Coronavirus impact: Ad budget drop likely to sting sports industry

Companies, which anticipate an even more pronounced economic slowdown, plan to cut their advertising budgets by up to 50%, according to media buying agencies.

The sports industry, especially cricket – as it remains the most popular sport in India as well as the one that attracts strong publicity – could be the big loser.

The Covid-19 epidemic has already dampened a busy sports calendar. While the Indian Premier League (IPL) has been postponed to April 15, the probability of the tournament taking place in the first half seems slim, experts say.

The T20 World Cup has not been postponed (it was scheduled for October), although the tournament is hanging by a thread because the movement of international players remains uncertain. The Tokyo Olympics have also been postponed for a year.

The Star-Disney broadcaster has a lot at stake, since the rights to the IPL as well as to the T20 World Cup belong to the media house. Even if the IPL is pushed further, the premium on IPL programming could drop sharply, said leaders of major media buying agencies.

Many hope that the IPL could take place in September, just before the T20 World Cup in October. They highlight Australian cricket coach Justin Langer’s statement a few days ago about the IPL as the best tournament to prepare for before the T20 World Cup to reassure them.

“But selling IPL at Rs 8-10 lakh per 10 seconds, the average rate at which it is sold, would be difficult in September when general entertainment channels (GEC) 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 difficult for Star to command such a high premium, “said a senior media official.

The challenge is not limited to broadcasters, but extends to IPL franchisees and even the Board of Control for Cricket in India. The card depends on the major part of its income of more than Rs 4,000 crore from IPL.

“Imagine if it is canceled, Star TV will not pay any broadcasting and advertising rights which itself is Rs 3,300 crore per year. Then, no sponsorship ads like Vivo. And the franchisees will not pay their share by 20% of revenues. If it is deferred, the price of rights will have to be renegotiated downward, as will agreements with franchisees. So everyone stands to lose, “said a senior executive of an IPL franchisee. .

Private companies are already diverting advertising budgets for IPL to other programs.

R S Sodhi, Managing Director of the Gujarat Co-operative Milk Marketing Federation, manufacturers of Amul, said: “We spend 20-25% of our advertising budget on sporting events. This year, the major tournaments have been postponed. Thus, part of this money was spent on advertising on news channels and GECs and part on digital advertising. “

Kamal Nandi, CEO and Executive Vice President, Godrej Appliances, said: “Summer will be a wash for us because of the lockout. I exclude all advertising during the period April-June. As far as advertising beyond, it will depend on how quickly things get better. “

There are others who paint a still dark picture. Media agency veteran and independent expert Shripad Kulkarni said he had seen advertising drop by 10-15%, if not more. “I do not anticipate any major sporting events that will occur this calendar year. For businesses, the biggest challenge will be to continue operations and deal with the liquidity crisis, “he said.

Ashish Bhasin, President and CEO of APAC and President of India, Dentsu Aegis Network, said advertising spending would take a hit. “Digital advertising will also not see the 28-30% growth rate predicted earlier for the media,” he said.

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