Setback for BCCI as Vivo pulls out of IPL in wake of backlash3 min read . Updated: 05 Aug 2020, 06:00 AM IST
- Backlash on social media behind Chinese firm’s decision to pull out
- The decision comes a day after the cricket board said that it will retain the Chinese sponsor.
Smartphone handset maker Vivo has pulled out as the title sponsor of this year’s Indian Premier League (IPL) cricket tournament, following criticism on social media about a Chinese brand being associated with the championship, Hindustan Times reported, citing unidentified people.
The decision comes a day after the cricket board said that it will retain the Chinese sponsor. Spokespeople for BCCI and Vivo declined to comment on the development.
Vivo, which still has three years of the sponsorship deal worth ₹1,320 crore left, is likely to return to sponsor the T20 tournament from 2021 to 2023.
The border clash with China that left 20 Indian soldiers dead in June has cast a cloud over Indian cricket as Chinese mobile phone brands are not only among the top sponsors of cricket tournaments but also spend huge sums on advertisements during tournaments.
While trader association Confederation of All India Traders and Swadeshi Jagran Manch, an affiliate of the Rashtriya Sawayamsevak Sangh (RSS), welcomed the BCCI decision, financial implications for the cricket board and IPL teams are bound to be severe.
Vivo had been paying ₹440 crore annually to BCCI as part of a five-year-long title sponsorship fee since 2018. Apart from sponsorship, Vivo also spent heavily on television advertisements and dealer engagement that is estimated to be around ₹150 crore during the T20 tournament.
A bunch of other Chinese smartphone brands, including Oppo, Xiaomi, Realme and OnePlus, also take up premium ad slots spending over ₹500 crore through the tournament, according to media buyers’ estimates. With the negative sentiment towards Chinese products, these brands might shy away from advertising during IPL. This would further hurt Star India, which is expected to take a 10-20% hit in ad revenues and is unlikely to touch the ₹2,000 crore revenue that it had generated from IPL last year.
“Vivo’s exit is definitely a disappointment for Star, though it might end up creating an opportunity for new brand categories such as e-learning platforms, which have been doing well," said Ajit Gurnani, chief client officer, Zenith India, a Publicis Groupe media agency.
In fact, Chinese brands’ ad spends contribute about 20-25% of the total IPL revenues, said Sandeep Goyal, chairman, Mogae Media, a Mumbai-based marketing and communication agency. “It’s a clear signal for other Chinese brands to lie low. I doubt we will see much advertising from smartphone brands this year," he added.
The strategy of Chinese brands has been centred around leveraging big Bollywood and sports celebrities, bagging title sponsorship for sports properties for peak visibility, and concentrating advertising money on cricket.
“Nationalism, as a mass sentiment, is a powerful force. I believe brands have to bite into this reality. The best strategy for Chinese brands right now is to lie low, especially on a popular property like IPL," said Harish Bijoor, brand strategy specialist and founder, Harish Bijoor Consults Inc.
IPL’s association with the Chinese brands isn’t restricted to handset makers. One of the official partners, fantasy sports firm Dream11, and umpire partner Paytm have Chinese investments. However, the immediate worry for BCCI is to find a company that can replace Vivo.
“If the board doesn’t manage to get the same amount of sponsorship money, then not only BCCI but also the team franchise revenue will get impacted," a sports marketing executive said on the condition of anonymity.
This would hurt franchises, especially small ones, which are already being pressured by brands to renegotiate sponsorship contracts, given the market conditions.
“Franchises are likely to offer discounts basis on their relationship with the brand. The smaller teams, which have not been able to secure sleeve/hat sponsors yet, might end up taking a hit of over 20% in their revenues given the market conditions," the executive added.