Blog | Was it a right move by Byju's?...

Byju’s is Not the Title Sponsor of Team India:

Yes, you heard it right. Byju’s is not the Title Sponsor of Team India. The title sponsor of Team India is Paytm (owned by One97 Communications Limited) which acquired the sponsorship rights for BCCI's International and Domestic matches for 2019-23 home season at the winning bid price of Rs 326.80 crore.

This is essentially the renewal of the previous contract, as Paytm had won the sponsorship rights in 2015 for four years, at a bid price of Rs 203.28 crore. The winning bid was Rs 3.80 crore, which is at 58% incremental value in comparison to the previous per match value of Rs 2.4 crore.

It has been a common misconception among most of the people who follow cricket that, the Title Sponsor of the team is the one who owns its logo on the official jersey of the players. But actually, the brand that gains a spot on the jersey is termed as the Official Sponsor of the Team. You may question, there are other official sponsors as well. Then why there is the logo of a particular brand on the jersey? The answer is very simple. Though that brand is not the Title sponsor, its investment is no less than that of a Title Sponsor. It’s just the case that he has the highest bid as an Official Sponsor in order to gain most visibility by getting a place on the official jersey of the team.

Byju’s is the Official Sponsor of Team India:

The Bangalore-based educational technology and online tutorial firm, Byju's, replaced the Chinese mobile-maker, Oppo, as the official sponsor of the Indian cricket team from September 5, 2019. The ed-tech startup that was founded in 2011, a first from the category to win the rights, the team until March 31, 2022.

But the sponsorship right to Byju's is not a fresh one. Rather this right was transferred to Byju's from the previous Official Sponsor of Team India i.e. Oppo Mobiles India Pvt. Ltd. Oppo was the official sponsor of Team India from April 01. 2017 and was supposed to continue till March 31, 2022. It was a complete 5 years of sponsorship right where Oppo Mobiles was supposed to pay an amount of Rs 1079 crore for the duration of their contract having beaten the only other bid of Rs 768 crore from Vivo, another smartphone manufacturer. The minimum reserve price was set by the BCCI at Rs 538 crore.

Oppo could hardly continue for 2 years in this tenure and failed to deliver more. Due to which there was a Tripartite Agreement between Oppo, Byju's and BCCI in order to shift the sponsorship right from Oppo to Byju's. Any transfer of sponsorship requires the interested parties to inform BCCI about negotiations. accordingly, BYJU’s and Oppo informed about their discussion. The BCCI didn't stand to lose any money as the new company will pay exactly what the old one is paying. The financial aspect of the deal was not disclosed by BCCI as there is involvement of secrecy clauses.

Was it a new benchmark for Digital Brands?

So, it is safe to say that it is a defining moment, as Byju’s has set a benchmark for the digital-first brands?

Shiv Sethuraman, Founder, The New Business mentions:

Byju’s association with BCCI is definitely a defining moment for the digital first brand in Indian “Team India’ Cricket sponsorship has been historically the domain of classic old economy brands like Sahara, ITC etc. Having said that, I think it was actually PayTM that took the first step with their domestic sponsorship.”

So, in 2015, Paytm was the first digital-first brand to acquire the Title Sponsorship rights for India's matches at home for a period of four years for about Rs 203 crore. The rights include sponsor branding of series with the title sponsor logo, designation as the title sponsor of the series, visibility at the stadium, and broadcast sponsorship rights.

Pranabir Singh, Director, Media (online and offline), DCMN India mentions:

It is not a fresh deal, hence brand Byju’s and BCCI are in a win-win situation where the existing brand decided to move out as an official team partner. “Had it been a fresh deal then Byju’s would have paid much higher price considering market inflation and other external factors,”

This news indeed came as a shocker to the audiences because the jersey branding for Team India has always been with non-digital brands such as OPPO, Star, Sahara and others. It is the biggest sponsorship that a digital-first brand has ever taken since its evolution in India. There are several digital-first brands present across different categories that have huge yearlong advertising and marketing budgets. These include Amazon and Flipkart in e-commerce; Dream11 in the Fantasy League, Pharmeasy, Netmeds and Medlife in online pharmacy, Amazon, Big Basket, and Grofers in the online grocery ordering, Zomato and Swiggy in online food ordering; Policybazaar in the fintech; Ola and Uber in the online cab ordering and PhonePe, Google Pay, Amazon Pay, Paytm, in the e-wallet category. However, other than Paytm none of these players have taken a sponsorship of this level.

What's in there for Byju's?

Byju’s definitely holds the baton for the ed-tech category in India. As per recent reports, Byju’s is valued at Rs 38,000 crore. The brand is already spending heavily on marketing (of about Rs 200 crore). It has emerged as one of the biggest advertisers in India in last few years. The marketing budget for the brand is way beyond the competition. Byju’s has been working with Bollywood actor Shah Rukh Khan as its ambassador who cuts across the all socio-economic categories across the country. For start-ups it depends a lot on the size of investments they are receiving, to decide their magnitude and scale of marketing efforts.

Their content is what’s helping Byju’s accelerate growth and be one of the top education start-ups in the country.

So, the big question is what does this association brings for Byju’s when it is already a category leader with the highest top of the mind recall.

It might be a case that Byjus is looking at a huge user base considering India as its centralized geographical region of growth. Digital-first brands also have the luxury to involve in this kind of partnerships as they have don’t have to spend more on fixed assets and logistics.

The association will bring more brand exposure and product penetration for the brand especially in Tier 2, Tier 3 cities and smaller towns, which are preparing themselves for an era of digital learning. “As Cricket is already a big entity across India, whether in metros or small rural towns, it will give BYJU’s 360-degree brand exposure, better product familiarity and more acceptance among the audiences. It’s a great proposition for BYJU’s to reach out to the masses and make the concept of online learning via an app, a popular one, but it will also be a challenge as no Ed-tech brand has done it on such a large scale.

Brand Building or Performing Marketing?

A large number of digital-first brands in evolution prefer to opt for brand + performance rather than going only for brand building. Brand exposure and performance marketing are two separate part of a brand’s roadmap in any market and there has to be a good balance between the two. Thus, the brand custodians have to allocate budgets strategically to ensure brand exposure and performance marketing, both are helping a brand to propel its growth.

The idea is to always focus on driving performance since each and every step of the consumer journey can be tracked by the virtue of the product being digital. However, several players in the digital-first category are now beginning to opt for brand building exercises. So, Byju’s is one such player that has gone ahead to take this route.

Consistent and targeted brand exposure is vital to drive performance and in the initial phase of the journey, it’s important for a brand to enhance the visibility and need to demonstrate the usability of the product well to the targeted audiences, which is critical to driving performance. “Byju’s approach is very balanced when it comes to demonstrating their product usability as well as work aggressively for a mass brand visibility. There have been brands like Toppr in the Ed-tech space in India, which arrived before Byju’s but none of them focused on mass reach and remained popular only in certain cities.

Why did Byju's invest on Cricket?

There is no doubt that cricket delivers a huge impact for brands in India. The game commands unprecedented reach and provide a strong engagement platform. Several big players such as Policybazaar, Amazon, Flipkart and Paytm have been investing in cricket for a long time. A lot of newer players have joined the bandwagon of cricket in ICC World Cup 2019 including Byju’s. Till a couple of years ago, advertising (including spot buying and sponsorships) was dominated by traditional players, as the digital players were not seen as ATL heavy brands. However, the needle seems to have shifted and brands fro, multiple categories across cricket as a platform to advertise.

Cricket also provides a base as a one-stop solution where a brand need not necessarily need to do media planning at a regional level. “Also, if they are looking for a regional presence, they can do it by planning no. 4 or 5 channels owing to the base plan (cricket) which covers the entire nation. Considering a million-dollar deal with BCCI, Byjus is looking to achieve the vision for the brand by ploughing extended marketing budget.

Let's talk about the facts:

The Official Sponsors of India till date are as mentioned above. Indian Cricket Team had 5 sponsors till date. It's very obvious that all the sponsors had a different amount to pay. Let's have a look at it:

1. Wills (ITC): Rs 30 lakhs per Match

2. Sahara India: Rs 3.34 crore per International Match

3. Star Group: Rs 1.92 crore per Bilateral Match and Rs 61 lakhs for an ICC Match

4. Oppo: Rs 4.61 crore per Bilateral Match and Rs 1.56 crore per ICC or Asian Match

5. Byju's: Rs 4.61 crore per Bilateral Match and Rs 1.56 crore per ICC or Asian Match

We can see that there is a great hike in terms of Match Fee for Oppo as compared to Star Group. Comparing the figures, we find that the match fees for Oppo has increased about 2.5 times as that of Star Group. Well, this hike could have been still reduced up to a certain extent but as mentioned earlier, as the primary competitor of Oppo, Vivo quoted a bid of Rs 768 crore, Oppo quoted a higher bid in order to get the sponsorship rights.

Why did Oppo Backout?

For any big company, Market Share growth plays a vital part when there is a question of such a heavy long term investment plan. Let's have a look at the market share of Oppo in the Mobile Phones Industry in FY2018 and FY2019.

We can clearly see that Oppo has a market share of 7.4% in the FY2018(Q1) and has a market share of 7.6% in the FY2019(Q1). The growth of Oppo seems to be almost stagnant when the presence of Oppo is in and around 30+ countries. Such a poor growth in terms of Market Share and that too with a vast geographical outreach.

Revenue Generated by Oppo in FY2018 is Rs 37,450 crore.

Oppo still had only 7.6% share. Considering the huge investment that it made, this made the deal to be deemed as “not viable,” thus they handed over the sponsorship deal to Byju’s.

Keypoints and Reasons:

1. Oppo was a widely used product, it was a very saturated market because consumers had many choices in terms of features or price range.

2. Oppo took the sponsorship at a very high cost and anyway they had a market share of 7-8 percent against Xiaomi, OnePlus that have crossed 20 percent without doing all this stuff.

3. Oppo took the cricket stance to get visibility but cricket sponsorship has become too expensive so it was natural to see Oppo exit.

4. Unless Oppo had gained some 20-30 percent points of the total market share of the smartphones, it was impossible to sustain such costs.

Oppo vs Byju's:

Byju’s is one of the largest in the world in terms of Ed-tech. It is a huge company and they have garnered interest from several biggies like (Mark) Zuckerberg’s family. So, it makes Byju’s a significant organization and it is trying to come of age with this advertising initiative. But most of all, most of its audience watches cricket.

Byju’s is eyeing as it aims to go deeper into the Indian market. For students in the larger cities, it is not difficult to get access to tuition and coaching classes. However, things are different when it comes to smaller towns. But now with access to high-speed internet at cheaper rates, students can access learning apps. The marketing brain behind this initiative is not only targeting people from larger cities but also the smaller towns. Cricket is a widely watched event and they will get larger eyeballs.

So, was it the right move?

Let's solve it very mathematically.

Population of India = 1.3 Billion

Total Workforce of India = 402 Million

Remaining Population = 1.3 Billion - 402 Million = 898 Million

Considering 25% follow cricket (minimum) = 25% of 898 Million = 224.5 Million

Let's say only 0.05% of them are customers of Byju's = 0.0005% of 224.5 Million =1 Million

Let the average course fee of Byju's be Rs 25,000

Revenue Generated out of it = 25,000 x 1 Million = Rs 2500 crore

Amount Invested by Byju's for sponsorship rights = Rs 1079 crore

Byju's would be having a minimum ROI (Return on Investment) of 2.5

Hence, it is very clear that it is definitely a right move by Byju's to be the Official Sponsor of Team India. This will not only lead to growth in terms of having customers from India but may also result in having customers from other parts of the world as well.

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