With the government working to tighten the noose around surrogate advertising, the Indian ad industry is bracing for 10-12% slump in the H2 or ‘festive’ ad spending this year. Some experts are also doubtful if the industry would be able to keep up the double digit growth rate this year — the way it has done for the past couple of years —and reach the projected Rs 1.2 trillion mark by the end of 2024.
It’s a double whammy for the Rs 38,700 crore (2023) alcobev sector in India, say insiders, because on the one hand the new rules will put a cap on marketing spends by such brands; on the other, they would curtail the space for workarounds.
The crackdown was long overdue, says Sandeep Goyal, chairman of Rediffusion, one who has previously called out alcohol brands for disregarding the law of the land. “Guidelines to control surrogate advertising exist but everyone dodges them,” he says. “Surprisingly, even international brands, many of which are listed entities, do so because government initiatives have, at best, been weak. The FSSAI, Censor Board, AAAI, IBEF and the ASCI have all kept a safe distance from the issue of surrogates.”
Look at what’s on the table. The draft rules suggest that the new regulation will straightaway outlaw advertising for non-alcoholic items such as water (a la Kingfisher mineral water), club glasses (Carlsberg), music CDs (Seagram’s Imperial Blue) if they display the same logo or branding as does the alcoholic brand. That apart, the new regulation will hold both the manufacturer and the celebrity accountable for any digression. The penalty for failing to comply with the new rules would entail fines of up to `50 lakh, while the celebrity ambassadors who promote such brands could face an endorsement ban of up to three years.
Rules of the game
Industry watchdog the Advertising Standards Council of India or ASCI must step up the game when the new rules come into force, say experts. On its part, ASCI contends it has done all it could given it’s position as a self-regulatory body that can only “complement the legal controls” rather than surpass them. Manisha Kapoor, CEO & secretary general, ASCI, says, “The ASCI guidelines clearly distinguish between surrogate advertising, which is prohibited by law, and brand extension advertising, which is legally permitted. ASCI has also brought cases of non-compliance to the notice of regulatory authorities.” Last year, the industry body reported 82 instances of direct alcohol advertisements and 65 instances of vaping and e-cigarette advertisements to various authorities for appropriate action.
But here’s the thing: Brands know the cracks in the system and exploit them to the hilt. Take this: ASCI says brands can legally advertise their extensions if they meet certain criteria. For instance, if a brand extension product is available in at least 10% of the stores as does the leading product in that category, or if its sales hit Rs 5 crore annually or Rs 1 crore in the state it’s sold, they’re deemed by-the-book. As Goyal says, “the liquor and tobacco lobbies are extremely well-funded and have side-stepped such provisions”.
That said, things are expected to change here on. For one, event sponsorships, the mainstay of tobacco and liquor products communication since the direct ban on advertising such products was enforced in 1995, will be a thing of the past. “Brands will take extremely customised, consumer centric, targeted approach to connect with customers,” says Prateek Sethi, founder, TRIP Creative .
For another, we might see a lot more of native advertising, especially in the digital space where ads will begin to clone the look and feel of the media format where they appear in. “Digital platforms will be crucial, enabling campaigns to engage with the targeted audience with personalisation,” says Pankaj K Arora, co-founder, Whilter.ai.
Indeed, digital media — which is expected to comprise 42% over the overall ad pie in 2024 from 40% in 2023 — might just be the unintended beneficiary of all this as brands turn to it to expose readers to promotional content without sticking out like a sore thumb.
On the flip side, says Hemanshi Kotai, research and teaching associate, KJ Somaiya Institute of Management, “they can also focus more on CSR initiatives and community engagement to build brand loyalty”.
Finally, will the new rules be enough? Much work remains to be done to plug the many loopholes (such as in-film placements), notes Rashmi Jain, associate professor, Marketing & International Business, KJ Somaiya Institute of Management. “Ease the process of reporting surrogate ads and ensure stringent enforcement of the rules to ensure the new curbs are effective,” she adds.