The decision to relocate the second edition of the Indian Premier League (IPL) Twenty20 tournament to South Africa has prompted several key advertisers such as Hyundai, Havell's and Reebok, among others, to consider cutting back budgets or pulling out.
On-ground advertising and promo spends for the IPL were expected to go up 40 per cent over last year's Rs 150 crore, advertising industry sources said. For on-air advertising, companies were expected to spend over Rs 500 crore.
Sports and fitness brand Reebok, one of the key spenders in last year's IPL, said it may cut spends 15 to 20 per cent. Reebok is the team sponsor for Kings XI Punjab, Kolkata Knight Riders, Bangalore's Royal Challengers and the Chennai Super Kings.
"The magic of IPL will not be the same outside the country. Last year, we generated a good percentage of sales from on-ground promotions; that will not happen now. We may have to activate our marketing efforts overseas and then will have to work out the revenue-sharing with them," Sajid Shamim, executive director for marketing, Reebok India, told Business Standard.
Havell's India, one of the associate sponsors on air, confirmed that it has cancelled the Rs 7 crore to Rs 8 crore allocated for on-ground promos at each of the domestic venues. "We may cut our spends for on-air advertising too," Vijay Narayanan, director, marketing and communications for Havell's India said. Havell's had set aside about Rs 30 crore for on-air promotions.
Like Havell's, Hyundai is considering cutbacks. "Had IPL been played in India, there were plans to back our on-air advertising with on-ground marketing activities. Now, no such possibility exists and we are also looking at re-working our on-air spends," a senior executive in Hyundai Motors said.
A senior executive of a leading beverages company said: "Nearly 20 per cent of the value of our team sponsorship contracts is on-ground marketing activities like pouring rights in the stadiums, meeting players, and free tickets that we can leverage. Now all this is gone and we have to reduce our budgets."
Media buying agencies confirmed the trend. Said Pavan Chandra, managing director, (South & East) of ZenithOptimedia: "Unless the parameters of IPL timings, venues, dates or its broadcaster are clear advertisers will re-evaluate their advertising spends for sure."