[The Outline By Inc42 Plus] Brought To You By Startups

Dear consumer,

Whether it is a TV show, web series, newspaper, online games, or billboards, Indian startups have been splashing themselves on every available space and over the years, this has extended to high-profile events and entertainment properties. What started with web series partnerships in 2015 and 2016 has taken on a new form today with well-funded startups bidding huge amounts to sponsor major TV shows such as Bigg Boss, and even the Indian Premier League or IPL, reputed to be one of the largest showcases for brands in India. 

Cricket is not just a ‘religion’ in India, but a make-or-break opportunity for brands and startups. It all began with Reliance sponsoring the cricket world cup in 1987 (known officially as The Reliance Cup), which set off the trend of brands chasing cricket sponsorships. If the likes of Pepsi, Coca Cola, Hero Honda and other giant conglomerates ruled this sphere in the 90s and the early 2000s, the trend has veered towards new-age startups in the last 10-12 years. Yes, the IPL was a definite reason, but startups started looking at offbeat (yet high-profile) ways to garner a following. What began with the IPL, the likes of the Pro Kabbadi League, Indian Super League or ISL and others have continued, and this has now trickled down to mainstream entertainment properties such as Bigg Boss and a host of webseries. 

“Whenever you see a brand on TV, it reassures you that they must be big, they must have a lot of money, they must be of high quality, that’s why they are able to spend. So very quickly, it gives credibility to a company that brands otherwise take years to build,” Apurva Chamaria, chief revenue officer of travel tech startup RateGain and former marketing head at tech giant HCL. 

In 2019, IPL reached about 462 Mn people across TV and digital, giving companies a far wider reach and recognition in one partnership. Owing to Covid-19 and uncertainty around IPL, the title sponsorship revenues fell down from INR 440 Cr to INR 222 Cr — which is what Dream11 is paying for the title spot. This was followed by the entry of Unacademy and Cred as official sponsors of IPL.

While BYJU’S, which is one of the few unicorns with positive unit economics, could afford to become the jersey sponsor of Indian cricket team, is it wise for growth-stage startups such as Unacademy, Cred, Dream11, Paytm, EUME, MPL bid for high-value sponsorship rights?

In Pursuit Of Scale 

Over the years, the IPL has become a truly international event, even among fans from countries other than India. Being associated with the tournament helps brands in building trust and strong brand recall among consumers across geographies.  

The same was affirmed by the media statements of these startups as well. Abhishek Madhavan, VP of growth and marketing for gaming startup Mobile Premier League (MPL) called the startup’s IPL and Big Boss sponsorships an opportunity to become a “household name in India”. On the other hand, Unacademy’s VP of marketing Karan Shroff is looking to make Unacademy the “biggest brand in the consumer-internet space” in India.

The marketing partnerships are not just limited to TV shows and live events, companies have been spending extensively on TV commercials, full page newspaper ads and even billboards that are dotted around the city.

“An increase in engagement and recall, results in a higher probability of the brand being the first choice in mind of the consumer during the buying stage,” said Shivi Chopra, cofounder of OTT-centric advertising platform ads2OTT. 

Given the plethora of brands in each business category, consumers have numerous options within their reach. In order to stand out and get embedded inside the consumer’s mind, it becomes imperative for the brands to be present at multiple touchpoints on a day-to-day basis in the life of the consumer. 

Vaibhav Odhekar, cofounder of marketing tech startup POKKT, said, “While there are large numbers being floated around for internet ready audiences in India (say around 400 Mn – 500 Mn), the practical problem is that only around 150 Mn audience could be classified as digitally evolved. So via digital mediums, you can effectively reach this 120 Mn ~ 150 Mn population.”  

So, the major task at hand for digital startups is to grow the pie and to do that they have to think non-digital. Which is why the traditional ATL (above the line) routes of TV and big ticket sports entertainment are being readily experimented by tech startups. 

“Our target group is anyone using a smartphone in India and hence, we are focusing on marketing — because it is a huge market and is bound to increase with internet and smartphone penetration increasing,” said MPL’s Madhavan.

But do these above the line marketing attempts have any correlation to online sales? What is the ROI (return on investment) that startups look for through these marketing spends?

The Search For ROI

According to RateGain’s Chamaria, high impact properties usually have no direct correlation with sales, unless the brand does media modelling, which is when businesses decide without this campaign the brand is growing at 5% and with this, the growth rate will be 15%-20%. But by and large, the impact is primarily on awareness and reach.

“When it comes to digital, all startups look for ROI-based campaigns like cost per install but when it comes to TV, the end-goal becomes reach and frequency,” Rikki Agarwal, cofounder and chief business officer of Blink Digital, a digital agency that has worked with brands like IPL sponsor Dream11 and Spartan Poker.

Naina Parekh, founder of a lifestyle brand EUME, believes that the right brand associations add a level of trust that reaps very long-term benefits. From a credibility building viewpoint to being able to engage with consumers, such associations go a long mile, Parekh added.

EUME has partnered with two IPL teams as official mask partners. The company has reaped benefits from similar associations with cricketers and influencer marketing programmes. These associations are said to have added a lot of traction to the company’s product distribution channel which was otherwise unknown. 

MPL’s Madhavan also noted similar results from signing up Virat Kohli as the brand ambassador and becoming the broadcast sponsor of IPL in 2019. “In just two years, we have grown to 6 Cr. users in India,” he added. It is interesting to note that MPL was only founded in September 2018, just a few months before last year’s IPL.

Nitin Sharma, founder FirstPrinciples and former principal at Lightbox, also noted a similar example of growth. Talking about one of the Lightbox’s portfolio companies, he wrote in a 2015 blog,”A one-month burst of about INR 6 Cr led to a 50% jump in monthly revenue, which was sustained. In this case, one could roughly argue that the TV spend paid back in about 12 months, plus the lingering brand creation effect.”

But he also followed this up with a cautionary note about the problem of attribution in multi-channel advertising. Which means, when the companies are advertising on multiple channels, it is tough to quantitatively attribute the effect of one channel over the others.  

Out Of Focus

While these above-the-line marketing efforts might have worked for giants such as Reliance (which had already been around for over a decade when it sponsored the world cup in 1987) and Chinese tech behemoth Vivo. When it comes to startups, the major difference is the fact that many of these companies are fairly new and are yet to show unit level profitability. 

“It is okay to acquire these kinds of impact properties if you have a clear path to profitability or you are already making money at a unit level. If you don’t have a clear path to profitability, then it is just wishful thinking,” said Chamaria. Stage of a startup also plays a crucial role here. If a startup hasn’t spent much time on figuring out its internal brand and culture, how will it build a compelling brand image for the public?

While growth might skyrocket with heavy ad spends, does this divert a startup’s focus from its core offerings? Even if companies are able to drive huge user traffic from these high-profile associations, metrics like user retention and repeat rate will still depend on factors such as strong product offering and user experience.

Sponsoring Mega Cricket Events: Then And Now

Fourteen years after the company’s launch, Reliance Industries performed a spectacular marketing stint by sponsoring the 1987 Cricket World Cup or Reliance Cup. Three decades later, another Indian company is attempting a similar feat. Founded in 2008, fantasy sports startup Dream11 is the title sponsor for the Indian Premier League (IPL) 2020. 

Brought To You By The Government

It’s not just startups that are focusing on building their brand image —  through campaigns like ‘Atmanirbhar Bharat’ and ‘Vocal for Local’, the Narendra Modi government is also looking to revamp the image of India as an import-reliant market and reducing the dominance of tech companies from China. 

The most high-profile move has been the ban on TikTok, PUBG Mobile and other mega apps. While TikTok continues to hunt for a non-Chinese buyer, PUBG’s South Korea-based parent company has already severed ties with Chinese publisher Tencent Games. With this PUBG Mobile is also looking for a new partner in India. Reports this week noted that a new licensing agreement is in the works with an unnamed Indian gaming company to pass on the rights to run the PUBG Mobile in India. 

But the impact of numerous app bans is not just limited to Chinese companies, Indian consumers and businesses have also taken the brunt of this seemingly geopolitical decision. TikTok influencers lost a huge revenue source, and in the case of PUBG Mobile, esports companies lost the highest contributor to the overall esports prize money pool. 

And the ban has also severely hit many Indian traders and online sellers. Club Factory was one of the Chinese apps banned by India and the company has reportedly suspended payments to Indian sellers by invoking the ‘force majeure’ clause. This has pushed Indian sellers into a financial crisis  — of loans, EMIs and pending payments. Some sellers have even tweeted about committing suicide and blames the government for their misery. 

Brought To You By Data 

Staying on the ban on Chinese apps and games, India’s decision is being seen as a power move in the global geopolitical table. For long, intelligence agencies around the world have accused Chinese tech companies of stealing user data and adding to China’s hold on the tech industry giving the country the geopolitical edge. But with the ban on over 200 Chinese apps, India joined the league of Western nations such as the US, UK, Canada and others that see China as a threat in the ongoing Global Data War.

While in 2020, the government is cracking down on Chinese apps and investors with the express intention of protecting the data sovereignty of India, this is actually the same data which the Indian government has been looking to intercept and monitor over the past 5-6 years. This twist of irony brings up the oft-asked question — can freedom and security co-exist without either getting diluted? Can there be a fine balance between privacy, innovation and mass surveillance? 

Unlike the past, when war made everyday life perilous, this slow-burning data war requires citizens to be asleep to the fact that there is indeed a war going on. And India’s ban on Chinese apps is being seen as eyewash by some observers even as the country extends its support to other nations in the global surveillance efforts. 

Like the debate of privacy and security, balance is an important cog in any system, whether it is a country, a company or indeed a startup. Focusing too much on any one aspect — say brand building for example — can often result in lopsided growth and highlight other weaknesses, while distracting from the finer points of the business. 

Until Next Week, 

Yatti Soni 

Note: We at Inc42 take our ethics very seriously. More information about it can be found here.