2015: ICC World Cup, IPL: Airtel’s ad and marketing expenses likely to increase in FY-2015-16

BENGALURU:  With the 11th edition of the ICC Cricket World Cup (World Cup) around the corner and IPL season soon thereafter, it is quite obvious that most major media planners must have already booked or are in the process of booking spots on anything and everything that has something to do with cricket. Bharati Airtel Limited (Airtel) has been increasing its advertising and marketing spends (A&M exp) during each edition of the game along with other communication players in the country.

Notes: (1) All figures mentioned in this report are standalone and NOT consolidated, unless stated otherwise.

(2) 100,00,000 = 1000,000 = 100 lakh = 10 million = 1 crore

In 2003, the year of the 8thedition of the World Cup, the company had more than doubled its A&M exp to Rs 166 crore (5.43 per cent of standalone Total Income or TI) from Rs 82.88 crore (5.51 per cent of TI) in FY-2002. In both FY-2002 and FY-2003, Airtel reported loss of Rs 180.53 crore and Rs 176.42 crore respectively. TI in FY-2003 was more than double (up 2.03 times) at Rs 3054.44 crore versus the Rs 1504.12 crore in FY-2002.

In FY-2004 the company continued its growth path and reported 64.9 per cent increase in TI to Rs 5036.94 crore, A&M exp of Rs 198.77 crore (3.95 per cent of TI) and a PAT (Profit After Tax) of Rs 584.91 crore (11.6 per cent of TI). The company has always been in the black since then, with PAT growing in absolute value as well as in terms of percentage of TI to peak to Rs 9426.15 crore (26.5 percent of TI) in FY-2010.

Circa 2007, the year of the 9th edition of the World Cup, which started towards the fag end of fiscal 2007 and overlapped to the beginning of fiscal 2008, Airtel’s A&M exp in FY-2007at Rs 402.47 crore (2.26 per cent of TI) was just 0.5 per cent more than the Rs 400.33 crore (3.55 per cent of TI) it had spent in FY-2006. But then 2008 was also the first season of the Indian Premiere League (IPL) Cricket and the company’s A&M exp hiked by 40.7 per cent in FY-2008 to Rs 566.47 crore (2.2 per cent of TI).

In FY-2007 and FY-2008, Airtel reported PAT of Rs 4033.23 crore and Rs 6244.19 crore respectively. TI in FY-2008 at Rs 25703.51 crore was 44.4 per cent more than the Rs 17944.34 crore in FY-2007.

In FY-2011, the year of the 10th edition of the World Cup, Airtel spent its highest A&M within a 10 year period starting FY-2005 (FY-05) till FY-2014 (FY-14) at Rs 721.50 crore (1.88 per cent of TI). Corresponding TI and PAT numbers were Rs 38338.90 crore and 7716.90 crore (20.1 per cent of TI) respectively.

Growth in TI which was in single digits at just 4.7 per cent in FY-2010 versus the previous year, and 7.7 per cent in FY-2011 versus FY-2010, spurted by 10.1 per cent in FY-2012 to Rs 42285.00 crore.

FY-2014 has again witnessed single digit growth of 8.5 per cent to Rs 50771.90 crore, but that could be attributed to huge 70 per cent mobile subscription penetration attained in the country with 88.63 crore subscriptions (The Telecom Regulatory Authority of India -TRAI claims 93.3 crore mobile subscriptions) against a population of 125.58 crore reported in July 2014.

Though Fig 1 above indicates that Airtel’s A&M exp has been going up in absolute rupees, it shows a declining trend in A&M exp in terms of percentage of TI.

Further, as mentioned above, Airtel reported its highest PAT in FY-2010 at Rs 9426.15 crore (26.5 per cent of TI). Since then, PAT dropped steadily to Rs 5096.30 crore (10.9 per cent of TI) in FY-2013, before registering an increase of 29.5 per cent to reach Rs 6600.20 crore (13 per cent of TI) in FY-2014 (Please refer to Fig 2 above).

Considering the scenario, - sagging PAT and a very aggressive competition in a market place that is reaching saturation in subscription, it is inevitable that the company increase its A&M spends, and the coming World Cup followed by IPL in the early part of fiscal 2016 seem to be the most obvious vehicles for a resurrection of sorts.

Also post Cricket World Cup years (2003, 2007, 2011), the company’s A&M spends have increased, so FY-2017, FY-2018 should show the company spending more towards A&M.

In Q2-2015 results, Airtel has indicated a growth of 10.1 per cent in consolidated TI for H1-2015 versus H1-2015. In case the company maintains the same growth rate in H2-2015, extrapolating the 10.1 per cent growth to standalone TI, Airtel’s FY-2015 TI should be in the range of Rs 56,000 crore. Assuming that it maintains A&M spends at 1.2 per cent of TI, its A&M exp for FY-2015 should be at least Rs 670 crore.

Latest Reads
Sports sponsorship in 2017 up by 14%: SportzPower-GroupM report

SportzPower, in association with GroupM's sports arm ESP Properties, has released its 2018 report on sports sponsorship in India.

MAM Marketing MAM
Mindshare elevates Prasanth Kumar, Amrita Randhawa to global roles

MUMBAI: Mindshare, the global media agency network, has announced two major leadership changes for its growth markets region.

MAM Marketing MAM
Kohli brand driving on the up

MUMBAI: From a rambunctious maverick to becoming India’s most celebrated player, Virat Kohli is the man that brands pay crores to get on board.  

MAM Marketing MAM
Big B sings acapella style for Navratna

MUMBAI: Navratna Oil, the ayurvedic therapeutic cool oil brand from the house of Emami has launched Amitabh Bachchan in a never seen avatar of an ‘acapella' singer. In a brand new music video, Big B can be seen crooning to the iconic song ‘Sar jo tera chakraye’ from the film Pyaasa in an acapella...

MAM Media and Advertising Ad Campaigns
Linc Pen encourages students taking exams

MUMBAI: Linc Pen and Plastics, one of India’s most trusted writing instruments for the last four decades with a strong presence over 50 countries, has lauded the resolution and hard work of students who are taking their board exams this year with a brand new advertising campaign, Best of Luck.

MAM Media and Advertising Ad Campaigns
JSW Steel leads fight against counterfeit steel

MUMBAI: JSW Steel, India’s leading steel producer has a new TV campaign which is a part of the company’s ongoing effort to create mass public awareness about the menace of counterfeit in the colour-coated steel products category.

MAM Media and Advertising Ad Campaigns
Gulf Oil signs Hardik Pandya as ambassador

Gulf Oil Lubricants India Limited (GOLIL), a Hinduja Group Company, has signed Indian cricketer Hardik Pandya as its brand ambassador for the company’s new business initiatives and lubricants. Pandya joins cricketing legend MS Dhoni, who has been associated with the company since 2011 as its brand...

MAM Marketing Brands
Aamir Khan becomes Vivo India's new face

After ending a two-year contract with Bollywood actor Ranveer Singh, Chinese mobile manufacturer Vivo has found its new brand ambassador in Aamir Khan. The eminent actor has been signed for Vivo’s future brand and product communication initiatives of Vivo India.

MAM Marketing Brands
Former Deloitte CMO Teresa Barreira joins Publicis.Sapient

Publicis.Sapient, the digital business transformation hub of Publicis Groupe focussed on partnering with clients to advance their business performance, has appointed Teresa Barreira as the company’s new chief marketing officer (CMO).

MAM Marketing MAM

Latest News

Load More

Sign up for our Newsletter

subscribe for latest stories