Are regulators finally waking up to surrogates?

After a prolonged wait, ASCI has taken action to regulate surrogate ads, but it may be insufficient to rein in a complex advertising ecosystem

For five long years, or more, I have been fighting a persistent battle against liquor surrogates, earning myself the sobriquet of a “lone crusader”. I have written open letters to at least half-a-dozen chairpersons of the Advertising Standards Council of India (ASCI) over the years, actively engaging with them regarding specific complaints against erring brands, and given tens of media interviews to highlight the transgression of the law. I have petitioned the various ministries in the Government of India — consumer affairs, food, information & broadcasting; even the Central Board of Film Certification (CBFC), the Food Safety and Standards Authority of India (FSSAI), and sent missives to all advertising and media industry bodies. 

However, liquor brands have continued to advertise — blatantly, even fearlessly. The surrogates (politely called “brand extensions”) have become more and more creative, inventive and daring with the passage of time. Everyone in the ecosystem has colluded to let the farce of “surrogates” flourish — ad agencies, TV channels, watchdogs, and the government. The liquor and tobacco lobbies, well-funded and highly influential, have made it an unequal battle for me against all of them. Despite this, I have continued to raise my voice, scoring small victories with ASCI and getting noticed in the right governmental quarters, but just about.

Earlier this month, ASCI finally acted. It put out guidelines for the qualification of brand extensions — meant to evaluate the genuineness of surrogates of liquor and tobacco, advertising for which is prohibited by law. Objective criteria have been put out to qualify a correct brand extension (as per Chapter Ill Clause 3.6 (a) of the ASCI code).

ASCI wants that any brand extension product or service should be registered with the appropriate government authority, such as FSSAI or the Food and Drug Administration. For a brand that is present in the market for more than two years, it should have a sales turnover exceeding Rs 5 crore per annum nationally, or Rs 1 crore per annum per state, where distribution has been established. 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 criteria mentioned. Brand extensions that have been launched in the market but have not yet completed two years must meet certain criteria too:

• Achieve a net sales turnover of Rs 20 lakh per month from launch. Such sales should not be to a subsidiary or sister concern.
   
• Demonstrate fixed asset investments that are exclusive to the advertised brand extension of not less than Rs 10 crore. Such assets could be land, machines, factory or software, in case the product is being manufactured/ developed by the advertiser. No advertising-related expense can be part of such investments.
   
• In case the manufacturing/procurement of such brand extensions is being outsourced, norms have been put in place to demonstrate the possibility of achieving the turnover as laid out in the new criteria.
   
• The scale of advertising for such an extension, ASCI says, should be proportionate to the sales of that extension. Hence the advertising budget for such a brand extension should not exceed 200 per cent of sales turnover in years one and two of launch, 100 per cent in year three, 50 per cent in year four, and 30 per cent thereafter.
   
• For this purpose, the advertising budget would include media spends across all media for the prior 12 months; payments contracted to celebrities appearing in the ad and annual average of money spent on advertising production for the brand in the previous three years.

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.

Almost on cue with the ASCI guidelines, The Central Consumer Protection Authority  is planning to soon publish public information on the establishments and brands that are running misleading advertisements in an effort to crack down on misinformation among citizens. The consumer protection authority, which is run by the Ministry of Consumer Affairs, Food and Public Distribution — has said in a statement that they will soon be “naming and shaming” companies that are publishing misleading ads to discourage such practices.

So is it time to celebrate? Will all these guidelines and “name & shame” initiatives get erring companies and brands to fall in line? Honestly, I think we have a long way to go. Forget the brands, the culprits perpetuating the breaking of the law are all within the ecosystem — ad agencies that produce the ads, the event companies that create the “experiences”, the TV channels that air the ads, CBFC and FSSAI that need to certify the ads but turn a Nelson’s eye. I have upbraided ASCI multiple times. They are at best a well-meaning watchdog — largely toothless because they can only censure, not punish.

Liquor brands, in comparison, are made of sterner stuff.

The writer is chairman, Rediffusion. sandeep@goyalmail.com