Sports marketing agencies hit a roadblock in India

The going is proving to be tough for sports marketing agencies in India. Some of sports marketing arms of media agencies, such as VGC Sports and to an extent, even Ogilvy Sports, have closed shop around December-end 2008. Is it the slowdown effect or lack of talent or some other factors that have hit the sector? exchange4media finds out. Earlier today, our story had incorrectly mentioned that Havas Sports has shut shop. Havas Sports is operational under the leadership of Anand Yalvigi, who is the General Manager of the business in India.

According to the Pitch-GroupM Survey, the size of the sports marketing industry is a tad over Rs 1,900 crore and is growing at 25 per cent annually, nevertheless this industry widely believes that sports marketing in India is still at a nascent stage. With the global economic meltdown taking a toll on every sector, sports marketing has not remained immune to its effects.

While Preeti Vyas, Chairwoman and CEO and Vyas Giannetti Creative (VGC), CEO, were not available for comments as they were travelling, Sanjay Thapar, Group President - North and East, O&M, shed some light on Ogilvy Sports.

Thapar explained, “Ogilvy Sports was just a couple of people who had joined us with specialisation in sports marketing with an attempt to start the discipline as part of Ogilvy Action, specialising in Ogilvy Sports. However, they could not deliver on any of the promises that they had made and, therefore, they left the company and we decided not to replace them. We have no plans to revive it, at least not in the near future.”

Mohit Bhagchandani, Head, 10 Integrated, pointed out, “Sports marketing works mostly on acquisitions, and this is a major hindrance that advertising companies face. Sports in India has always been about cricket, and that too at the top level, which operates on serious monies. Further, other spaces in Indian sports are limited and difficult to promote and that too, considering the limited expertise in the market.”

He further said, “Ideally, sports marketing businesses operate on long-term business model, which includes creation of sports properties and take time to nurture. Though not yet an ‘industry’, market demand for sports marketing can be created through effective packaging. The best example for this would be the Mumbai Marathon, a city-based event, which derives major sponsorships and partnerships and is promoted at the world stage.”

Mahesh Ranka, GM, Relay Worldwide, noted, “Everyone is handling the business in their own way. We are not oblivious to what is happening in the market, however, since we have a commitment as a group to sports, we are convinced that sports is something that works for the brands and they too are very keen to ensure that we succeed in our endeavour. So, we do not want to leave any stone unturned.”

Is dearth of talent the reason?

According to Manav Singh, GM, Gemba India, “The one reason is that sports marketing in India is still a premature market, as sports itself is at a premature stage to be marketed. At the end of the day, the sports unit or agency is not able to deliver on the promises made. When you do not see immediate results, and especially in a slowdown period you obviously want to rationalise it, so yes, slowdown also has had an effect.”

Agreeing with this, Ranka said, “This industry is not very well matured. Unfortunately, sports marketing is construed with anything that you have done with sports, including activation. We look at people who understand the business of brands and who can understand and amalgamate the business of sports with that. Thanks to the Indian Premier League (IPL), the industry is much bigger today.”

“I believe sports marketing in India will mature over the next 5-10 years, when IPL takes the market to a whole new level and when other sports start getting their traction with people, which turn into fans and then see brands getting interested and be part of it, because we hardly see any brands supporting any sport to help grow it,” he added.

Scenario in 2009

Bhagchandani opined, “This is a difficult year with the recession, but at the same time, India is also at the centre of global attention. The dynamics of the Indian sporting industry are rapidly changing and brands are now considering sporting platforms as integral components for their business.”

Ranka observed, “Sports marketing is predominantly a cricket-dominated industry in our country. As all things are getting affected by the slowdown, so is this part of the business. The way things are at this point of time, the slowdown will definitely affect the investments in sports marketing as well. However, there are opportunities for people to exploit the sports marketing part of the business since the costs are going to be depressed and long term investments can be looked at with a strategic thought, and not tactical thought.”

According to Gemba India’s Singh, “The biggest challenge is the perception that only cricket gets the marketing dollar because consumers are only interested in this sport. Each sport has an audience that is passionate about it, so you need to find that audience and sell those eyeballs to the corporates. I believe the biggest challenge here is to bring other sports deeper into this industry. What we need to do is bring in more corporates to sports to help sports grow and not just to leverage it for logo exposure. We need to see how they can grow this market and fix the structural problem of this industry.”

So, if an agency has had to shut down their sports marketing unit, the biggest reason would be lack of deliverance on the promises made rather than blaming it all on the slowdown effects. Nevertheless, when media agencies set up a sports marketing unit it is because it acts as an extension in connecting with the consumer and communication. After all, it is all about delivering the right audience and in the right context. And if this industry has to see further growth, more and more corporates need to join the bandwagon, along with the Government’s willingness to clean up the system and structural problems.