Challenges of sports marketing: Insights from the India Premier League

WARC, 13 February 2014

MUMBAI: As India Premier League cricket teams bid for players ahead of the April event, the IPL format has been valued at up to $3.2bn with significant untapped merchandising opportunities.

An analysis by American Appraisal India, a brand valuation company, was based on contacts with over 300 advertisers and agencies linked to the IPL as well as three of the teams involved and used the 'relief from royalty' approach – the estimated royalty that a company would have to pay for the use of the brand if it had to licence it.

After last year's event, which was marred by an illegal betting scandal, businesses might have been expected to show rather less enthusiasm this time round, but that appeared not to be the case.

"Most stakeholders we spoke to in this survey are overwhelmingly still positive about the IPL," Varun Gupta, managing director at American Appraisal India, told Livemint.

He conceded that target rating points had fallen but argued that overall viewership had risen significantly. "Apart from the IPL, there is no other platform reaching out to so many people," he said.

The survey by American Appraisal India showed that 57% of the respondents said their advertising budgets for the IPL had either risen or stayed the same over the last five years while only 14% of the respondents  reported cutting their spend over that period.

Gupta also indicated that IPL merchandising was likely to increase markedly over the next few years. "The IPL merchandise market represents significant untapped potential for IPL franchises," he said.

His analysis showed the market for IPL branded merchandise had the potential to rise tenfold by 2020 from its current figure of $40m.

But Vinit Karnik, national director, sports and live events for GroupM's entertainment, sports and cause marketing consultancy, was less certain, pointing to the widespread availability of counterfeit products and the relatively high prices for genuine items.

"It will be a while before that actually starts adding real value in terms of revenue for IPL teams," he said, although he added that it was a major draw for engaging fans.

Pepsi last year signed a $74m, five-year sponsorship deal with the IPL from which it expected to derive "tremendous value … multiple times our investment".

Data sourced from Livemint; additional content by Warc staff

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