Despite hype, World Cup may disappoint advertisers

A treat awaits television as well as online cricket viewers across the world with a busy cricket season. The Cricket World Cup kicks off on February 14 followed by the Indian Premier League. But are advertisers really preparing for it in a big way or is it going to be like just another day in the office for them?

“In business terms, from a marketer’s perspective, just because there is IPL or World Cup, it does not mean he gets extra funds. It is dependent on the return on investments. Return on investment is critical to many companies, international and Indian, which are listed because you cannot overspend in one or two quarters and not show disproportionate figures because it has an impact on your shares.

Quite a lot of funds will get pulled into this World Cup or an IPL and we might get an incremental overall spend increase. But it is not going to get a quantum leap,” according to Anil S Nair, CEO & Managing Partner, L&K Saatchi & Saatchi.

Partha Sinha, Director and Chief Strategy Officer at Publicis Group, believes that only specific brands may have a specific strategy in place and are looking at options apart from cricket.

“Some of the major sponsors including Pepsi, Vodafone and Airtel may have a specific strategy as events like these are a great platform to launch brands. However, cricket has outpriced itself and so most of the clients are looking at an alternative to cricket now.” According to the Ficci-KPMG Indian Media and Entertainment Industry Report 2014, the long-term outlook for TV advertising remains positive and advertising revenues are expected to grow at a 13 per cent compound annual growth rate (CAGR) between 2013-18.

At an aggregate level, the total TV advertising market is estimated to have grown around 9 per cent in 2013 to Rs 13,600 crore, lower than the 11 per cent projected the same year. Going forward, television advertising in India is expected to grow at a CAGR of 13 per cent over 2013-18, to reach Rs 22,000 crore.

The top 10 categories advertising on TV as per 2013 share included personal care/personal hygiene (15.7 per cent), food and beverages (13.3 per cent), services (8.1 per cent), hair care (4.7 per cent), auto (4.4 per cent), personal healthcare (3.3 per cent), personal accessories (3.1 per cent), household products (2.9 per cent), telecom/internet service providers (2.6 per cent), laundry (2.5 per cent).

Ficci goes on to say in the report that TRAI’s regulations and HD channels with shorter breaks on TV are driving ads to online medium. The TRAI introduced multiple advertising-related regulations on TV channels in 2013 such as only 12 minutes of ads on a channel in an hour, time gap between ad breaks and programming should be at least 15 minutes except if it is a live sporting event, no pop-up, part screen ads or drop down advertisements.

According to a recent report by Edelweiss, GroupM expects ad spends in India to register a 12.6 per cent growth (Year-on-Year) in 2015, similar to 12.5 per cent levels seen in 2014. If not for the general elections, overall ad spends in 2014 would have risen by around 10 per cent (YoY).

Thus, on a like-to-like basis, GroupM expects ad growth to improve by a huge around 260 basis point (YoY) in 2015. GroupM’s overall ad forecast is still lower than peers, Magna Global and WARC, which are forecasting 13.3-15.1 per cent  overall ad growth in 2015.

Overall ad spends

Overall ad spends are expected to reach around Rs 49,000 crore in 2015, with TV (around Rs 22,400 crore), print (around Rs 16,900 crore)  and digital (around Rs 4,700 crore) being key contributors. Underperformance by print at 5 per cent YoY growth in ad spends vis-à-vis 16 per cent YoY growth for TV is expected to continue in 2015 as well. GroupM mentions despite positive sentiment, advertisers continue to tread caution.

So, will sports channels laugh their way on to the bank or will the general entertainment channels (GECs) have their fair share of pie as far as advertising during these events are concerned? Experts believe that it is going to be a mixed bag.

“Advertisements in GECs don’t suffer right now but they will suffer during these events for sure because money is very limited. Come February-end onwards till May, GECs are going to have a tough time. India is still a single TV household largely and once cricket happens, cricket becomes the only thing that people watch. During this World Cup, GECs won’t suffer much as matches take place in the morning India time,” Nair adds.

The IPL is a made for TV format as it takes place during it is prime time. If you spread your spot buys evenly, it is a lesser risk compared to the World Cup. The current World Cup eats into the working days, it is a longer format and so your spot gets spread over a period of six hours as against IPL which is around three hours. “So, clients would have to take a view and I guess, most of them will split their money between these two except for the people who have earmarked funds years back,” Nair adds.

“Advertisers need to have a significant media spend for the World Cup. However, since the sport has become expensive from an advertiser's perspective, GECs are unlikely to suffer much during the World Cup,” Sinha says.