Cricket World Cup to generate Rs 20-22bn in ad rev on TV/digital platforms: Karan Taurani

Market research company Elara Capital has released a Consumer Discretionary report on the upcoming Cricket World Cup. According to Karan Taurani, Senior VP, Elara Capital, one can expect the tournament to generate Rs 20-22bn in ad revenue on TV/digital platforms combined. Taurani states that the digital revenues for CWC may prop significantly this year.

Here are excerpts from the report.

Consumption to wax with Cricket World Cup

Favourable timings to boost viewership

India is hosting the Cricket World Cup (CWC) after 12 years (through 5 October-19 November 2023). For the first time, India will host all the matches solo – Earlier, other Asian nations have co-hosted with India. Favourable timings (matches will begin at 10:30 IST/14:00 IST) may boost consumption of the property on TV/digital platforms. Expect the CWC to generate INR 20-22bn in ad revenue on TV/digital platforms combined. And digital revenues for CWC may prop significantly this year as: 1) timings are favourable (viewers may watch the first half of the match on OTT) and 2) CWC will be available free for all mobile users on Disney+ Hotstar app. In terms of TV advertising, expect a 6% CAGR versus the prior edition of the CWC in CY19. For the digital medium, CAGR may touch 21% versus 2019 levels.

Consumer discretionary – Win-win proposition

The CWC may positively impact online food ordering for aggregators such as Zomato/Swiggy. Through 2019 and prior world cups, JUBI alone saw a boost in SSSG (higher SSSG growth of ~3% in the CWC quarter) due to best experience offered in food delivery. But this time, expect other categories – burgers, fried chicken and biryani – to perform well, led by higher penetration of online aggregators, and likely replication of JUBI’s delivery experience. Also, pizza may see significant demand (preferred by large groups). But the segment is highly fragmented with many competitors in the fray, which may dampen prospects of a big delta/advantage for JUBI in this CWC. QSR/food tech companies may see a positive impact of 6-8% (2%-3% higher quarterly growth in Q3FY24) from higher orders during the CWC (six weeks). The alcobev industry may see a boost in consumption as beer volumes have an on-premise share of ~30% – Premium beer such as Corona, Heineken, Bira and Budweiser could see strong growth. Within spirits, scotch whiskey and upper prestige could see a boost in volume growth due to higher on premise share (~40%). We estimate positive impact of 4%/6% (1.5%-2% higher quarterly growth in Q3FY24) for overall whiskey/beer volumes in October-November due to the CWC. Bars/pubs may see better occupancy, which may positively impact alcobev volume growth in Q3FY24.

TV advertising (non-cricket) may be strained

In the past year, many consumer tech companies (edtech, fintech, foodtech and e-commerce) have shifted focus to profitability, thus curtailing ad spends. This has hurt the market as regards ad spend growth on TV/digital. These verticals have not yet made a come-back in terms of larger ad budgets, and the market is depending on larger, traditional verticals such as FMCG, Auto and Telecom. Expect TV ad spends for GEC-based players – Zee Entertainment Enterprises (Z IN) and Sun TV (SUNTV IN) – to see a mild strain in Q3FY24, due to spends being diverted to cricket. But the positive impact from the festival season may largely offset this hit. The mix of advertisers has also changed – from new-age plays to traditional verticals – which has hit the overall pricing (sports and GEC). ZOMATO, UBBL, DEVYANI, WLDL and UNSP seem to be the key beneficiaries from the overlap between the WC and the festive season which will boost overall consumption.

Cricket World Cup adex

CWC 2023E to yield 20% more TV adex than 2019

The upcoming CWC may generate at least 20% more in TV adex than it did in 2019. Sports advertising revenue has witnessed a CAGR of ~20% in CY15-22. And for 2023 CWC, advertising yields are at a mild premium vs 2019 pricing levels, indicating that the same pricing structure is being maintained. Most International Cricket Council (ICC) event sponsors are Indian brands and have committed substantial investments.

Digital adex: CWC 2023E to grow at least 70% versus CWC 2019

In contrast, digital adex for 2023E CWC may likely grow at least 70% more than the prior editions led by: 1) favorable timings (viewers may watch the first half of the match on OTT), 2) CWC will be available free for all mobile users on Disney+ Hotstar app and 3) better growth in digital advertising versus traditional media. CWC 2023 may see a similar growth as in digital ad spends during the Indian Premier League (IPL) in 2023. While the absolute value of digital advertising may not be as high as TV advertising, the growth rate may be higher. Cricket has gained popularity on digital platforms, and lower advertising prices on digital channels have allowed many brands to participate. In 2019 CWC, digital advertising-led revenue ranged within INR 4,000-INR 5,000mn. Asia Cup may generate TV adex within INR 3,000-INR 4,000mn.

Consumption boost during CWC

Sales/volume growth higher in CWC quarter Consumer Discretionary, especially Food & Beverages and Alcobev, has seen a correlation with the past two CWCs (in 2015/2019). Per our findings, SSSG/volume growth in the CWC quarter surpassed the annual SSSG/volume growth in the past two CWCs. JUBI’s annual SSSG dipped 4.5% YoY in FY15 whereas in the CWC quarter, the SSSG rose 6.6% YoY. In 2019 CWC quarter too, JUBI’s SSSG was much higher at 4.5% YoY versus an annual average SSSG of 1.7% YoY in FY20. For Alcobev, the delta was visible (on high ‘on-premise’ growth) more for beer – UBBL’s annual volume pared 4.2% YoY in FY20 but volume grew 5.6% YoY in CWC quarter.