Mumbai: These are exciting times for Paul Smith, founder and chief executive of Repucom International, a Stamford, Connecticut-based firm that provides sports marketing analysis and sponsorship research to brands globally. The privately held company, which has worked with clients such as the Board of Control for Cricket in India, International Cricket Council, International Management Group and National Football League (NFL), reported revenue of around $25 million (Rs117 crore today) in 2009 and is targeting 90% growth this year, as advertisers focus on their return on investment.
Competitive spree: Repucom’s Smith says brands in the US now say they have to be in IPL or they will lose. Abhijit Bhatlekar / Mint
Smith spoke in an interview about changes in the sporting landscape and the Indian Premier League (IPL) cricket tournament. Edited excerpts:
What is it about the changing dynamics of sport that brought you into the business?
In 1994, I left the PGA (Professional Golf Association) and started a company called Total Sport Entertainment in Australia, which specializes in sponsorship activation, leveraging and management of portfolios—purely just representing brands. Six to seven years of working in this business, more questions were asked on what is the value of this. The reality is: today sports has changed. It is no longer based on the interests of the chief executive officer or some ties like that. Now, it is a media decision, there’s planning around it and consumer activation. It’s a complex model.
What does your firm do?
We use an image detection or biometric software technology developed in France by a company called SpikeNet (Technology) to detect brands and images. In short, we don’t measure 30-second spots, we measure content, what happens inside play. That could be graphics, branding on players, endemic signage on boards—we pick up everything in the content. What we sell is data to clients who commission us a project. Then we launched Cricket 24 early this year, which is a database of every brand in cricket in India. That data sits inside a database; clients can come in and pick whatever data they want to get a competitive analysis and to get a view of what they are doing and what their competitors are doing. Our whole business—our global production centre is based in Bangalore—centres around measurement; it’s all about dissecting numbers, looking at demographics, how many eyeballs am I getting and placing that back to sales.
How has the approach to sport changed in this region?
The way IPL has been executed has highlighted the enormous commercial landscape for the product in the sub-continent. It shows how people are looking at this product (IPL) and commercializing it, instead of doing it the old way. Brands in the US now say they just have to be in IPL. It is being seen as a product you have to be a part of because if you don’t, then your competitor will go at it.
Regarding IPL, there is constant speculation that the valuations are inflated.
We are not out there touting a currency, we are providing a perspective that comes together through data, married to media rights and executes a number. We can’t make it high, we can’t make it low and we can’t cook these numbers up. When we say there were 11,202 seconds of exposure for Sahara, we provide 11,202 verification images, so there is proof of performance. We run a consistent methodology globally. The same methodology applies to IPL, NFL or cricket in Australia. People might say it’s high and the values are inflated, but the truth is that it rates its head off! The broadcaster sets the price, people are stepping up and paying the price. So, if it is a bubble, it’s sustainable at this point. When people start to walk away from this, that’s when the bubble bursts.
Is the cost of the two new IPL teams, collectively worth $703.33 million, sustainable?
Welcome to the commercial marketplace! If I offer you a price, and you accept it, that is what it’s worth. People can put a book value on anything, but ultimately it is what it’s traded at. It may be based on no common sense, it’s just a straight out: “I want to buy that asset, because it’s important to me,” then who is to say that it’s inflated? Look at the billions of pounds tied up in the English Premier League now, that is what people are paying for those teams. We don’t know if it’s sustainable, no one knows.
If this is so dynamic, how does one get into a long-term investment?
Sport is one of the greatest casinos you will ever go into. As a sponsor, I buy into a team. And if they don’t win, then I lose. That is an inherent dynamic of sport from a commercial perspective. Are people going to watch it? Will my team do well? But sport touches people, it goes to an emotional point that a Bollywood movie does not go to. In these tough economic times, sport has come back stronger as it is a comfort point, they trust it. It’s a cheap form of entertainment, how much does it cost to turn on the TV? That’s what sport has been doing for centuries, but today you can commercialize it.