Bangalore: The popular Indian Premier League (IPL) cricket tournament is being used as a showcase for several firms backed by institutional investors that have embarked on an advertising blitz to showcase themselves and grab the attention of a nationwide audience.
Among them is Micromax Informatics Ltd, which has become the third largest mobile phone seller in India by volume after Nokia and Samsung, dislodging established firms such as Sony Ericsson and Motorola.
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The company, seeking to gain customers in urban markets after establishing itself in rural areas, has signed up Bollywood star Akshay Kumar as brand ambassador and is currently one of the most prolific advertisers on television, having sponsored the recent India-South Africa cricket series.
Mobile phone manufacturers dominate the brands striving for greater attention during the IPL. Karbonn, Lava and Spice have all been advertising relentlessly during the IPL matches.
Brands that don’t promote themselves during the tournament run the risk of losing customer mindshare, said Bhavesh Shah, executive director, investment banking, JM Financial Consultants Pvt. Ltd.
The quick format of cricket has been steadily gaining television viewership. As many as 37.1 million people watched the first three matches of the third season of the league, compared with 29.4 million last year. Viewership for the tournament has surged by 41% since the inaugural season, when 26.3 million people watched the first three matches.
Pune-based Parag Milk and Milk Products Pvt. Ltd, backed by Motilal Oswal Private Equity Advisors Pvt. Ltd, has also gone on an advertising spree, not on television or IPL but the so-called out-of-home segment. The firm has branched off from its Gowardhan-branded dairy products to launch Go Cheese and other products through its hard-to-miss billboards.
For firms such as Micromax and Parag Milk, which have already grown to a substantial size, advertisements offer a key weapon in taking the competition head on and establishing themselves in a segment.
Micromax, which raised $45 million (Rs205 crore) from private equity firm TA Associates in January, has set aside Rs100 crore for branding strategies this year. “TA is a strategic expert and a global partner for us than just a financier,” said Vikas Jain, Micromax business director. “We are looking at getting the right mix of customers. It would be 70% rural and 30% urban. Now we have products for urban customers and our advertisements are in line with product strategy.” TA Associates could not be reached for comment.
“Companies may be spending on advertisements as the market, in their assessment, would require them to do so,” said Shah. “Companies that have capital from recent fund-raising activities would have an advantage in doing so.”
Institutional investors, which have traditionally confined themselves to giving out capital, are taking a greater interest in initiatives to increase sales, given that a surge in revenue could lead to their exit schedule being advanced.
“In the consumer market, you got to be visible. You rub shoulders with the best and you have to advertise your presence,” said Rakesh Sony, director, Motilal Oswal Private Equity. While he refrains from telling the firm where to deploy capital, all strategies are discussed and a consensus is reached, Sony said.
Parag is focused on seeking a share of various dairy segments, said Rahul Akkara, vice-president of marketing, adding that Rs20 crore will be spent over the next one year on marketing campaigns.
“We have already noticed impact coming from advertisements on our sales,” he said.