Wednesday, November 28, 2012

Cricket is still the big thing and Pepsi knows that

Nothing, it appears, can slow the economic behemoth that the BCCI has become. Not falling television ratings, not terminated IPL teams, not alleged financial irregularities or a sluggish general economic climate. PepsiCo’s bid of Rs 396.8 crore to be the title sponsor of the IPL through 2017 almost doubles the value of the original deal with real estate firm DLF and gives the IPL a blue chip title sponsor that already has a long association with cricket.

When DLF decided not to renew their association with the Twenty20 tournament because the deal no longer made economic sense to them, it suggested the BCCI would be hard pressed to find a replacement willing to pay the kind of money they expected. The deal with Pepsi, however, underlines how strong the IPL brand has become and how it continues to attract big ticket sponsors even as companies tighten their belts.

“It is a great deal,” Samir Kale, the founder and president of SportzPR, the sports communications division of CMCG India, told Firstpost. “It is certainly well beyond expectations especially in today’s tight monetary world. To commit that large a sum and expect a reasonable return on it [shows the appeal of the league].”

Just who were Pepsi kidding?
According to Kale, one of the reasons that Pepsi has bet big on the IPL is that April and May are typically the best months for soft drink sales. “IPL works at that time,” he said. “Everything about IPL gets talked about at prime time. They wouldn’t have done it if IPL was held in November and December.

“The timing is perfect from the industry perspective. Most of their budgets are spent at this point of time [anyway]. They are not going out of their way to create a budget for this.”

The marriage of Pepsi and cricket is also a natural fit. Pepsi have a long history of being associated with cricket and a number of India’s cricketers, most notably captain MS Dhoni, endorse the brand. “Sports and refreshment are right up there,” Sridhar Ramanujam, the head of brand consulting firm Brand Comm, said. “The fit is much better than a builder [DLF].”

The other advantage of the IPL is that it is impossible to get away from during the season and cricket delivers in a way no other sport can yet emulate in India. “Pepsi tried to queer the pitch by doing the “change the game” campaign with football, which was an aberration,” Sridhar said. “With a mass brand, it is difficult to segregate metros from non-metros. There is greater traction of watching football in metros, but cricket is still the big thing and will continue to be the big thing for the next five years.”

However, Unni Krishnan, the managing director of Brand Finance, which puts out a report on the brand value of the IPL every year, sounded a note of caution. While he welcomed the ability of the IPL to still attract companies of the stature of Pepsi, he also argued that the development should not be allowed to obscure the league’s problems.

“The IPL has managed to evoke trust but it needs to now set its house in order before its ability to draw such blue chip sponsors diminishes. They can’t say this 400 crore shows that we have no ailments and let’s sweep everything under the carpet. Instead, we [Brand Finance] think the entire governance council should say there is a lot of long term potential; how can we nourish it? How can we encourage it? How can we manage it?”

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