property, the Indian Premier League (IPL), has earned advertising revenue of around Rs 5,650 crore (Rs 56 billion) from eight editions and is expected to earn over Rs 1,100 crore (Rs 11 billion) this year, according to market estimates.
Certain advertising categories have used the IPL to grow their revenue size. Mobile handset makers like Micromax and Karbonn have been backing the IPL to establish their brands against global majors like Samsung. In fact, the handset category could be accounting for 20% of SPN’s IPL revenues this year.
So, how did Sony build its IPL revenues over the years?
Even as early as 2008, the broadcaster knew that the Twenty20 format would be the future of the game.
As SPN India president Rohit Gupta says: “We at that time had just finished with our ICC rights, which ran from 2002 to 2007. We understood the direction in which cricket was moving. There was a drop in viewership in the 8-hour ODI format. Besides, the ICC format depended on how India performed. So in 2003 India went to the World Cup final and then in 2007 it exited early and everything crashed.”
A few Twenty20 matches were played in bilateral series at that time and when that happened viewership really surged.
“60–65% of the population was below the age of 35. They wanted faster-paced games. A change was taking place. We realised that the Twenty20 format was the format to be in. We knew that this was the format of the future. We also knew that over time Test and ODIs would have substantial erosion in their viewership. Hence, we bet on the IPL as it was a Twenty20 format,” Gupta says at length.
Gupta is clear that the IPL is successful not only because of the Indian players but also because of the participation of the best of the international crop. “From the very start the IPL had the best players of the world playing. If the top players take part in a league like the EPL or La Liga, it works. History tells us that wherever the top players play that league is successful,” he says.
For him the IPL had three things from the outset. “First, it was a young format for the youth. Second, the top players in the world were playing. Third, the owners were very strong and great marketers themselves,” he explains.
The IPL is now seen as being risk free for advertisers. However, back in 2008 the stakeholders bore all the risk. “Risk free is only in hindsight today. At that time, everybody asked how the men in blue could play with Australians. There were sceptics,” Gupta states.
This scepticism presented a huge challenge for Sony. In the first year, people did not believe in the format. People wondered how Indians could play with other players. They felt that it would never be serious cricket, which was a big issue.
Sony’s key strategy in 2008 was to sell the IPL at the level of India cricket. At that time, India cricket sold at Rs 200,000–250,000 for a 10-second spot. “We decided to sell at that rate. We ensured that any brand that came in as a sponsor did not see a competitor advertise. Coca Cola, which was a sponsor, did not see Pepsi. When Vodafone came in there was no other telecom company. We needed the brand to trust this format. Till the first ball was bowled, nobody knew what would happen,” he recalls.
When the first ball was bowled in the IPL, there were no spot buyers—just seven sponsors. Only 40% of the inventory had been sold. “The sponsors got an advantage of their competitor not being there. The first match saw a century being scored in Bangalore. The stadiums were full. The IPL was the talk of the town. After the first match everybody knew that the IPL was successful.”
The IPL came at just the right moment for Sony. “We have had continuity with cricket since 2002. It has been a 15-year journey,” he adds.
After the first season, there was no turning back for Sony. Category exclusivity went out of the window in the second year. Multiple brands came in. In the second year, there were 10 sponsors.
Another point to note is that the wraparound show ‘Extraaa Innings’ was always sold separately from the first year itself. “We spend a lot of money on the show with the sets. We need to recover the cost. We don’t package ‘Extraaa Innings’ with the match. It is a big property. Today we have 30–45 advertisers on the IPL.”
In the third year, Sony decided to offer alternate match packages for spot buyers. A client was thus present on every second match. “As we increased our rates, the outlays became bigger and a lot of brands could not afford all 60 games. The tournament runs for over one month. So even with this package, the reach is very high. The alternate game package has always been successful,” Gupta explains.
Many brands keep coming back to the IPL. Vodafone has been there from the beginning. Havells has been there for a very long time and so are Godrej and Cadbury.
Brands like Tata Motors, ITC and Voltas have been there in one form or another for a while. New categories like e-commerce have been there for the past two to three years. Amazon used the IPL as its launch pad and has been with the IPL ever since.
The top categories
Due to the large youth and female populations, Sony is getting a mix of all clients. In 2015, e-commerce accounted for around 23% of Sony’s IPL ad revenues.
“We don’t only get male-focused brands. We get FMCG. Reckitt has come in as a sponsor for the first time. This is a hard core female brand. Telecom has been consistent along with mobile handsets. E-commerce has been there for the past two to three years. Auto has been there for a while. Hyundai was there for the first four to five years. This year Maruti has come in for the first time. Hero Motocorp has been there. All the large advertising categories are present,” Gupta clarifies.
Brands born out of the IPL
Furthermore, the IPL has given rise to certain advertising categories. Gupta points out to handset makers like Micromax and Karbonn, who used the IPL as a platform to compete successfully with global majors like Samsung.
“The handset category was born out of the IPL five to six years back. They gave a tough time to large multinational players like Samsung and Nokia. In the past two three years, the e-commerce category was born out of the IPL.”
Gupta reiterates that the IPL’s benefit has nothing to do with the fact that it takes place during summer. “The kind of reach that the IPL delivers makes it the best platform. You hit 60–70% reach levels in the third or fourth week. For any new product or category, the IPL is a must. It touches 80–85% of the universe. Nothing comes even close to it.”
One change is that in the last couple of years people keep marketing budgets for the IPL aside at the start of the year.
“The IPL has become a part of the marketing calendar for most brands. They keep money aside at the beginning of the year for the IPL. They know exactly which brand they want to use the IPL for. Now the IPL is a very carefully planned activity for brands. We have seen this change take place over the last two years. The IPL has reached a mature stage. There is no dependence on India’s performance. The ratings are consistent,” he says.
The sales process
Selling the IPL is a six-month process. The broadcaster starts in October and approaches last season’s sponsors first.
The 60-match magic
Sony experienced a revenue dip in the fifth season, because in the fourth season the tournament had 76 matches instead of 60. This meant more afternoon games. Consequently, the ratings fell and clients were unhappy.
“In the fourth season, our revenues were huge as there were 74 games. However, the ratings came down. This had an effect in the fifth season. There was a dip but we did not drop our rates. This helped us get back in the sixth season. It also helped that we went back to 60 games. Primetime ratings had held up, but the afternoon games were more in the fourth season, which impacted averages,” he states.
For him the current 60-game format is perfect as the afternoon games mainly happen on the weekend. Weekday afternoon games pose an issue.
The strategic timeout
The BCCI decided to do this in the second edition in 2009 when the event was held in South Africa. In each innings, there is a timeout. Gupta maintains that this helps the game as well as helping Sony air ads. This also resulted in an increase in payout in 2009. However, from 7.5 minutes it came down to five minutes in 2010 after criticism. Each innings now has two timeouts and each lasts for two and a half minutes.
Gupta says that clients use the IPL and come back for it because the broadcaster manages clutter very well. “This year we have an extra co-presenter to reduce the clutter. We try to sell more sponsorships. This year we will have the least amount of clutter. Each sponsor has increased its value. The co-presenters are paying Rs 600–700 million. The associate sponsors are paying Rs 350–450 million. The spot buys are at Rs 550–550. We have doubled our HD feed rate to Rs 150,000. ‘Extraaa Innings’ sells at Rs 150,000. Clients like Amul, Emami and Kent R-O buy it.”
IPL delivers consistency and reach
IPG Mediabrands CEO Shashi Sinha agrees with Gupta that the IPL is one of the best platforms on television today due to reach.
“Advertisers want consistency. It does not get bigger than the IPL and on a consistent basis. Over eight years the ratings have been high. Obviously, male-oriented categories will use it. Whether it is auto, e-commerce or mobile operators—they are present. While women do watch the IPL, it still has a large male following. Big brands that want to showcase their strength come onto the IPL,” he says.
Sinha also feels that clutter is not an issue as a match only lasts for 40 overs. For him clutter happens when it is 100 overs. “It is a 40-over, three-hour limited game. So where is the clutter? The IPL is high intensity. People watch the game with passion. So they see advertising with passion,” he clarifies.