Vivo Leverages IPL’s Popularity; Market Share Doubles

Eyebrows were raised when Vivo committed a 267% premium on the base price to retain the IPL sponsorship rights in mid-2017 (Vivo had committed US$68m per annum against the base bid price of US$18.6m; the 5-year deal is valued at US$356m). However, the impact can now be measured by Vivo’s volume growing 119% year on year against closest rival and Team India’s sponsor Oppo’s 28% growth.

Vivo has doubled its market share in the January-March quarter with a jump to 12% from 6% during the corresponding period last year. Experts are attributing the growth to the brand leveraging on the mass popularity of the IPL.

“Vivo’s expensive bets on the Indian Premier League cricket are paying off. Vivo has made several shrewd marketing investments, which also include signing internationally popular Bollywood actor Aamir Khan as its brand ambassador,” said a research director at Canalys, a leading technology analyst firm in India.

According to Canalys, this is Vivo’s best-ever performance in India with the company shipping more than 4.5m units. Meanwhile, the growth for market leader Xiaomi, and second-ranked Samsung, has reportedly slowed down during the corresponding period in the world’s second-largest smartphone market. The growth of Vivo, Oppo and Realme has also enabled Chinese smartphone brands to see an increase of 20% year- on-year.

According to ASN data, handset brands have spent almost US$417.6m in the Indian sponsorship market since Q316. Unsurprisingly Vivo (61.5%, US$256.6m) and Oppo (23.2%, US$96.8m) dominate the market with their big-ticket cricket sponsorships, with the IPL and India National Cricket Team respectively.

The current market leader for smartphones in India is, however, Chinese brand Xiaomi with a 29% share in Q1-2019. That said, its shipments declined by 2% year-on-year this quarter. This could be because the 3rd Chinese brand in the market doesn’t stack up in terms of Sponsorship spend (to Vivo and Oppo), and isn’t able to sustain its brand in the hearts and minds of Indian consumers. Xiaomi’s sponsorship budgets are dwarfed by its two big rivals: it has spent just over US$7m+ since Q417, capturing a mere 1.7% share of spend. Its two remaining major deals include a title sponsorship deal with Indian Super League (ISL) team FC Goa (~US$1m p.a.) and a celebrity endorsement deal with Bollywood star Katrina Kaif (US$315k).

Second largest brand Samsung’s market share has also declined further to 23% YoY in the first quarter as against 26% in the corresponding period last year.

So far, Vivo’s strategy of spending big on, arguably, the most attractive sports property in the market seems to be paying off… but time will tell if these budgets are sustainable, or whether they run out of gas while trying to chase down their rivals’ market share.