On a sticky funding wicket, startups give IPL sponsorship a miss

Many consumer internet companies and startups, which have been heavy advertisers and sponsors during the Indian Premier League (IPL) over the last few years, appear to be giving this year’s edition a miss amid the so-called funding winter and an overall reset in the technology industry worldwide.

The big names staying away from this year’s IPL, which begins next week, include edtech majors Byju’s and Unacademy, online payments firm PhonePe, subscription service Amazon Prime, healthcare startup Pristyn Care, quick commerce player Zepto, electric vehicle maker Ather Energy, fintech Niyo, and music streaming company Spotify.

In addition, some other richly valued tech startups such as SoftBank portfolio companies ecommerce firm Meesho and online used car marketplace Cars24, which were sponsors of specific teams earlier, have decided to skip the IPL this season.

Electric two-wheeler maker Ather Energy however will continue its partnership with the IPL team Gujarat Titans. The new-age firms which have signed up with the Board of Control for Cricket in India (BCCI) as official partners for IPL include Dream11, Cred, Upstox, and Swiggy Instamart.

Negotiations still on

Some of the new-economy companies are learnt to be still negotiating with broadcasting and streaming platforms to buy spot advertising deals, instead of signing up as full-time sponsors, media planners told ET. Companies that sign on as sponsors pay an upfront amount and are offered discounted rates unlike the 10-second ad spots which are more expensive.

According to media buying executives, Disney has on boarded eleven sponsors and around 60 spot advertisers. The sponsors include Dream11, Airtel, Asian Paints, Coca Cola, PepsiCo, Tata Group, Swiggy, Mondelez, Voltas, and Vivo, while the advertisers are from categories such as fantasy sports, beverages, telecom, fintech, insurance, automobiles, consumer durables, paints, food, and travel.Viacom18, on the other hand, has signed on sponsors such as Dream11, Parle Agro, ET Money, TVS, Puma, Mondelez, ITC, PepsiCo, Kamla Pasand, Castrol and UltraTech Cement.

“For a lot of new age brands and startups, they wouldn’t want to overspend, given the current scenario. The guiding thought right now for them is to manage cash flows… After the boom (of 2020 and 2021), the sentiment has changed dramatically. Simply because IPL is there, it may not mean that these companies (which advertised earlier) will be able to do it all over again,” Manish Bhatt, founder director at advertising agency Scarecrow M&C Saatchi said.

Brands are also faced with the dilemma of choosing between digital and television advertising with Disney and Viacom18 separately being awarded rights for digital streaming and television broadcasting, respectively.

ET has reported earlier, citing Venture Intelligence data, that venture funding into Indian startups fell by a third to $23.9 billion in 2022, from $35.5 billion in 2021, as the turbulence in the technology sector made investors skittish, severely hitting late-stage fundraising. The number of deals also fell to 1,130 in 2022 from 1,215 in 2021.

This has led to startups and unicorns rationalising their costs and cutting down on expenditures with marketing spends and employee costs becoming the go-to options to achieve business prudency.

“Some startups and new-economy companies are facing a tough time because of the unfavourable funding scenario. There is a focus on becoming more prudent, and to cut down on unnecessary expenses that is leading to companies not advertising with mega events such as IPL,” Gajendra Jangid, co-founder and chief marketing officer of Gurugram-based unicorn startup Cars24 said.

A Meesho spokesperson said, “Last year, IPL sponsorships helped drive growth in awareness and consideration among male customers. While viewership was substantial, it declined versus the previous year. Over the course of the year, our organic share of male customers has also increased. Hence, we will not look to sponsor IPL this year. We will continue to make data backed decisions and deploy budgets through effective media mix modelling which will help us sustain our on air presence for a longer period”. The e-commerce company had signed up with teams such as Royal Challengers Bangalore and Rajasthan Royals.

Cyclicality among advertisers

Additionally, media planners and industry professionals that ET spoke to pointed out that specific issues within the digital sector also played a role in decision making of companies to not advertise with IPL this year. “There are some industries like gaming and cryptocurrencies, which may not be advertising due to challenges affecting their industry…. New age clients still look at events like IPL,” said Mansi Datta, chief client officer & office head – north and east at Wavemaker India, a WPP and GroupM media agency.

In 2021, crypto exchanges such as CoinDCX, CoinSwitch, WazirX had spent around Rs 40 crore in advertising on IPL but they decided to stay away last year after clampdown by the RBI. For the 2023 edition of the women’s IPL, the BCCI has banned crypto advertisers completely.

A senior executive at a media company, who spoke on the condition of anonymity, said that cash-rich startups typically utilise the IPL platform to build awareness of their company, after which they refrain from spending on expensive properties.

“There is typically a cyclicality to advertisers – they will get on board the IPL train to garner engagement and traction for a few years and then look at other marketing opportunities that are not as expensive. Generally, newer players would get on board but given the bleak scenario that we are witnessing with respect to startup funding and poor cash flows, startups have not looked at IPL with the same enthusiasm as before,” the executive said.

Gaurav Munjal, cofounder and chief executive of edtech unicorn Unacademy, in a tweet posted in July 2022, had said: “The last three years with IPL were amazing. Our Brand went to another level. I recommend all upcoming Brands to partner with IPL. Our focus has changed. Hence the decision to not do IPL next year”. In response to a query sent to Unacademy, a spokesperson referred to Munjal’s tweet, and said that the company did not have any additional comments.

Another senior advertising agency executive pointed out that with IPL, brands tend to run an “over-concentration risk” by allocating a huge sum of their marketing budget to a single event.

“Brands run a risk of over-concentrating their marketing budgets leaving little for the rest of the year. Even though that is not such a big concern for mass market large companies such as those present in the consumer goods or automobile sectors, it becomes a difficult call for startups to take, especially in a situation where they are aiming for financial stability,” the person said.

For Viacom18, the outlays being sought from co-presenting sponsors is in the Rs 175-250 crore range, while for associate sponsors, the ask is in the Rs 40-60 crore range. For Disney, on the other hand, the broadcaster is learnt to be seeking an outlay of Rs 150-160 crore from co-presenting sponsors, and Rs 65-100 crore from associate sponsors. Disney is also learnt to be asking Rs 17.5-18 lakh per 10-second ad spot from its sponsors, while it is asking Rs 18-18.5 lakh per 10-second spot from non-sponsoring brands.

Queries sent by ET to spokespersons at Disney, Viacom18, and BCCI did not elicit a response till press time Friday.

Wavemaker India’s Datta said that IPL is the single-largest aggregator of audiences, and there is no sporting event in India, which gathers that much audience. She added that the latest edition of the tournament – which will commence on March 31 and have the last league match played on May 21 (with the date of the final match to be announced later) – is projected to garner 500 million viewers each on digital and television platforms. Till last year, the viewership was around 350-360 million for television and around 150-160 million for digital streaming.