Does Centre’s advisory give long rope to surrogate ads?

The Department of Consumer Affairs, Ministry of Consumer Affairs, Food & Public Distribution recently directed advertising bodies to ensure strict compliance of guidelines for prevention of “misleading advertisement” and “surrogate advertisements”.

The direction was given to Advertising Association of India, Indian Broadcasting Foundation, Broadcasting Content Complaints Council, News Broadcasters and Digital Association, Advertising Standards Council of India (ASCI), PHD Chamber of Commerce and Industry, Federation of Indian Chambers of Commerce and Industry, Confederation of Indian Industry, ASSOCHAM, International Spirits & Wines Association of India, and Indian Society of Advertisers.

Asked if the latest directions will bring a difference to the advertising universe, veteran adman and MD of Rediffusion Dr Sandeep Goyal said, “This is just blowing hot and cold. For the past 5 years, I waged a lonely battle against surrogate advertising against ASCI. I tagged every possible governmental authority - to no avail.”

“The government has become more active and vigilant in the past months. But till some brands, their owners, their ad agencies and their celebrity endorsers are taking visible action against, this malaise will continue,” Goyal added.

Manisha Kapoor, CEO & Secretary General, ASCI, cites ambiguity in the central law as the prime reason behind such violations.

“In the last 3 years, ASCI has processed 36 ads of liquor brand extensions, of which 31 ads were found to be violative, and the advertisers withdrew/ modified the ads. The ASCI code very clearly defines the qualification criteria for brand extensions which are permitted under the law, versus surrogate advertising which is prohibited under the law,” Kapoor told e4m.

She further explained, “The MIB advisory to Television networks on Surrogate advertising, dated 15 September, 2020 says-Rule 7(2)(vih)(A) of Advertising Code enshrined under Cable Television Networks (CTN) Rules, 1994 prohibits direct or indirect advertisements of cigarettes, tobacco products, wine, alcohol, liquor or other intoxicants. However, advertisements of genuine products sharing brand name or logo of such products are permissible subject to specified conditions prescribed therein. The rule thus aims at prohibiting surrogate advertisements while at the same time allowing advertisements of genuine brand extensions subject to specified conditions.”  

TV ads cleared by CBFC

The Advertising Code of the CTN rules requires advertising to comply with ASCI guidelines, Kapoor pointed out. All brand extension ads on TV channels are to be pre-cleared for telecast by CBFC, after confirming compliance with the guidelines, which were jointly developed by MIB, CBFC and ASCI, she further noted.

“In addition, noting direct advertising of alcohol brands on social media, ASCI also drew the attention of the Department of Consumer Affairs to this phenomenon for necessary action. ASCI’s guidelines and actions are therefore consistent with the provisions of the law, and we urge advertisers, media owners and creators to be mindful of these.”

She insists that clear criteria that qualify a genuine brand extension are also laid out in the ASCI code as below:

1. Brand extension product or service should be registered with appropriate Government authority e.g., GST/FDA/FSSAI/TM etc.
2. A) For a brand that is present in the market for >2 years, the following criteria would apply
3. Sales turnover of the product or service should exceed Rs. 5 crore per annum nationally, or Rs 1 crore per annum per state, where distribution has been established.
4. A valid certificate from an independent organisation such as NielsenIQ or category - specific industry association, or an independent and reputed CA firm would be required to prove the concerned criteria.
5. B) Brand extensions which have been launched in the market, but have not yet completed two years must meet any one of the following criteria:
6. Achieve a net sales turnover of Rs 20 lakh per month from launch. Such sales should not be to a subsidiary or sister concern.
7. Demonstrate fixed asset investments which are exclusive to the advertised brand extension of not less than Rs 10 crore. Such assets could be land, machines, factories, software, etc., in case the product is being manufactured/ developed by the advertiser. No advertising related expense should be part of such investments.

III.  In case the manufacturing/procurement of such brand extensions is being outsourced, then evidence may include board resolutions and purchase orders for long term (> 1 year) contracts with service providers/manufacturing entities, stating their capacities, and contracted volumes/Rupee value, which clearly demonstrate the possibility of achieving the turnover as laid out in criteria 2B (I).

1. Give evidence of turnover greater than 10% of the turnover of the same brand in the restricted category (including sub brands in the restricted category).

*All the above evidence should be certified by a reputed and independent CA firm.

“Irrespective of the length of time the brand has been in the market, the date of launch would be considered as the date of the first invoice for sale for the said brand extension. If a brand extension cannot meet the qualification criteria, for the purpose of the ASCI code it would not be considered a genuine brand extension, but rather a surrogate created to advertise a restricted category,” Kapoor said.

Rules can be challenged

Surrogate advertising has always been seen as a hidden opportunity to get closer to the audience by owning an emotive zone that is unique to the brand voice and identity. It is celebrated in creative brainstorming rooms as ‘take that’ rather than an ‘oh no’, says Amrita Dey, Group Creative Director at 4AM Worldwide.

“There is a constant sparring between the ban lobby consisting of government, NGOs and various vocal individuals on one side, and the pro lobby consisting of free spirits (pun unintended) on the other side. Government slaps fines that are ignored, often because the rules are unclear and can be challenged. For example, it is still unclear if liquor companies can advertise drinking water and soda or not,” Dey contended.

“Ischemic heart diseases and stroke have been identified as the leading causes of death in lower middle-income countries. But we do not see governments banning use of foods and beverages that contain high salt, sugar and unhealthy fats. It is left to the consumer’s sensibilities to control and monitor their consumption. The ban against alcohol and tobacco advertising then appears to be more socio political/ cultural presented in the context of healthcare. The companies in that case have no option but to resort to surrogate ads. And the users have no choice but to hide and consume or rebel against this rhetoric,” she points out.