Cashing in on IPL: Star India looks at digital for revenues
Envisaging high viewership online, Star India, the official broadcaster of the Indian Premier League (IPL), has hiked ad rates for the tournament on Disney+ Hotstar. The digital streaming platform, which has been charging rates of `120 CPM for a 10-second spot thus far, is now demanding `180-200 CPM for the same duration. Industry executives, however, are doubtful if the platform will be able to garner advertisers at these rates. Digital advertising rates on platforms like Facebook, YouTube and Instagram have fallen by 20-30% as supply has exceeded demand.
Another challenge for Disney+ Hotstar is investment from SMBs. The platform had made advertising affordable to attract SMBs thus far; therefore, increased ad rates and muted market conditions could result in the long tail of advertisers staying away. “The platform will chiefly need to derive most of its ad revenue from brands that can sell their products/services during these tough market conditions as SMB brands and Covid-19 hit sectors will tend to be far more conservative about ad spends in general,” observes Sahil Shah, EVP, media and operations, WATConsult. Most brands (which used to sell 90% or more through offline) are generally conservative about advertising right now as they don’t want to over-index investments on IPL when they are unsure of the lift in sales due to on-ground challenges, he adds.
With TV, however, the broadcaster is under pressure from advertisers to offer discounts on ad rates, given the exceptional circumstances this year. In February, before the coronavirus pandemic forced BCCI to postpone the cricketing tournament, Star India had reportedly floated TV ad rates of about `12-13 lakh per 10 seconds. According to a Star Sports spokesperson, though, there is “no reduction” in ad rates for IPL this year.
However, industry watchers say the broadcaster is making some concessions. In some cases, brands have been given offers of Rs 10 lakh per 10 seconds, say media buyers.
According to analysts, Star India is also increasing the duration of all its pre-match shows from 60 minutes to 90 minutes. Previously, shows on days when two matches took place were 90 minutes long. The broadcaster plans to increase advertising inventory by prolonging the programming. Despite limited access to players and the constraints of developing shows around IPL, the broadcaster is aiming to make six to seven non-live shows.
For this 13th edition of the IPL, Star India had initially set itself a revenue target of about `3,000 crore. In 2019, the broadcaster is said to have earned about `2,200 crore in advertising revenue.
Star India, like other Indian broadcasters, struggled during the intense lockdown months to earn ad revenue in the absence of fresh content. During this time, despite attracting high viewership, broadcasters offered discounts in the range of 60-70%. The IPL is Star India’s opportunity to capture lost ad money.
The expectation is that IPL will garner record-breaking eyeballs this year, especially since matches will be played sans large audiences in the UAE. Therefore, media planners believe that IPL is a high-risk, high-return property for advertisers to leverage as audiences are hungry for live-action sports.
However, the investment has to make business sense to advertisers. Mayank Shah, category head, Parle Products, says while FMCG products have been in demand during the pandemic, there is still uncertainty about reaching the consumer. “In such a scenario, it will be tough for brands to shell out tens of crores on advertising,” he says. Marketers and their media agencies are negotiating 20-30% discounts, say industry insiders.
Vivo dropping out as a title sponsor could have some ripple effect, too. According to Sandeep Goyal, chairman at Mogae Media, Star India will be constrained to further reduce ad rates and take a massive hit on ad revenue if more brands with Chinese investments and backing opt for a low-key presence or are forced to drop out as sponsors and advertisers. Brands like Byjus, Paytm, Dream11, Swiggy and Zomato are all saddled with significant investments from Chinese venture capital firms and spend `100-250 crore each on IPL typically.