The Hindu Business Line : Advertisers hit for a huge six

The fallout of the debacle of the Indian team in the World Cup on the advertising plans of companies highlights the importance of operational risk management. Just as over-exposure to one financial instrument is a financial risk, over-exposure to one single advertising campaign is an operational risk.

An effective solution to risk mitigation is diversification. Companies need to ensure that no single advertising campaign constitutes more than a set percentage of their annual advertising budget. In the current context, TV channels have refused to refund companies which want to pull out their advertisements. This development may lead to advertising contracts being made more flexible in future.

Sponsorship may be made conditional based on the programme crossing a threshold Television Rating Point (TRP) level or based on performance of the team or an individual in a sporting event. The TV channels can then charge a premium for providing this flexibility.

P. H. Karthik, Mumbai

The country has responded with angry protests, resentment and violence on India's ouster from the cricket World Cup. Ad rates have plummeted. Advertisers are chalking out ways to recover their investments.The issue has to be sorted out by the advertisers, agencies and channels concerned.

T. S. Sundareswaran, New Delhi

It has been reported that India's share in cricket's advertising revenue is about 70 per cent. With Team India's exit from the World Cup, the TRP has fallen sharply.

As most Indian cricket fans have now lost interest in the World Cup, big advertising agencies are in a fix how to make up the loss in the advertising revenue and pay the balance of the contract amount to the television channels.

It is only proper that the TV channels and the official marketing agencies concerned consider a reduction in the contract amount so that the advertisement agencies are not put to heavy loss and are able to satisfy their clients.

S. Nallasivan, Tirunelveli

Companies, ad-agencies and the media. All sought to cash in on the hysteria and hype over cricket and, in turn, over the cricketers. Everyone in the loop wanted to make a fast buck.

With India's early exit, obviously there will be less eyeballs which, in turn, means less mileage for businesses. That is why advertisers and their clients want to renegotiate the contract terms.

Krithivasan, e-mail

India's exit from the World Cup must have hit advertisers' profit calculations for a six. But such things happen in business. The question is really about advertisements featuring cricket stars.

Following the debacle, ad agencies will have to change strategy or re-negotiate the contracts with the cricketers.

A. Jacob Sahayam, Thiruvananthapuram

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