Sponsorship Strategy for a New Indian Entrant in Sports

Sponsorship Strategy for a New Indian Entrant in Sports

The Sports Sponsorship market in India witnessed another year of growth in 2019 with the value surpassing a never seen before Rs. 9,000 crores, an impressive growth of 17% over the value in 2018. The business of sports in India has seen a substantial Compounded Annual Growth Rate (CAGR) of 12.8% over the past decade. These facts and numbers show that the belief in and delivery of sports has been performing well and consistently growing. (GroupM Media India Private Limited, 2020)

The brand that I believe should invest in sports is Vedantu. It is an EdTech company having a live online learning and tutoring platform that enables flexible personalized learning by connecting students and teachers. Vedantu offers free courses from class 6 to class 12, free master class sessions, as well as premium, paid 1-on-1 classes from class 6 to class 12. (Vedantu, 2020)

The name and logo of Vedantu symbolize a personalized knowledge network as is shown in the image below.

To date, Vedantu has raised a massive amount that is around $83.9 million to $85 million in funding according to 2 different sources. (Ghosh, 2020), (Crunchbase, 2020) It has raised 2 rounds in the past year itself, $42 million in August 2019 in its Series C round led by Tiger Global Management and WestBridge Capital and $24 million in February 2020 in a Series C extension round led by global venture capital firm GGV Capital. In addition to this, in the past year, it has also had debt financing of Rs. 9.42 crores or Rs. 94.2 million by Trifecta Capital Advisors. (Crunchbase, 2020)

Vedantu claims that it has over 2.5 crore or 25 million users monthly across 1,000 cities and more than 40 countries (though dominated by India) on its own platform and on YouTube. Vedantu’s CEO & co-founder, Mr. Vamsi Krishna, has also stated that its student enrollments have grown by 4.5x year on year. It plans to use the funding to build their brand and create new content for children aged 4 to 10/11 studying in kindergarten up to class 5. (Ghosh, 2020) Its current revenue is estimated to be around $10 million or Rs. 70 crores. (Owler, 2020)

According to Vedantu’s Registrar of Companies filings with the Ministry of Corporate Affairs (Government of India) its revenues from operations increased from around Rs. 5.3 crores or Rs. 53 million in Financial Year 2018 (FY18) to Rs. 10.44 crore or Rs. 104.4 million in FY19, a growth rate of nearly 100%, and as per Inc42 Vedantu’s revenue also grew almost 4.3x, which is more than 400% in FY18 from FY17, which is impressive and shows that Vedantu has consistently been growing. However, the rapid growth of Vedantu has required them to spend big amounts and have increasing expenses, which has also led to them incurring higher losses. It spent around Rs. 39 crores to earn a revenue of around Rs. 10 crores in FY19 and posted a loss of Rs. 27.31 crore. However, Vedantu’s performance is better compared to competitors such as Unacademy that had an operational revenue of Rs. 11.66 crore and losses of Rs. 90.27 crore in FY19. Vedantu also spent 66.46% more on advertisements and promotions in FY19 over FY18, spending Rs. 5.6 crore in FY19 compared to Rs. 3.3 crore in FY18. (Upadhyay, 2019), (Khatri, 2019)

The financials & commercials of Vedantu show that it is a player that is trusted and has continued to be backed by multiple established venture capital firms year after year, and has great potential while consistently growing and spending on advertisements and brand promotions. It has also stated that it will use its funds to spend more on building and promoting its brand, which strengthens the suggestion and shows that it will be willing to invest in sports as it is an area that would help to develop Vedantu’s brand image.

Vedantu should look to invest in sports and promote its brand through sports as the medium, something it hasn’t done before. This is because, the customers & viewers of sports are the fans, who are loyal, emotional and irrational and in India most of them are young and of learning age. Through positively associating with the fans’ favorite sports, teams and players Vedantu can develop a positive association and brand image in the minds of the fans, who are their potential customers.

There have also been other EdTech companies that have invested in sports such as Byju’s, upGrad, Unacademy, the biggest, most valuable and most prominent of them being Byju’s. Byju’s replaced Oppo as the team sponsor of the Indian men’s and women’s national cricket team in 2019 after the ICC World Cup, which is the most expensive sponsor spot/inventory taken up by any Indian brand. (Business Standard, 2019), (ETBrandEquity, 2020)

Byju’s created an advertisement campaign featuring child mascots and star players of the Indian cricket team walking out onto the cricket field wearing the new jersey with Byju’s as the sponsor with the players talking about not just being a player in it but also a student. The video goes on to show a player tying the shoelace of a child mascot, and about winning with grace but not getting disappointed with losing, and that victory is best shared whereas sorrows should be left. It ends off with the players saying that it is not just a jersey, but a reminder to never stop chasing your dreams & keep learning, with the screen then changing to the slogan “Keep Learning” succeeded by Byju’s logo with their tagline “Keep Learning”. Through this campaign, Byju’s aimed to convey that learning is an on-going process and the feeling of togetherness. Byju’s also had separate Instagram contests exclusively for students aged between 5-17 from different cities with lucky winners winning T20 or ODI match tickets. They also posted about the Indian women’s cricket team including a picture of the team with the jersey on International Women’s Day. (ETBrandEquity, 2019), (Byju's Instagram, 2019)

Unacademy is also a sponsor of sports, being the title sponsor of the yet to be held Road Safety World Series or Unacademy Road Safety World Series. It is a T20 cricket tournament between legends of respective countries organized by the Road Safety Cell of Maharashtra to increase awareness about road safety. The tournament included 5 countries, namely, India, South Africa, Sri Lanka, Australia and West Indies with legendary cricketers such as Sachin Tendulkar, Virender Sehwag, Zaheer Khan, Brian Lara, Muralitharan, Chaminda Vaas, and Shivnarine Chanderpaul. Sachin Tendulkar is also the brand ambassador of the tournament, while Sunil Gavaskar, another Indian legend, is the match commissioner of the series. Unacademy users will have the opportunity to be present during the toss between the captains of the two teams and can also view the live masterclass matches exclusively on Unacademy’s app, website, and YouTube channel. (ETBrandEquity, 2020) (Wikipedia, 2020)

Vedantu’s values are well aligned with Kabaddi and the Pro Kabaddi League (PKL). Both Vedantu and the Pro Kabaddi league believe in engaging content, quality delivery, and superior up-to-date technology. This is seen in how the PKL transformed the sport from being played in the open on soil and ground in a different format to a new television, viewer, youngster, and urban-friendly set-up & format. The Pro Kabaddi League has kabaddi matches in quality in-door stadiums that use superior technology, on mats in a format with rules, that keep the fans and viewers captivated and engaged.

Vedantu’s target audience is students from Kindergarten to class 12 aged between 4 to 18 years. This is another reason the PKL is the most suitable category of sport Vedantu should invest in, as PKL has the highest percentage of viewers aged between 4-30 years and despite this, there are no advertisers & sponsors from the education sector. This makes investing in the Pro Kabaddi League an enticing untapped opportunity. (Rise of Indian Sports Leagues, 2017), (Cricket in India: It's Not Just a Game, 2019), (Heda, 2019)

I believe Vedantu should approach the Pro Kabaddi League to become the official “Time Out sponsor”. Each team can take one “Time Out” of 90 seconds per match during which the match clock is paused. However, this is a sponsor spot/inventory that the PKL has not sold and got a sponsor for yet. Vedantu can become the PKL official “Strategic Time Out” sponsor/partner and can give one or a few of its lucky users free match/VIP tickets and during the “Time Out” have the Vedantu user(s) wearing Vedantu branded apparel appear on live television and have moments to savor. It can also advertise its own 30-second ad during this 90-second “Time Out” and show that strategy & learning or strategic learning is important for everyone including kabaddi players. (Vivo Pro Kabaddi, n.d.)

The targeted sponsorship amount is Rs. 15 crores for a period of 3 years. Star India, the owner of the league, is believed to have quoted Rs. 6 crores per year for an official partner sponsorship. Thus, the value to be just the official partner or sponsor for a particular category of the PKL that is the “Strategic Time Out” in this case, and which currently doesn’t have any sponsor at all would be slightly lower at Rs. 5 crores per year. As it’s a multi-year partnership, it will further help with the valuation from Vedantu’s perspective. (Saini, 2019) Additionally, the rights to be the official “Strategic Timeout” partner of India’s top sports league, the Indian Premier League (IPL), is believed to have been sold for Rs. 31 crores for 3 years or Rs. 10.33 crores per year in 2018, and the PKL being far behind the IPL in terms of popularity, viewership and following should have a much lower value.  (GroupM Media India Private Limited, 2020), (Kedia, 2019)

From this investment and partnership, Vedantu should expect a good return on key objectives such as an increase in brand awareness & visibility, improving brand image, an increase in brand recall, developing goodwill, customer engagement, and most importantly an increase in the number of Vedantu users.

I believe investing in sports, especially as the official “Strategic Time Out” partner of the Pro Kabaddi League is an attractive and untapped opportunity for an EdTech e-learning company such as Vedantu, that must not be missed as it will make a big difference for the sponsor and help it to achieve important objectives not possible to achieve as easily through other means or mediums.

P. S. Check out my football merchandise business at midfieldmerchandise.com

Bibliography

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