With new law in place, will brands and stars rethink the endorsement game?

Will brands and stars rethink the endorsement game as the new law seeks greater accountability from all stakeholders?

Misleading claims have long been the bane of the advertising industry, with government and regulators struggling to rein in false and obfuscating claims in ads. The problem has been compounded in part due to the extensive use of celebrity endorsers in advertising. While stars remain the safest bet for most brands, offering mass reach and credibility, their fame also sets the relationship with consumers and advertisers, on a vulnerable pitch. 

Consumers tend to trust celebrities easily, says N Chandramouli, chief executive officer of brand advisory firm TRA Research, which makes them more vulnerable and celebrities, a party (even if inadvertently) to misleading claims. To address these concerns, the Consumer Protection Act, 2019, which was notified last week, has sought to make celebrities liable for the endorsements they undertake.

This is the first time, say legal experts, that celebrities will be held accountable for the words they mouth or the message they endorse. The penalties for being a conduit for false claims are stiff, from a fine of Rs 10-50 lakh to a jail-term of five years. The act can also bar a celebrity from endorsing a product for up to a year, extending it to three years for repeat offences.

Celebrity management companies are predictably unhappy with the new law, arguing that holding celebrities accountable is an overreach. “I am not saying that celebrities should not do due diligence before picking up an endorsement. But holding them responsible for the misleading claim is not correct,” the chief executive of a popular celebrity management firm based in Mumbai said, requesting anonymity. 

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But the Advertising Standards Council of India (ASCI), which is the sector regulator, says that it was time that misleading claims especially in categories such as education, health care, digital services and teleshopping are checked.  “We expect to see a significant impact in the control of misleading ads with the new Consumer Protection Act,” Rohit Gupta, chairman, ASCI, said. “We will soon be launching a monitoring service of potentially misleading ads appearing in digital media, in addition to print and TV surveillance that already exists. We see our role as being complementary and promoting responsible advertising,” he said.

The importance of celebrity endorsements is on the rise (see box) as the pandemic has intensified the rush for trusted faces whose words carry weight. A recent report by TAM AdEX shows that there was a 63 per cent rise in volumes of celebrity-endorsed ads on television in June 2020 versus April of this year.

 

Experts say that the dependence on celebrity endorsers will only grow as consumers seek familiar labels and trusted names. “These are tough times and brands that have high recall and resonate with consumers will find greater traction,” says Arvind Singhal, chairman, Technopak. 

This means that brands that have already built a name in the market will advertise more, but with messages that signal their relevance in the current crisis (either as a means of prevention or as a source of succor). If an actor or a sports star can back the claims that the brands make, the message will reach wider and be more acceptable. 

Hence the rush for a famous face to helm the brand. TAM Adex says that in the month of June, cricketer Virat Kohli topped the list of most-visible celebrities on television, spending an average of 10 hours per day across TV channels. Actor Akshay Kumar followed, while actor Kareena Kapoor Khan was the third-most visible celebrity on television.

Chandramouli says that while advertisers will increasingly turn to celebrity endorsers in the post-Covid-19 world, scrutiny and debate of endorsements will also grow, following implementation of the new consumer protection law. “For once, I believe, there is a serious endeavour to keep the consumers’ interest in mind when it comes to misleading claims,” he says. How far this initiative will go is anybody’s guess. Till then, endorsers and brands will err on the side of caution.