Govt imposes prohibition on surrogate advertising; alcohol and tobacco brands main casualties

The government’s recent guidelines prohibiting surrogate advertising, have caused quite a stir, especially among alcohol brands.

Many readers will remember the music CDs, the packaged drinking water and the glassware ads on TV from various brands. But you could never find them at any store. Why? Because they never existed in the first place.

What you saw in those communication were nothing, but actual products’ surrogates that were prohibited from being advertised. In this case, they were alcohol brands – Bacardi Music CDs, Green Label packaged drinking water, Blenders Pride glassware, to name a few.

A surrogate advertisement is a clever ploy to promote a non-existent product, while slyly promoting a prohibited item. Apart from alcohol brands, tobacco brands dole out such ads from time to time.

Actor Akshay Kumar’s recent ad for Vimal was criticised for being a surrogate communication piece for pan masala, which is injurious to your health.

Clause 6 of the ‘Guidelines for Prevention of Misleading Advertisements and Endorsements for Misleading Advertisements, 2022’, under The Central Consumer Protection Authority (CCPA) states:

No surrogate advertisement or indirect advertisement shall be made for goods or services whose advertising is otherwise prohibited or restricted by law, by circumventing such prohibition or restriction and portraying it to be an advertisement for other goods or services, the advertising of which is not prohibited or restricted by law.

The brand extension conundrum

What, however, caught the eye of most, is the lack of information on brand extensions: Provided that mere use of a brand name or company name, which may also be applied to goods, products or service, whose advertising is prohibited or restricted, shall not be considered to be surrogate advertisement or indirect advertisement if such advertisement is not otherwise objectionable as per the provisions set out in these guidelines.

On the other hand, the Advertising Standards Council of India (ASCI) clearly states that for a brand that is present in the market for more than two years, the following criteria would apply:

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.

For brands younger than two years, there are separate guidelines that you can read here.

Simply put, if an alcohol brand sells glassware and advertises it, then it is a genuine brand extension. If not, it is surrogate advertising.

When asked about this ambiguity from the CCPA, Manisha Kapoor, secretary-general and CEO, ASCI, says, “The issue of surrogate advertising, which is disallowed by law, versus brand extensions, which are permitted by law, is a grey area. ASCI, in consultation with the Ministry of Information and Broadcasting (MIB) and CBFC, has laid down some objective criteria to separate the same.”

When asked about the impact on marketing spends of alcobev brands, Shweta Purandare, founder, Tap-a-Gain, calls the situation ‘funny’, because alcohol advertising is prohibited by law, but “this notification does not stop genuine brand extensions.” (Purandare is also an advertising compliance expert, and former secretary-general of ASCI and head of corporate communication and brand, Diageo.)

Purandare feels that the CCPA will rely on the present guidelines of ASCI, which have been developed in collaboration with MIB. She also points out that the new guidelines are legally binding and now cover the realm of digital where alcohol brands freely advertised their wares.

CCPA can impose a penalty of up to Rs 10 lakh on manufacturers, advertisers and endorsers for any misleading advertisements. For subsequent contraventions, CCPA may impose a penalty of up to Rs 50 lakh. It can prohibit the endorser of a misleading advertisement from making any endorsement for up to a year and for subsequent contravention, prohibition can extend up to three years.

Is beer the biggest loser?

The prohibition on direct and indirect surrogate advertising, and the ambiguity around brand extensions, have sent alcobev brands to their drawing boards.

Beer brands must be sweating the most because it is a social drink, first and foremost. A brand manager with a global alcobev giant tells afaqs! that beer will be more affected than other spirits because it is a drink you don’t usually consume alone, unlike whiskey. If you do, then you keep it chilled, which means your family members will know about your beer consumption; something not everyone can afford to disclose in Indian homes.

Second, large-scale experiences are back and people prefer to consume beer during football matches, revenge parties, and concerts, than any other alcoholic beverage.

With a prohibition on surrogate advertising, the brand manager feels the quality and top-of-mind recall of a beer brand will play a dominant role. And, at private events like a house party, the beer brand served will make or break its sales, going forward.

Adding to all this, the brand manager reveals that the entire industry is still trying to understand the new guidelines before making any move on communication, branding or marketing.