The edtech firm Unacademy stated on Monday that it will stop sponsoring the Indian Premier League (IPL) as part of several cost-cutting initiatives starting in 2019. Unacademy co-founder and CEO Gaurav Munjal wrote to staff members in an internal email that the organization “must embrace frugality as a core principle” to turn cash flow positive. Investors are being wary of funding due to the ongoing Russia-Ukraine conflict, rising interest rates, and concerns about inflation.
According to a recent analysis by PwC India titled “Start-up Deals Tracker – Q2 CY22,” total funding for the April–June period fell by 40% to USD 6.8 billion. Many businesses are making the difficult choice to reduce their spending on marketing and advertising as they struggle to find funding. According to business and marketing consultant Lloyd Mathias, the emphasis now is on business models rather than simple consumer acquisition. Investors are requesting profitability from start-ups. The solution, according to Bindu Balakrishnan, Country Head, India, DCMN, is to discover ways to grow sustainably both during and beyond the current upheaval rather than drastically cutting back.
“We’ve observed several brands cutting budgets across all verticals. It’s never been more crucial to think strategically and prepare how your brand will deal with these challenges given the present environment. However, it does not follow that doing so is the sole option. After all, a lot of businesses have succeeded after going through crises. For instance, the 2008 financial crisis led to the creation of Uber and Airbnb. The start-ups with sustainable business growth will be the ones that endure and succeed. Companies either make significant investments in performance marketing or entirely scale up their marketing efforts during such crises. Balakrishnan, however, recommends these businesses “not go dark.” In contrast to well-known businesses, brand development is crucial for start-ups. There are worries that it might affect the adex as a whole as well. According to projections from the sector, start-ups generated about 11% of the total index of over Rs 74,000 crore in 2021.
This year, several start-ups made significant IPL investments. On Star Sports, advertisers included companies including Dream11, Byju’s, CRED, Swiggy Instamart, and Meesho. 12 out of the 18 sponsors on Disney+Hotstar were start-up businesses. Despite Unacademy’s announcement that they won’t be participating in the IPL in 2019, Chakravarty believes that this will be a missed opportunity for brands. “IPL draws brands and businesses from all over the world, not only start-ups. Given the size of the event and the addition of the ten teams, I don’t anticipate any businesses avoiding it. Every brand that doesn’t promote on it is giving another business an opportunity, he claims.
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