CHAPTER 1
Advertising in India: Historical Perspective,
Evolution and Growth
CHAPTER 1
Advertising In India: Historical Perspective, Evolution and Growth
This chapter briefly describes a historical perspective of Indian culture, government,
economic policies and media environment before giving a detailed overview of Indian
advertising and consumer related issues. This background of culture, social structure,
governance, economy and media are important since they have a direct influence on
markets, marketing communications and consumer behaviour in any market structure.
1.1 Background
India, a nation of more than one billion people, is bordered by Himalayan ranges in the
north, and extends as a huge wedged peninsula more than 1500 km of length. To its south
is the famous Indian Ocean, to the west the Arabian Sea and to the east the Bay of
Bengal. The unique location of India with its natural land barriers, however, could not
save it from the frequent invasions through the mountain pass of the north. A few
invaders left after they got satisfied with the looted wealth, while others stayed back.
These periodic invasions by Turks, Moguls and others, and later the colonization by the
British, have had a strong influence on Indian Culture and its social, religious and
political institutions.1
1.2 Cultural Influences from Ancient India
Dravidians are supposed to be the original inhabitants of India. By nature they were god
fearing, art loving and peace loving people. According to historians Aryan tribes migrated
from what is now southern Russia to the northwest part of India in around 1500 B.C.2.
Aryans were polytheistic in their believes, which later strongly influenced Hinduism, the
dominant religion of India3, constituting approximately eighty percent of the population 4.
Aryans made their first intrusions in Punjab, the northwestern part of India and Eastern
part of Pakistan, in about 1500 B.C., and later moved to other parts of the subcontinent5.
1 Reddi, U. (1989), “Media and Culture in Indian Society: Conllict or Cooperation”, Media, Culture and
Society, 11,395-413.
2 Nehru, J. (1989): “ 1'he Discovery oflndia" New Delhi, India: Oxford University Press.
1 Ibid
4 Weiner. M. (1989): “The Indian Paradox: Essays in Indian Politics" New Delhi, India: Sage Publications
5 Basham. A.L. (1970): “ Traditional India”. In: Moore, C.D. and D. Hldredge, eds. “India: Yesterday and
Today”. New York Pracger Publishers, 1-36
1
Another feature of the Aryan society was the strong belief in family as the basic unit of
society6. Little has changed in the last 3000 years, except for the fact that in urban areas
the extended families are disappearing. Gender and age are the main ordering principles
in the family hierarchy. A younger male sibling has greater influence and formal authority
over family matters than his older sister. The spheres of activities within and outside the
family are sharply divided between men and women.7
1.3 Influence of Islam and British
It all started with the invasion of Arabs in 712 A.D. Then came Afghans, Turks and
finally Mughals in 1526 A.D. from north of Afghanistan, who unlike other invaders
stayed back to make this land their home. Mughals brought with them a new art and way
of life and other cultural patterns, and popularized the use of Hindi, the national language
of modem India. During their reign the Mughals built many excellent structures,
buildings, palaces and mosques. These beautiful edifices represent the zenith of Mughal
imperial splendor8. Although some Muslim rulers were tolerant of Hindus, others were
not. The bigots among them repressive methods and forced many Hindus to accept Islam.
Today it is estimated that more than 75 million people in India follow Islam9, making
India a nation with largest Muslim population in the world10.
The diminishing power of the Mughals rulers, in the earlier decades of eighteenth
century, made it easy for the Europeans to gain a foothold in India. The British,
Portuguese, Dutch and French came at first to trade, but slowly were able to carve out
their own territories within the Indian subcontinent The British were the most successful
among them. Operated by the East India Company, which was based in London. British
ships carried bullion, wool and metal to India and shipped back spices, cotton, indigo,
jute, tea and coffee to Europe. In the Indian polities and culture within which the British
traders operated, there was a consistent interweaving of political authority and
commercial enterprise. Gradually by 1775, the British were able to get a firm control over
h llasham, A.L. (1959): "'The Wonder Thai Was India’’. London: Sedgewick & Jackson.
7 Reddi, U. (1989): Opcil
8 Nehru, J. (1989):Opcil
"'Weiner, M. (1989): Opcit
1(1 Oommen, T.K. (1990): "Stale and Societies in India: Studies in Nation huilding” New Delhi. India Sage
Publications.
2
parts of India, and by 1857, they virtually controlled the entire country*11. British ruled
India for approximately 200 years, and left a lasting influence on all the spheres of Indian
society. British parliament's announcement in 1813 that it was the moral responsibility of
the East India Company to better the "moral conditions" of its Indian subjects was the
first step towards this.
After this announcement Christian missionaries, a small and
insignificant group till the beginning of the nineteenth century, were permitted to work in
British Indian territories under a system of licensing. These missionaries challenged
Hinduism and Islam, questioning the authority and authenticity of scriptures, beliefs and
the relationship of reason to belief and practice. Initially these missionaries were
successful in converting the beliefs of Indian people, but later failed to sustain their
efforts except among the lower classes of Indian population12. Today Christians comprise
the third largest religious group in India with a population comprising of less than five
percent of the total population of India13.
Although British had little impact on religion in India, they proved to be much more
successful in reforming the system of education. They introduced a system of education
similar to those experienced by students in England. English Education resulted in a large
pool of middle-class Indians who were able to meet the low-level administrative
requirements in government offices of British India14. A number of schools run by
missionaries were opened all across India, and in 1857, the first universities were
established in Calcutta, Bombay (now Mumbai) and Madras (now Chennai). The newly
introduced system of education, along with books and journals, made it possible to
transmit modern as well as traditional knowledge to masses, rather than to just a
privileged few, as had been the case under the old system. This new education had some
unexpected social and political implications. Exposed to Western literature and thought,
an elite group of Indians became committed to social and political reforms, thinking —
perhaps for the first time -- about a new society that would transcend old barriers of caste,
creed and region15. However, the racial discrimination practiced by the British in all
" Nehru. J. (1989): Opcit
Brown, J.M. (1994): “Modern India: The Origins of an Asian Democracy”. New York: Oxford University
Press.
11 Weiner. M. (1989): Opcit.
" Prankel, F.R. (1988): “Middle Classes and Castes in India's Polities: Prospects for Political
Accommodation", In: Kohli A. ed. India's Democracy: An Analysis of Changing Stale-Society Relations.
Princeton, NJ: Prinston University Press. 225-261
15 Brown. J.M. (1994): Opcit.
3
walks of life, coupled with the slow pace of political reforms, disillusioned this group,
which provided the impetus for the national movement, culminating in India's
independence in 1947.
1.4 From of Governance
After achieving independence, India and its national leaders were faced with the daunting
task of drawing up the blueprint of the type of government that would best suit the
country's needs. Indian leaders acquainted themselves with the unwritten constitution of
the British, and studied the constitutions of America, France and Russia. The newly
formed Indian union comprised 27 states. Though it was federal in setup, considerable
power was concentrated at the center. The Indian parliamentary system was modeled
largely after the British system, with the elected representatives of the Lok Sabha (House
of the People) compared to the British House of Commons. The other house, the Rajya
Sabha (Council of States), was to comprise members elected by the state legislatures
(modeled after the French system) and a few members, distinguished in various fields,
were to be nominated by the President. But, as in Britain, real power rests with the Prime
Minister, who must have majority support in the parliament16. In the Indian system of
democracy, central and state governments have concurrent power over economic and
social planning, commerce, social security, health and education. However, central
government has the sole authority over foreign policy, defense, internal security and
revenue. And all the residual powers not specified in the constitution were to be under the
purview of the central government.
1.5 The Economy
After almost 200 years of British Rule, at independence, India had inherited an economy
with serious market imperfections. The internal market mechanisms were so damaged
that effective resource allocations became impossible17. To shape up the economy,
Jawaharlal Nehru, the first Prime Minister of independent India, set up the Planning
Commission. The five-year plans produced by this body were to be guidelines only and
were not designed to have any force of law. But with the Prime Minister as the ex-officio
chairman, the commission had a prominent position.
K’ Ibid
17 Tomlison. It.It. (1993): "The Kconomy of Modem India, 1860-1970", Cambridge, United Kingdom:
Cambridge University Press.
4
<?
The beliefs, experiences and the ideological predilections of Mr. Nehru and some of his
close associates, who were influenced heavily by the ideals of Fabian Socialism, made
them more prone to adopt a socialistic framework of economic policy18. Then there were
Indian entrepreneurs who were involved in trading and manufacturing much before
independence, and had contributed a lot in the struggle for independence, had to be given
their fair due. In 1939, the capital employed in the private enterprise was around Rs. 450
crores; foreign capital employed was around Rs. 350 crores. The most dominant capital
investment was in railways - Rs. 900 crores19. The Indian leaders chose to follow a mixed
economy, which combines private enterprise with government planning, including overall
direction and control as well as investments by government in infrastructure areas of
power, transport and communication.
In the early years a simple two-sector model of Soviet planning was adopted: investment
goods (like steel and machinery) and consumption goods. The disadvantage of this
strategy was the commitment of a major portion of the budget to heavy industries, which
yielded low returns. Moreover, this investment generated buying power, which could not
be absorbed due to an insufficient supply of consumption goods.
These difficulties did not seem to deter Indian leaders. They believed that given the
country's limited resources of capital, technical skills and foreign currency, the production
of "unnecessary" consumer goods would be detrimental to the economy in the long run.
The Indian leaders were also conscious of the social effects of excessive consumption. As
these leaders were mentored by Mahatma Gandhi during the struggle for independence,
most of them considered themselves to be Gandhians, that is, followers of Gandhi's
philosophy. Gandhi strongly believed that acquisitiveness breeds social inequality,
exploitation and domination20.
18 Chakravarly, S. (1987): "Development Planning: The Indian Hxperience”, New York: Oxford University
Press.
''' The Financial Lxpress July 2. 1999
Roy, R. (1988): "Three Visions of Needs and the Future: Liberalism, Marxism, and Gandhism". In Coate,
R.A. and J.A. Rosati. eds. The Power of 1 luman needs in World Society. Boulder CO: Lynne Rienner
Publishers, 59-76
5
Till 1964-65, considered a high period of growth by economists, the gross national
product grew at an average annual rate of 4.2 percent and per capita net national product
grew at an average rate of 1.9 percent. However, during this period there was a marked
difference in the way different industries progressed. Heavy industries like steel industry,
which was also on the top priority for investment grew rapidly, and the industries
engaged in the production of mass consumption goods, did not do well.
India's economic growth began to decline after mid-1960s. India was forced into a war
with Pakistan in 1965, which resulted in greater commitment to defense expenditure, and
a reduction in the flow of foreign aid. This was coupled with severe draughts in 1965 and
1966. All this resulted in heavy pressures from the e World Bank for devaluing the
currency, and the Indian currency was devalued by about 50 percent in 1966. These
forces pushed up consumer price index (CPI) from a base of 100 in 1960 to 167 in 1967.
Pakistan forced another war upon India in 1971. Bad harvests in 1972 and 1974, and
hikes in world prices for crude oil followed this in 1974 and 1979. All these pushed the
CPI to 420. In other words prices had increased more than four times in 20 years. Food
prices were on the rise and two-thirds of the average household income continued to be
spent on food, causing a crippling effect on the demand for consumer goods21.
The situation was further worsened by a series of acts passed during the regime of Prime
Minister Mrs. Indira Gandhi, who moved further to the left on industrial policy. In 1969,
the Monopolies and Restrictive Trade Practices (MRTP) Act was passed, enabling the
government to place restrictions on new licenses for larger firms. She nationalized banks,
insurance and coal industry. In 1973, a restriction put to the foreign investments by
passing the Foreign Exchange Regulation Act (FERA). Close advisors of Mrs. Gandhi
and a few "conservative" bureaucrats supported the government control over the industry
as this meant enhancing their powers as granter of industrial licenses22.
By 1976, the word "socialism" found its way into the Indian constitution. But, the Indian
brand of socialism is different in theory and practice from socialism elsewhere. Although
it recognizes the "evils" of concentration of economic resources, socialism in India does
21 Rothermund, D. (1993): “An Economic History of India: i-rom the Pre-Colonial l imes to 1991". New
York: Roulledge.
22 Weiner, M. (1989): Opcit
6
not attempt collectivization of private property, but only to limit it; the legitimacy of
private property is not questioned, but the cautious restriction of private property appears
to be the sole aim23. With this thinking, government imposed extremely high rates of
direct taxation on upper income brackets, and indirect taxes were raised to very high
levels on certain commodities termed "luxury" goods. These measures became extremely
popular with the voters, due to the fact that a large portion of the population did not even
receive adequate nourishment in terms of calorie intake. But did not do well to the
economy in general and to the demand for consumer goods in particular.
Indian economy started getting fresh breath in 1985. Mr. Rajiv Gandhi, who became the
Prime Minister in 1985, decided to adopt a new view of the state and the economy.
Unencumbered by the socialistic principles espoused by Mr. Nehru and Mrs. Indira
Gandhi. He surrounded himself with young advisors, who had previously held high-level
executive positions in multinational companies, and set the country on a course that was
revolutionary by Indian standards. His new strategy of liberalized import, greater
sensitivity to market signals, and liberalized rules of entry and growth for the industry,
implied that the government would not shield any industry, public or private, from
competition. These liberalized policies were aimed primarily at upgrading technology,
reducing cost and modernizing plant and equipment. In addition the salaries of
government employees more than doubled in 1986 due to Fourth Pay Commission. This
proved to be a tremendous boost to the purchasing power and to the explosive growth of
the middle class in India"'4. 1985 also witnessed the telecommunication revolution in
India, under the initiatives of Sam Pitroida, and the facility of Strait Trunk Dialing (STD),
reached every nook and corner of the country.
In the initial phase of the implementation these of liberalization policies, the going was
good. In the later years, Mr. Rajiv Gandhi faced stiff opposition from Indian industrialists
and left-leaning economists. This resulted in loss of momentum with which the new
economic policies were implemented in subsequent years. Nonetheless, modest gains
were made. For example, during the 1980s gross domestic product (GDP) reached an
average of 5.3 percent, and per capita income increased by 40 percent. These liberalized
23 Oommen. T.K. (1990): Opcit
"4 Dubcy, S. (1992): “The Middle Class". In: Gordon, I,.A. and I\ Oldenburg, eds. India Brie ling. 1992.
Boulder CO: Weslview Press. 137-164.
7
economic policies coupled with the rising disposable income of 150 million-strong
middle class, had far-reaching consequences on consumption patterns. For instance, the
sale of room air-conditioners increased 64.7 percent; refrigerators, 361.5 percent; cars
472.3 percent; motor scooters, 1102.8 percent; wrist watches 145.5 percent, between
1980-81 and 1990-9125.
Unfortunately Mr. Rajiv Gandhi was assassinated in 1989. Initially, this was seen as a
setback for economic liberalization. However, next Prime Minister, Mr. P.V. Narsimha
Rao, who assumed office in 1990, vowed to follow in the lines of his predecessor by
introducing economic policies that promised to stimulate the economy by way of easing
restraints on large companies, implementing easier procedures for investment, making
availability of term loans and bank finance easier, introducing hire-purchase and home
financing, lowering taxes, making travel abroad easier, and stimulating the stock
markets26. Furthermore, in an attempt to lure multinational companies to invest in India,
in May 1990 the government made a policy announcement proposing to approve
automatically foreign investments of up to 40 percent of common stock. Higher foreign
equity was allowed depending on the nature of the business. For example, for a wholly
export-oriented business, the government even allowed 100 percent foreign equity27.
After pursuing an inward-looking development strategy with the state assuming an
important role for more than four decades, India decided to take a historic step of
changing tracks in 1991. It embarked on a comprehensive reform of the economy to
widen and deepen its integration with the world economy as a part of structural
adjustment. There seems to be a general consensus on the desirability of reforms to
dismantle the bureaucratic regulatory apparatus evolved over the years that may have
outlived its utility. However, there has been coOnsiderable debate on the contents of the
reform package, their sequencing and the pace, their implementation and their impact.
The debate has become a highly polarized one between two camps of scholars. One group
of analysts hails the achievements of reform and seeks faster implementation of the
remaining issues on the reform agenda. The other school is more critical of the approach
Khatkhate, I). (1992): “India on an Hconomic Reform Trajectory" In: Gordon, I,.A. and Is. Oldenburg,
eds. India Briefing, 1992. Bou der CO: Wcstvicw Press. 47-70.
Dubey, S. {1992): Opcii.
17 Price Waterhouse. 1990. Doing Business in India. Price Waterhouse World Firm Limited.
8
to the reforms. It focuses on the adverse effects on the society especially the vulnerable
groups, questions the sustainability of growth and the reforms themselves. Hence, they
seek rethinking on the coverage, sequencing and pace of implementation of reforms28.
The major beneficiary of these policies and reforms were the Indian middle class, which
was representing one of the largest consumer markets in the free world29. Today their
number is more than the population of United States30. This group of educated Indians,
with a large disposable income and exposure to the influences of the world outside, has
shown a growing interest in the consumption of luxury goods31.
After a period of relatively robust economic performance in the late 1980s, the Indian
economy entered into a period of unprecedented liquidity crisis during 1990-91. This
crisis was a combined effect of a number of events coinciding. These included collapse of
the Soviet Union that had emerged as India's major trading partner. The Gulf War that
erupted in January 1991 worsened the balance of payments crises not only with rising oil
prices but also by causing a virtual stoppage of remittances from Indian workers in the
Gulf. These events coupled with political uncertainty prevailing in the country led
international credit rating agencies to lower India's rating both for short and long-term
borrowings32. The political uncertainties also complicated the problems of giving a
direction to the reforms till India could see a stable government under the leadership of
P.V. Narisimha Rao in 1991. These uncertainties gave a hint for the future political
scenario in the country i.e. the coalition governments were to become the norm of the
system. Which meant that the new governments would be more depended on the
consensus for bringing in reforms in the economy, where people with different ideologies
would be members of decision making body. These ideologies would be ranging from
communists to capitalists. One of the achievements of these reforms during the early
nineties was the convertibility of Indian currency in the world markets, which made
Indian foreign trade easier. The partial convertibility of rupee was announced in 1992-93
budget that was subsequently broadened to full convertibility on current account by
August 1994. The economy saw a slowdown due to various stock market scams India
2S Kumar, Nagesh (2000): "Kconomic Reforms and Their Macro-Kconomic Impact”, Kconomic and
Political Weekly, March 4-10.
v> Jalan. B. (1990): "India's Kconomic Crisis" New Delhi, India: Oxford University Press
30 Dubey, S. (1992): Opcit.
31 Khalkhale. I). (1992): Opcit
9
faced during the second half of the of 90s and in early 2001. To some extent the recent
slow down could be on account of the contagion effect of the east Asian crisis on India
indirectly and economic sanctions imposed on India in May 1998 following Pokhran II by
major industrial countries33. These circumstances compelled the government to go faster
than the calculated liberalization and WTO forced the Indian government to pull out
import restriction from consumers items as well. As a result government pulled out
restrictions from more than seven hundred items on April 1,2001. Which essentially
means that now onwards anybody can import these consumer items and can sell them in
the Indian market at a profit, posing a serious competition to the indigenous industry.
As far as the market is concerned, liberalization has also brought in its wake a fare share
of challenges. Takeovers, dumping, brand wars, and the like. Multinationals with deep
pockets and stamina for long distance race have started turning on the heat on Indian
companies that worried, and continue to worry, about hostile takeovers, loss of national
control, unequal playing fields, and the like. Yet despite a flood of foreign brands,
especially in consumer goods, Indian brands have been able to hold their own across a
range of products. One consequence of liberalization has been the growing
professionalization of management. Even so, 80 percent of the top 100 companies remain
family enterprises. The more the confidence that business families have shown in
allowing the professionals to manage their companies, the more successful they have
proved to be in running their companies and retaining control34.
Marketers had pinned their hopes of another economic boom on the declaration and
implementation of Fifth Pay Commission Report. They expected a repetition of the
phenomenon of Fourth Pay Commission implementation, where consumers market
economy had seen an upswing. The predictions went wrong this time. With various
financial scams, and ease on import restrictions under WTO pressures, consumers were
not only skeptical in their investment and buying decisions, they also had choice in the
marketplace. The small pic was now shared by global brands too. This did not leave much
with the Indian manufacturers to cheer about.
32 Kumar, Nagcsh (2000): Opcil.
31 Kumar, Nagcsh (2000): Opcil.
3,1 Baru, S. (1999): “Hconomic Liberalization' - Indian Business Through The Ages", New Delhi. India:
Oxford University Press.
10
1.6 The Media Environment
The media environment in India is very democratic and competitive.
Till the early
eighties the environment was dominated by the press media. In 1982 Asian Games, held
in New Delhi, provided the impetus for innovative programmes and national broadcasts.
It also prompted the introduction of colour television in the wake of a national debate
about the need of such luxury35. The media in India can be broadly categorized into four
categories viz; print, audio-visual (radio and television), interactive (Internet), and
outdoors. Table 1,6(^. gives growth rate of various advertising media in India and table
1.6(b) gives the share of advertising revenue by various media.
Table 1.6(a)
Growth Rate of various advertising media (actual and projected)
_____________ ______ _______________ All figures are in percentage
2000
2001* 2002* 2003* 2004*
Media
1996 1997 1998 1999
Print
21.9
5.0
7.0
4.0
11.0 15.0
8.0
3.0
3.0
TVC&S 156.3 33.6 47.9
60.0
65.0
45.0
35.0
35.0
30.0
(-10.0)
10.0
8.0
TV DD
16.7
10.9 36.1
10.0
7.0
Radio
11.1
10.0 10.0
5.0
(-10.0) (-7.5)
5.0
7.0
10.0
Cinema
12.5
11.1
10.0 (-9.1) (-10.0)
5.0
7.0
3.9
6.0 ..
Outdoor
20
33.3 20.0
5.0
7.0
6.0
6.9
7.1
5.0
-
* Estimated figures
(Source: Business Standard November 6, 2000)
Table 1.6(b)
Share of various advertising media in total advertising revenue (actual & projected)
________ ______ _______ ____________________ _______ all figures are in percentage
Media
1995 1996
1997
1998
1999 2000 2001* 2002* 2003* 2004*
Print
67.4
65.8
60.8
59.0
63.8
55.7
51.7
47.5
42.9
38.8
TV C&S
3.4
7.0
8.2
10.1
14.5
21.5
27.0
32.2
38.1
43.4
TV DD
15.0
14.0
13.6
15.3
13.8
11.2
10.7
10.4
9.8
9.2
Radio
3.0
2.7
2.6
2.4
2.2
1.8
14
1.3
1.3
1.2
Cinema
2.3
2.7
2.4
2.1
1.7
1.4
1.3
1.2
1.1
1.0
Outdoor
8.4
8.1 |. 9.4
9.3
8.8
8.5
6.9
6.4
7.9
7.4
* Estimated figures
(Source: Business Standard November 6, 2000)
1.6.1 Print Media
Inspitc of the fact that post-independence Indian leadership did not give supportive
environment to Hie private enterprise to flourish, the ownership of newspapers and
magazines has always been in private hands. The press in India has operated largely
35 Anand, B. and Khanna, T.(2000): “Must Zee TV". Harvard Business School Case Study No. 9-700-122,
June 20. 2000, 2.
11
without any fear of censorship, except that in the period of emergency in 1975-1977. The
Bombay Samachar (renamed as Mumbai Samachar), first published in 1822, is the oldest
existing daily newspaper in India. The total number of newspapers and periodicals at the
end of 1989 was estimated at 27,054, including 42 that have been around for more than
100 years. In 1987, the total circulation of newspapers was 22.6 million, with at least 136
newspapers reporting a circulation of over 75,000 copies per day. According to the report
submitted by the Press Registrar for the year 1999, the total number of newspapers and
periodicals being published in India was 46,655 as compared to 43,828 during 1998,
registering an increase of 6.47 per cent. The total circulation of Indian newspapers during
1999 was 13,00,87,493, registering a marginal increase of 2.55 per cent over 1998. Anand
Bazar Patrika, a Bengali daily from Calcutta with a circulation of 6,74,481 copies, was
the largest circulated single edition newspaper, followed by The Hindustan Times, an
English daily from Delhi with a circulation of 6,40,752 copies. The Times of India,
English daily from Delhi with a circulation of 6,32,978 copies occupied the third position.
The largest circulated multi-edition daily was The Times of India (seven editions), with
16,95,945 copies. The second largest circulated multi-edition was the Malayalam daily,
Malayala Manorama, (eight editions), with 11,32,813 copies. Dainik Jagaran (Hindi) with
12 editions and a total circulation of 11,22,540 copies occupies the third position.
Malayala Manorama, a Malayalam weekly published from Kottayam, Kerala, was the
third largest circulated periodical with 11,60,616 copies followed by Saras Salil, a Hindi
monthly from Delhi having a circulation of 10,87,807 copies36. The circulation figures for
individual newspapers might seem low by international standards, but one should also
bear in mind that newspaper readership in India is limited by two major factors: (1) a low
literacy level, and (2) the proliferation of many languages (India has 13 constitutionally
recognised "regional" languages, in addition to Hindi, the national language, and English,
which is the major language of commerce and business). The rate of literacy varies
widely from one state to another and this is also reflected in the differential circulation of
newspapers and magazines. The newspapers and magazines with the largest circulation
are published in the states of Kerala and West Bengal, both of which have relatively
higher rate of literacy than the rest of the country. In terms of prestige and political
influence, however, the English-language newspapers and newsmagazines probably have
India 2001- A reference annual, compiled and edited by research, reference and training division.
Ministry of Information and Broadcasting, Government of India. New Delhi. 273-274
v‘
12
the greatest impact. In recent years newspapers that are published in Hindi and other
regional languages have also become influential.
Although newspapers are by nature a regional medium, several English and Hindi
newspapers have attempted to establish a national presence by publishing editions in
more than one major metropolitan centers like Mumbai, Delhi, Bangalore, Hyderabad,
Chennai and Madurai etc. The presence of such multiple editions makes it easier for
advertisers to use newspapers as a medium of national coverage. Likewise, several
regional language newspaper chains have multiple editions within individual states.
1.6.2 Radio
Radio broadcasting has remained a state monopoly in India. Though it started with two
privately owned transmitters in Bombay and Calcutta, government of India took them
over in 1930 and started operating them as the Indian Broadcasting Service, under the
aegis of the Posts and Telegraphs Department. The name was changed to All India Radio
(AIR) in 1936, and subsequently to Akashvani in 195737. At the time of independence
there were six radio stations38. During the 1960s the introduction of transistor radio
speeded the diffusion of Radios in India. It would have grown at a faster rate if the
Government of India had not treated it as a luxury item, levying a heavy import duty and
collecting an annual fee from all radio owners in form of license fee. Gradually these
policies were changed when the government realized the potential of the medium to bring
about social change. As of 1991, AIR's network operated 106 stations and broadcast
through 192 transmitters covering 95 percent of the population39. Presently, AIR has 199
radio stations and 313 transmitters. These include 142 medium wave, 53 short-wave and
116 Fm transmitters and provide radio coverage to a population of 98.8 percent spread
over 90 percent area of the country40. Roughly 24 percent of the Indian households own a
radio, and they receive about 17,000-programme hour s per day in 18 languages and 126
dialects41. With the advent of television and later the television boom in late eighties and
early nineties, there was a big decline in the growth of radio as a medium. Recently
37 Xavier, F. and Hashwer, L. (1993): “Communication Scene oi’India”, In: Uoonasekhara, A. and Iloladay,
IX, eds. Asian Communication Handbook. Singapore: Asian Mass Communication Research and
Information Center, 29-57.
38 India 2001- A reference annual. Opcit
M Xavier, F. and Kashvver, I,. (1993): Opcit.
1(1 India 2001- A reference annual. Opcit
13
commercial broadcasting has received a boost in the metropolitan cities, with the
franchising of several radio programmes (mainly in the FM band) to private programme
producers.
1.6.3 Television
Television was introduced experimentally in India in 1959 under the aegis of the state-run
radio company, Akashvani {All India Radio), with transmission limited to three days a
week. Regular service in Delhi began in 1965. In 1975-76, NASA loaned India the
Application Technology Satellite (ATS-6) to conduct Satellite Instructional Television
Experiment (SITE) in 2,400 Indian villages42. Programming consisted initially of two
hours of broadcasts a week and gradually expanded to include folk dancing and music,
the occasional play, and programme directed towards women43. Government owned
channel, Doordarshan, was granted monopoly rights over terrestrial broadcasting
immediately upon its inception in 197644. Till 1982 transmission was confined only to
major Indian cities45. Throughout this period TV was treated like radio -an information
dissemination channel. In 1982, NASA launched the first Indian Satellite, INSAT-1A.
During this time, which coincided with the Asian games held in Delhi, colour
broadcasting was introduced for the first time, resulting in an extraordinary boost to the
diffusion of television in India. In 1983, another satellite INSAT-1B was launched. By
1991, 519 transmitters were set-up covering 76 percent of the population. In parallel, a
cabinet minister's observation that Mexico had expertly used soap operas to spread
messages about economic development fueled further programming activity. A series of
mythological, historical and soap opera followed. Cricket mania further popularized TV
throughout the 1980s. Meanwhile, beginning in 1985, the government began to pressure
Doordarshan to produce and air programmes with heavy rural emphasis.
These
programmes were both capital-intensive and less interesting to private sector advertisers.
The quality of Doordarshan programmes deteriorated as a result46.
41 Singhal, A. and Rogers, H.M. (1989): “India's Information Revolution", New Delhi, India: Sage
Publications
43 Singhal. A. and Rogers, H.M. (1989): Opcit.
43 Anand, 13. and Khanna, T. (2000): Opcit.
44 Ibid.
45 Mehta. D.S. (1980): “Mass Communications and Journalism in India", New Delhi. India: Allied
Publishers Private Limited.
46 Anand. 13. and Khanna, T. (2000): Opcit.
14
In 1984, Doordarshan set up a second channel in Delhi, followed by Bombay, Calcutta,
and Madras. And by end of 1997, the second channel was set up in 16 other state capitals.
The 1991 Gulf War prompted a cable TV and Satellite broadcasting boom in India. The
large number of Indians with family members in the Middle East eagerly tuned to live
CNN broadcasts, either by investing in a satellite dish or by renting hotel rooms with
access to satellite TV. CNN's 24-hour availability was a novelty in the Doordarshan
dominated TV scene. Poorly capitalized entrepreneurs became rough-and-ready cable
operators by buying functional dishes to relay signals to apartment complexes and hotels.
At that time, India had only about 400,000 dishes, despite the fact that STAR TV had
included India in its 38-country satellite footprint. The number of television set used in
India climbed from a mere 3.63 million sets in 1984 to 32 million in 199147 and to 71
million in 20 0048.
Television in India received a tremendous boost when Hong Kong-based Satellite
Television Asian Region (STAR) started beaming a variety of advertiser-supported
television programmes in 38 Asian nations, including India, that fall under the footprint
of the broadcasting satellite, ASIA SAT-I. As STAR TV programmes were not encrypted,
the signals could be picked up by cable operators with one or two dishes and then
transmitted to TV homes by overhead wires or underground cables. In India an estimated
17 percent of TV homes have access to STAR TV by 1993. In addition ZEE TV. a Hindi
general entertainment channel was launched in October 199249. According to a study
conducted by Indian Market Research Bureau (IMRB), over 7 million homes across India
have access to ZEE TV. Of these, 51.1% are in the Western part of the country, 25.9% are
in the north, 13.5% are in the south and 9.5 % are in the East50. Sony Entertainment
Television was launched in October 1995, and this channel catered mainly to younger
audience. In 1999, of the 71 million TV homes, 32 million had access to cable, and these
numbers are expected to rise to as high as 93 million TV homes, 55 million with cable, by
2003. Cable penetration in urban area was more than three times higher than in rural
areas51. Today ZEE and STAR arc offering variety of channels specialized in different
categories of programmes like news, movies, youth entertainment etc. and Sony
47 Xavier, F. and Bashwer, L. (1993): Opcit
48 Anand, B. and Khanna, T. (2000): Opcit.
Ibid.
w Rcdi ('fusion Precision Media. 1994. Zee Television: Rough Road Ahead. Media Technology Group
Bulletin, March, Bombay: Rediflusion Advertising Private Limited.
15
Entertainment is concentrating on the entertainment through soap, comedy, movies and
sports.
The enormous popularity of STAR TV and its immense growth, especially in India,
China, Taiwan, and Israel, have sparked interest in launching of other regional
commercial satellites52. With this rapid growth of the industry, Indian viewers have the
access to Malaysia's RTM and TV3, the Philippines' ABS-CBN, Indonesia's RCTI,
France's Canal Television International, Japan's NHK, Hong Kong Taiwan Business
News Network and a channel from Pakistan53.
The national broadcaster faced some kind of competition for the first time in its history.
The rapid proliferation of satellite broadcasts created formidable challenges for national
broadcasters, who were not in a position to satisfy the appetite of audience who have
developed a taste for sophisticated programming after having been exposed to
transnational broadcasts. Consequently international broadcasters have been able to lure
away audiences, and with them, advertising revenues54. But in spite of that, since 1976
when the first commercials were aired on Doordarshan, its annual earnings from
advertising revenues increased form $0.6 million to about $300 million in 199055. Private
channels were not allowed to broadcast signals from within India, and therefore, were
forced to up-link their signal to satellites from other countries. This was further
complicated by India's foreign exchange restrictions, which made it difficult to rent such
international up-linking facilities. In 1997, the Supreme Court of India ruled that the
government should end its monopoly of the airwaves. Prasar Bharati, the Broadcasting
Corporation on India, thus came into being, it has assumed the charge of Doordarshan
and has made it independent of Radio. During 1990s, there had clearly been a shift away
from Doordarshan and towards the cable and satellite (C&S) TV market. Throughout this
time, Doordarshan remained true to its original mission of producing general
51 Anand, B. and Khanna, T. (2000): Opcit.
52 Kishore, K. (1994): “ The Emerging Marketplace of Communication Satellite in the Asia Pacific: A Case
Study of AsiaSat-I and Star TV”, In: Savage, J.G. and D.J. Wcdcmeyer, eds. Proceedings of the 16th Annual
Pacific Telecommunications Council Conference. Honolulu, 51-56.
51 Xavier, !•'. and Hashwcr, I.. (1993): Opcit
54 Khushu, O.P. 1993. Satellite Communications in Asia: An Overview. Media Asia, 20 (1): 3-9.
55 Singhal, A. and Rogers, K.M. (1989): Opcit.
16
programmes, which did not cater to specific demographics, and on developing regional
programmes to cater to India's many languages56.
ZEE, STAR TV and Sony Entertainment Channel are popular in Western, Northern and
Eastern India, whereas regional language channels like, Sun TV (Tamil), Udaya
(Kannada), Eenadu (Telugu), and Surya (Malayaiam), Asianet (Malayalam) are popular
in South India. Today there are some 100 odd channels, and all put together are beaming
1,500 to 2,000 hours of programming every day57. With the growth in TV households and
the Cable & Satellite households, this medium will have great potential for advertising.
Table 1.6.1(a) gives a trend in the growth of TV and C&S households.
Table 1.6.1(a)
Estimation of TV and C&S households in India
(All India Million Households)
Best Scenario
TV HH
C&S HH
Base Case
TV HH
C&S HH
Worst Case
TV HH
C&S HH
1999
2000
2001*
2002*
2003*
68.8
29.4
70.4
30.9
74.8
33.7
79.2
36.7
83.8
39.9
68.8
29.4
70.4
30.9
73.9
33.0
77.5
35.3
81.2
37.7
68.8
29.4
70.4
30.9
73.1
32.4
75.9
34.0
78.8
35.6
‘Estimated figures
(Source: Business Standard. November 9, 2000)
1.6.4 Cinema
Feature films and cinema are produced in India since 1912-13. It began with silent
movies. As per the records, R.G. Torney along with N.G. Chitre made Pundalik in 1912,
and Dhundiraj Govind Phalke (1870-1944) produced Raja Harishchandra in 1913. The
era of silent movies was overtaken by the talkie era in 1931 when Ardeshir Irani (19861969) produced Alam Ara, though silent movies were produced till 193 458. As Indian
cinema enters the centurion decade of its growth, it retains its prime position as the largest
producer of the feature films in the world. The satellite television boom has negativated
the importance of cinema as a medium of advertising; ironically enough, it also rekindled
the demand for films. In 1990 when India was on the threshold of a cable and satellite
56 Anand, B. and Khanna, T. (2000): Opcit.
57 Business Standard, November 6, 2000
58 India 2001- A reference annual. Opcit
17
revolution, there was an all-time high production of 948 feature films, which dwindled to
910 in 1991 and slipped below the 900 mark to 836 in 1992. In 1993 and 1994 it was812
and 755 respectively and rose marginally in 1995 to 79559. The figure has remained more
or less close to this number since then. In 2000 786 feature films were produced in
India60. The boom period in movie making can be attributed to the boom in C&S
households in early nineties and at point in time movies used to be higher TRP
programmes. Soon the TV producers started producing serials and other interactive
programming became popular and brought down the TRPs of movies and attendance at
the theatres.
The advent of satellite TV and other home entertainment systems has resulted in the
number of people going to theatres. This down trend in cinema admissions and
consequently. Lower box-office collection has sounded a death knell for quite a few
cinema halls in Delhi, Mumbai and various other cities. This resulted into a loss of Rs. 39
crores revenue.
The success of a few movies in mid nineties, like Hum Apke Main Kaun in 1994 (Box
office collection Rs. 175 crores), Dilwale Dulhaniya Le Jayenge in 1995 (Box Office
collection Rs. 100 crores), and Raja Hindustani in 1996 (Box Office collection Rs. 100
crores), can be attributed as one of the reason for boom in the industry61. Some of the
other reasons for the turn around of the industry in late nineties, as a few industry
watchers believe, are because of a freeze in the sale of video rights, a surge in the sale of
audio cassettes which serves to augment interest in the movie and an improvement in the
quality of theatres in terms of air-conditioning, seating, and sound systems. There are
about 13,355 cinema houses in the country: of which 9,000 are permanent theatres and
the rest are touring cinemas. The weekly cinema audience in India averages about 15
million viewers. Andhra Pradesh has highest number of cinema halls (2215), followed by
Tamil Nadu (1167), followed by Maharashtra (478). Rates of cinema advertising vary
from state to state, and are charged on a weekly basis for 60 second of film62.
5,) Advertisers handbook 1998, edited by D.V. Gandhi.. 98
“ India 2001- A reference annual. Opcit
1,1 Advertisers handbook 1998, edited by D.V. Gandhi, 98
18
1.6.5 Outdoor
Hoardings or billboards, as popularly known, outdoor has been the oldest form of mass
communication across cultures. We find public messages carved on stone even in the
Harappan civilization. The outdoor media in India is semi-structured. The hoardings in
the city and on highways are accounted for by the local civic authorities by way of
charging taxes and/or rentals for the hoarding either from the advertiser or from the
space-selling agents. The rates are dependent on the importance of the site, like a
hoarding at the prime or central location of the city costs more as compared to a hoarding
on the outskirts or on highway. Mostly hoardings are hand-painted in India, except for a
few in the cities, where the advertisers are mounting huge computer generated and printed
messages on the hoardings. The quality of the computer-generated images is far superior
to that of hand painted. Another form of outdoor messages in India is wall-paintings.
These are the advertisement messages painted on the walls facing a road. This could be a
wall of a house, a boundary wall of any building or a structure or even a parapet of a
bridge. The Indian outdoor market is estimated at Rs. 540 million and accounts for 10
percent of the advertising spend. It is growing at a rate of 15-20 percent per annum63.
1.6.6 Internet
Internet in India became popular only in mid 1990s. Before that it existed in India, but
was used only for scientific and defense purposes, mainly by ISRO, DRDO etc. The
commercialization of Internet started happening with the launch of Pentium Chip by Intel
in 1994-95. The most basic requirement for using Internet is a PC, a telephone connection
(the telephone wire is used as the basic connecting infrastructure) and a modem (which
facilitates transfer of date through telephone cables). Apart from this a user needs to hire
services of an Internet Service Provider (ISP), to be able to access the World Wide Web.
The ISPs charge a fee on hourly basis to provide this service to their subscribers. Initially
it was used more as a medium of communication, and it is only recently when it is
gaining popularity for commercial transactions.
By July 2000, total installed base of PCs in India was 2,720,000 and the PC sales in 19992000 alone were 1,182,000 units64. Putting together all ISP subscribers in July 2000, there
62 Advertisers handbook 1998, Opcil
w The financial Express July 2, 1999
M Computers Today 1-15 July 2000 p 25
19
were total 800,000 Internet connections in India, as compared to 276,000 connections in
1998-9965. The estimate today is that 4.5 million Indians have tried the Internet sometime
or the other. The Angus Reid group - research house - has estimated that by 2005, there
will be 12 million net users in India66. A NASSCOM survey shows that there were 0.28
million Internet connections and 1.4 million users in March 1999. This went up by 0.77
million connections 2.8 million users as on March 31, 2000, and figures as on May 31,
2000 were 0.95 million connections and 3.25 million users. The software forum forecasts,
3.5 million connections and 10 million users by March, 2001 and 6 million connections
and 16 million users by March, 200267.
According to another NASSCOM survey, 43 percent users of Internet in India are
professionals. Students constitute about 38 percent. Internet users on an average are
estimated to be accessing the Internet for 6 hours a week. Males outnumber females in
Internet usage by 77 percent to 23 percent. Over half (59.2 percent) use the Internet as an
information resource, 11.3 percent use it as an educational tool, and just 8.2 percent for
entertainment68. One of the NASSCOM's studies says that the total volume of ECommerce transactions in India was about Rs. 450 crore for 1999-2000. Of this, about
Rs. 50 crore were contributed by retail Internet or business-to-consumer (B-to-C)
transactions, and the rest through business-to-business (B-to-B) transactions. NASSCOM
has projected that E-business transactions in India are expected to reach Rs. 3,500 during
2000-01. Of this, about Rs. 300 crore could comprise of retail transactions and Rs. 3,200
crore of B-to-B transactions. In keeping with global norms, it is expected that B-to-B
transactions would continue to constitute a major chunk of E-business transactions in
India69.
In table 1.6.6(a) it is estimated that around two million homes will have Internet access
through cable TV by 2001. In India, 382 cities and small towns had an active Internet
community in year 2000. The internet user population might increase to approximately
65 Computers Today 1-15 July 2000 p 24
66 The Financial Kxpress. April 4, 2000
07 Computers Today 1-15 July 2000 p 44
wt Voice and Data, August 2000. p 88
Computers Today 1-15 July 2000 p 45-48.
20
300 million people by the year 200870. Table 1.6.6(b) gives details on the age wise break­
up of internet users.
Year
2000
2001* •
2002*
2003*
2004*
2005*
Table 1.6.6(a)
Internet Users in India
Subscribers (millions)
Users (millions)
1.6
4.8
2.5
7.5
4.8
14
10
32
20
50
32
70
* Estimated figures
(Source: The Financial Express. Sept 27, 2000)
Table 1.6.6(b)
Age-Wise break-up o Internet users in India
Percentage of users*
Age (years)
Below 18
12
49
19-24
28
25-39
40-54
8
3
55+
* of all Internet users
(Source: The Financial Express. Sept 27, 2000)
The recent IT Bill, passed by the parliament in 2001, brings E-commerce within the
purview of law and accords stringent punishments to "cyber criminals". With this, India
joins a select band of 12 nations that have cyber laws. The country now has a legal
framework for the authentication and origin of electronic records/communications
through digital signatures.
One study estimates that by 2001 ends, globally 54 percent of the new netizens are going
to be women. As against this, most of the Indian net users are male, unless the concept of
internet through cable catches up and more and more at home start using the internet71. In
the US, out of a user base of 130 million net users, only 1.5 million customers are using
broadband. The same trend is expected to follow in India too72.
All these facts show that Internet is going to be an important platform for business and
marketing and a medium for marketing communications in the future. According to an
70 The Financial Express 27 Sept. 2000
71
Ibid
72
hltp://w\vw.voiccndata.com (October 2000)
21
advertising industry estimate, total advertising revenues through internet advertising was
Rs. 140 million for the year 1999-200073.
1.7 The Advertising Industry
Today advertising industry in India is comparable to any developing or developed world
in terms of tools and techniques it uses, technology and understanding of consumers.
However, it has seen an evolution. This evolution is being described in the following
sections
1.7.1 Evolution and growth of Indian advertising industry
The history of advertising in India is almost as old as the history of modern print media in
the country. James Augustus Hickey, a Britisher, published the first newspaper of India
on January 29 1780, by the name Bengal Gazette or Calcutta General Advertiser.
However the title of the newspaper did not refer to advertising in its modem sense,
though it carried a few advertisement in its first issue. Taking their models from the
journals of London, these papers were full of classified advertising - simple messages
typeset by the newspapers and 'classified' into different categories for reader's ease of
reference and usually printed across the full front page74. It used the verb "to advertise" in
its archaic sense of "to inform". Other newspapers published during the same decade also
carried a few advertisements. During that time and afterwards i.e. in the nineteenth
century most of the advertisers in India were British Business Houses, who were basically
traders of the goods produced in Great Britain. However, advertising agencies did not
exist at that time75. There were two kinds of major advertisers at that time. First were the
retailers, the large stores like Spencer's, Army & Navy and Whiteaway & Laidlaw, who
mainly catered to the British. The other types were the brand sellers, which were mainly
the sellers of'patent medicines' and 'food items' with secret recipe formulae76.
Newspapers were not just the starting point for Indian creatives - as with the West again,
Indian ad agencies ad agencies themselves first started off as canvassing agents appointed
73 Rediffusion DY&R iniemal sources.
74 Doctor, V. and Alikhan A. (1999): “A Century of Indian Advertising". Advertising Brief, December 30lh,
1999,33-47
75 Banerjec, S. (1981): “Advertising in India: Involution and Technique”. In: Mass Media in India. New
Delhi: Ministry of Information and Broadcasting, Government of India.
76 Doctor, V. and Alikhan A. (1999): Opcit
22
by the newspapers to drum up business in return for a commission of around 10 percent77.
It was only in the earlier part of the twentieth century, that the advertising agencies began
to emerge. In 1905, B. Dattaram & Company was founded as the first advertising agency
in India78. This was followed by opening of Indian Advertising Agency in Bombay in
1907, and Calcutta Advertising Agency in Calcutta in 1909. Though some newspapers
had also set up studios to help their advertisers in creating copy and illustrations79.
The chronology of the development of Indian Advertising Industry can be broken down
decade-wise.
1920's: This decade saw the first foreign owned ad agencies being set up. After World
War I, some ex-British Army officers had set up an agency called Alliance Advertising,
and other one was set up in association with Tata's, Tata Publicity. Neither were
successful and soon folded up. L A Stronach, an artist and an entrepreneur, who got down
at Bombay (now Mumbai), from a P&O liner, could establish a successful agency of that
time. Later he opened an office in Britain too, mainly to facilitate British advertisers
targeting the Indian market. D J Keymer was another successful example set up by a
British engineering company with interests in India. One agency set up for American
rather than British advertisers was National, established by a group of American
importers in 1926. These importers later sold the agency to one Mr. Jagan Nath Jaini,
whose descendents still manage the agency. But apart from National and Dattaram's, most
of the other agencies of that era have folded up. L A Stronach's gave rise to today's
Norvicson Advertising, and D J Keymer gave rise to Ogilvy & Mather and Clarion80.
This decade also witnessed the coming up of the first of the proper multinational
agencies, J. Walter Thompson (JWT), opened office in 1926 to service the General
Motors (GM) business.
Within the next couple of years, a few more multinational
advertising agencies started establishing their outfits in India. Like, S. H. Benson in 1928
- a British agency, which later became Ogilvy Benson and Mather and then Ogilvy &
Mather in 1980s, and now popularly known as O&M.
7 Doctor, V. and Alikhan A. (1999): Opcit
7S Shiva Ramu, S. (1991): “Advertising Agencies: Global and Indian Perspectives". Jaipur, India: PWP
Printwell
7'‘ Banerjee. S. (1981): Opcit
1111 Doctor. V. and Alikhan A. (1999): Opcit.
23
1930's: Lintas India Limited was founded in 1939. Lintas was initially the in-house
advertising agency of Lever Brothers, now known as Unilevers. Lintas is the abbreviation
for 'Lever International Advertising Service’. Later, Lever Brothers spun it off as a
separate company. This was the decade, when Indian advertising industry began to take a
structure. On the initiatives of ’Peter Fielden’, the then chief executive of JWT,
advertising agency's remuneration got fixed at the international standard of 15 percent of
billings, rather than a variable rate of around 10 percent, which was what the space selling
agents used to get. A few of the industry bodies like the Audit Bureau of Circulation
(ABC), which made independent estimates of publications' circulation and hence gave
agencies a common and objective basis for media planning, also got established81. In
1934, Venkatrao Sista, opened Sista's Advertising and Publicity, as the first full service
Indian agency, offering creative as well as selling space.
Sista’s created the famous
‘Khatau’ brand of voils. Now Sista's have been bought over by Saatchi & Saatchi. During
this decade, foreign brands dominated the scene and the sole concession made to the
Indian audiences was to translate the copy, more or less literally, into native languages.
The general sentiment of the foreign clients and agencies was that if the ads didn't suit
Indian consumers, then they must be educated to appreciate them!
1940s: By the beginning of this decade, advertisers realized that Indian populace had to
be tackled differently and they needed to Indianise their advertising. In 1941, Lux signed
on Leela Chitnis as the first Indian film actress to endorse the product. If there was,
however, to be one landmarke campaign of the era, it would have to be Dalda - the
famous vegetable ghee from Unilevers (Hindustan Levers Limited). Launched in 1939,
Dalda was the first major example of a brand and a marketing campaign specifically
developed for India. The brand got established in the decade of forties.
The decade was marred with wars and independence movements. Subhash Bose’s INA
lead the war activities and independence movements like Quit India movement of
Mahatama Gandhi opposed the war activities. Advertising went into a down turn, a
combination of a mild economic recession and the difficulties of supply of imported
products. The ad industry tried to compensate by coming together to contribute to the
81 Doctor. V. and Alikhan A. (1999): Opcil
24
War effort. In Bombay, four leading agencies of the time, Keymer’s, Adarts, JWT and
Stronach’s cam together to form a consortium called K.A.T.S. As the first formal joint
venture between leading ad agencies, the unexpectedly hep sounding K.A.T.S. is credited
with being the forerunner of today’s Advertising Agencies Association of India82. As the
War progressed, and as the government got increasingly nervous about the quit India
agitation, it decided to move away from the metros to Shimla. K.A.T.S. also moved to
Shimla to setup a Central Publicity Unit (CPU). As a further indication of how seriously
the government took advertising, it also appointed an Advertising Consultant with a
specialized staff to act as a liaison between the government and the CPU. Among the
activities that CPU took up was advertising as on how to deal with shortages, cautionary
advertising, on the need for keeping secrets, and promoting the sale of War Bonds.
1950s: Despite the moves towards Indianization in the 40s, the consignment advertising
culture was still strong, with agencies waiting for the ads, which were dispatched along
with the products (and the cheques for the media cost). All the local agency did was
media placement. The real impact of independence came only in 1956-57, when
government started regulating commerce and industries. The passing of import control
orders and the control on tyre prices by tariff commission brought difficulties to foreign
agencies and few of them decided to restrict their operations. S H Benson, which had
bought D J Keymer decided to close Calcutta office. This in fact gave birth to Clarion
Advertising, where the employees decided to continue the operations83. Three were some
positive developments too in the decade of fifties. In 1956, another multinational
McCann-Erickson formed an alliance with Clarion Advertising Pvt. Ltd. of Calcutta.
Later both got separated and started operating independent of each other. A few smaller
multinational agencies also opened their offices in India. This decade was hey days of
illustration, and line drawings in the art field of advertising. The technology to reproduce
photographs in print was too primitive to be used for commercial purposes. Radio
advertising started picking up, but not through All India Radio as this was a non­
commercial medium. Radio Cylone and Radio Goa were the main broadcasters of popular
programmes among Indian audience, and hence were used by advertises and advertising
agencies.
s: Doctor, V. and Alikhan A. (1999): Opcit.
K.)
Ibid
25
1960s: Early part of this decade resembled late fifties. However, things got changed after
the World Bank forced Indian currency to be devalued. The news of devaluation
witnessed the exodus of expatriates from India especially those who had businesses. This
transferred the reigns of control of businesses to Indian professionals who joined
businesses in fifties. Though some stayed back and a few closed the operations. These
uncertainties made many Indian professionals decide to go on their own. Some famous
agencies like Ulka (now FCB Ulka), Franak Simoes Associates, Interpub, Marketing and
Advertising Associates popularly known as MAA (now MAA Bozell), daCunha
Associates and Mass Communication and Marketing (popularly known as MCM) were
founded in this decade. MCM later became the most successful of these and even said to
have set high standards in creativity and human resource compensations. Yet MCM have
been blamed to be away from Indian realities and an agency which did produce some
memorable advertising but did not build brands. This was the decade when Indian
advertising saw the real brand building campaigns, like that for Lux, Pears etc. JWT
divested its equity in HTA in 1960s, which made it a wholly employee-owned company.
By 1969, Lintas India Limited was also Indianized.
The sixties also highlighted the uneasy relationship between the advertising industry and
the government. Nehruvian socialism did not approve of advertising. The guiding
principle of this thinking was the belief in the classic theory that the media is a
manipulator. And advertising, seen as the bankroller of media, and considered as the
manipulator of the manipulators! Issues like these convinced the industry of the
importance of selling themselves to the government. One for the overall growth of the
industry and second for getting billings from public sector companies. In 1966, a
conference was organized by ISA (Indian Society of Advertisers) in New Delhi, with the
ostensible purpose of persuading the government to open up the broadcast media. A case
for promoting Family Planning using the power of television (available in limited region
in and around Delhi by then) as a medium was presented to convince the government.
Though public sectors had monopoly in their respective field, they were convinced to
advertise for the sake of building an image among various publics they dealt with.
1970s: Advertising business entered the decade of seventies with a happy ending of
sixties. Business boomed in early seventies. But, over all economic conditions
deteriorated in the country in seventies due to Bangaladcsh war, international oil crisis,
26
emergency, and the socialist policies of the Janata Government. This generated a lack of
confidence in the industry, and hence affected advertising business. MCM got closed.
Banks and Indian Newspaper Society (INS) lost faith in the advertising agencies. This
made the agencies consolidate their finances. Multinational agencies like HTA, Lintas,
O&M (Ogilvy Benson and Mather in 1971 and Ogilvy and Mather in 1979), with their
financial muscles and the management expertise, got stabilized by the end of the decade.
Lintas got MRF - its first non-Levers account, as Lux (a Levers' product) account got
shifted to HTA. Closure of MCM paved way to opening up of some of the famous Indian
advertising agencies like Rediffusion (now Rediffusion DY&R) in 1974, Trikaya (late
known as Trikaya Grey and now Grey Worldwide) in 1975, Chitra (later known as
Chaitra Leo Burnett and now Leo Burnett) in late seventies84.
Advertising in the seventies was also spurred by the opening of new media. AIR (All
India Radio) finally started accepting ads and sponsored programme (like Bournvita
Quiz) in its Vividh Bharati channel. Doordarshan opened up another option. This was
primitive at first since all that was possible was to broadcast a single static slide with a
voice over. Advertisers and advertising agencies innovated with several slides dissolving
into each other, till finally Doordarshan started accepting commercials with moving films.
Photographic reproduction technology in publications, with colour in magazines, became
widely available, prompting a boom in ads with photographs. Data on consumer's reading
habits became available with the National Readership Studies, conducted in 1970 and
1978. Advertisers now had both, more media opportunities , and the means of evaluating
between them.
In late 1960s and early 1970s, political climate of the country adversely affected the
growth of multinational advertising agencies. With an objective to promote domestic
enterprises, the Government of India imposed restrictions on equity ownership by foreign
companies and individuals, for all the businesses, which were not defined as the core
sectors. The most visible manifestation of this was in the strict enforcement of the FERA,
by which companies not operating in the "core sector" were required to dilute their
overseas equity holdings to one-third (or less) of the total capital. Multinationals like
84 Doctor, V. and Alikhan A. (1999): Opcit.
27
Coca-Cola and IBM closed their operations after being required to dilute their
shareholdings.
Implementation of FERA can not be linked directly with the developments in advertising
industry, but there is no doubt that the socialist policies of successive governments in
1960s and 1970s had a dampening effect on the industry and provided little incentives to
entering of multinational corporations in to the markets. Like disallowance of advertising
expenditures for the income tax purposes. Surprisingly, the industry experienced a record
growth during this period, despite all setbacks. The number of advertising agencies
registered with Indian Newspaper Society (INS) increased form 106 in 1969 to 168 in
1979. Of the top 10 Indian advertising agencies ranked by Advertising & Marketing,
popularly known as A&M (India's leading trade publication in the field) in its 1993-94
review, two were established in 1960s, three in the 1970s, and two in 1980s. The
remaining three agencies in top 10 bracket were multinational affiliates ~ HTA, Lintas
and O&M, which were established several decades earlier.
1980s: Changes in government policies in 1980s, with an objective to invite overseas
investments in the economy had direct impact on advertising industry. Under new
policies government eased restrictions on foreign investments in various industries,
including consumer products, and permitted multinational companies to operate under
their own names. In the anuual budget of 1985-86, the 20 percent disallowance on
advertising, proposed by the government in 1965-66 and later supported by the
governments in 1977 and 1981, was also withdrawn. This led to a phenomenon in which
we found 915 new brands of products and services appearing on the Indian market in
1985-86 alone85. With this liberalization in economy, a number of homegrown agencies
formed partnerships with transnational agencies. One of these earlier alliances was a
partnership between Bombay-based Rediffusion Advertising and New York based Ted
Bates Advertising (later acquired by Saatchi and Saatchi). Neither of them had financial
stakes in the partnership. The sole purpose of alliance was to provide uniform servicing
standards for some of Rediffusion's existing multinational clients. In subsequent
developments Rediffusion broke its links with Ted Bates, and is now affiliated with
DY&R -- Dcntsu, Young & Rubicam.
85 The Financial Express July 2, 1999
28
Even in the absence of any financial stakes especially in the form of stockholdings, both
Indian and multinational agencies realized that such partnerships were mutually
beneficial. The multinational agencies could have an access to expertise in Indian market,
save start up costs and constraints, and were able to acquire and retain multinational
accounts on the basis of the claim that they can provide global coverage (and arguably,
uniform standards of creative and client services). The Indian agencies on the other hand
saw a potential for rapid growth due to business from new multinationals entering the
Indian market, business form multinationals already operating in India, on the basis of
affiliating with the agencies servicing their parent companies. They also could have
access to overseas market information, research and training methodology and the of
course the prestige associated with multinational affiliations86.
Television was one of the most important phenomenons for the decade of eighties. In
seventies advertisers were still only experimenting with the TV. The real boom happened
only after colour broadcasting began with the 1982 Asiad. Bombay Dyeing was the first
colour TV ad. Thousand of consumers bought TV sets to watch Asiad. This happening
created a critical mass of viewers, large enough to make advertisers start taking TV
advertising seriously. First it was limited to a few cities and smaller manufacturers and
retailers could use this medium to communicate with the local audience. Later when the
scope of the TV grew, either the clients grew with it or, like the retailers, dropped out. TV
also brought the advertising world straight up against the government. Doordarshan was
in a monopoly position through the eighties and it did not hesitate to use it. There were
bureaucratic hassels in getting the commercials passed for telecast and rates were
skyrocketing. These increased costs, coupled with the general increase in media
opportunities forced ad agencies to take media planning more seriously. Availability of
media data became important. Agencies started relying more on Television Rating Points
(percentage of potential audience tuned in for a TV programme), Day After Recall tests
(percentage of targeted audience recalling one or more elements of a TV commercial after
24 to 72 hours from the time of viewing), pretesting of commercials and so on. Directed
and closely monitored communication efforts got popularized in the form of Direct
Marketing, especially after the success of Readers Digest and Bullworker. Marketing
Research agencies were set up more for qualitative research. Lintas grew very rapidly to
86 The Financial Express July 2, 1999
29
be number one for a year and than number two since then. This decade saw the rise of
Rediffusion, Trikaya Grey, Enterprise and Contract. The most memorable phenomenon
was the making of Mudra Communications. Mudra got started in 1980 and became
number three by the end of he decade.
Two other trends of the eighties are also worth noting. The first one was in response to
the legal restrictions on the advertising of alcohol.. The Ahuja group, a small liquor
company marketing a whisky called 'Black Stallion', discovered a way around the
restrictions by starting to advertise 'Black Stallion Tea' on Bombay bus panels. The real
beneficiaries were the large liquor companies who spotted this smart idea and lifted it for
their own use. Soon the market was awash with ads for Diplomat disposable ice cube
bags, Aristocrat silver bar accessories and Bagpiper club soda. The second trend affected
advertising professionals, who started discovering job opportunities abroad. Lured by the
higher salaries in a fledgling industry and the Western living standards, by the end of the
decade, advertising professionals were flocking to the Middle East, first to Dubai and
then to the rest of the Gulf87.
Many affiliations were formed and broken away in 1980's. Both multinationals and Indian
Advertising agencies were testing each other and the form of associations that would
work in the interest of all.
1990s: The liberalization of the Indian economy in the mid-1980s and early 1990s has
had major repercussions for advertising agency affiliations. On one hand the number of
affiliations increased and on the other hand multinational agencies sought to strengthen
their financial control over their Indian associates through the acquisition of stock. Even
transnational agencies that had earlier divested themselves of equity holdings in their
Indian affiliates, started seeking their way back. For example, JWT bought back a 49
percent stake in HTA in 1993-94, reportedly at the rather high price of Rs. 5,400.00 per
share. The importance of these facts was underscored by the fact that 11 of the top 20
agencies in 1992-93 had affiliations with multinational agencies. And nine out of ten
reportedly involved some form of stock ownership by the multinational agencies. This
was a departure from the closely held pattern of stockholding that characterized Indian
1,7 Doctor, V. and Alikhan A. (1999): Opcit.
30
agencies up until the 1990s. The willingness of Indian advertising agencies to let their
multinational partners acquire stock probably signals a perceived need for a larger capital
base to cope with the changing structure of the industry in the days to come.
Some major multinational advertisers operating in India had indeed changed agencies in
keeping with the norms dictated by their parent companies. For example, when Lufthansa
decided to shift from McCann-Erickson to Dentsu, Young & Rubicam (DY&R) globally,
the airline's Indian business went to DY&R affiliate Rediffusion Advertising. Similarly, R
K Swamy/BBDO acquired the Visa International and Delta Airlines accounts on the basis
of their transnational affiliations. However, transnational affiliations may not always be
the determining criterion in an advertiser's selection of an advertising agency, as shown
by the case of Pepsi-Cola Co. In view of Pepsi's longstanding relationship with BBDO in
the United States, when Pepsi was launched in India the account was expected to go to R
K Swamy/BBDO. Instead Pepsi elected to place its advertising in India with HTA. In the
late 1990s, even medium sized advertising agencies stated going in for affiliations or
mergers as the market started becoming highly competitive and economy underwent a
recession. Some agencies started differentiating themselves on the basis of their market
expertise.
The decade of nineties is clearly remembered for the media boom. The Gulf War gave a
boost to the satellite and cable TV in India. The growth of cable and satellite TV has
resulted in Zee TV and to a lesser extent Star TV and Sony (plus the regional channels
like Sun TV and Eenadu TV) breaking Doordarshan's monopoly. Print as a medium saw
decline but there was still an explosion in titles, particularly in specialized areas. Cinema
reinvented itself with a new breed of silk starry films. Outdoors rejuvenated through the
help of digital printing of hoarding, which has brought quality into this medium. With FM
stations, radio is entering a kind of revolution. This media boom meant that clients had
more options. But this also meant that consumer was even harder to reach because of
splintering audience. Media planning became difficult and an expensive business, with
clients questioning the capabilities of traditional full service agency's capability to handle
this function effectively. This gave rise to specialist media outfits from traditional
agencies like Fulcrum (HTA), Initiative Media (Lintas), Media Network (O&M), and
31
individual media planners and buyers. Some agencies, like Madison, changed their total
88
focus from a full service agency to a specialist media-buying agency .
The spinning off of media had another unwelcome effect on ad agencies. With media
owners tempting clients with the potential savings from buying space/time directly from
media houses, agency's remuneration model of 15 percent commission on media spending
have been questioned by clients. Secondly the new systems of AOR (Agency on Record),
where one agency is responsible for media buying and billings and the other one for
creating advertising, dependence on commission based model was impracticable. Though
AAAI (Advertising Agencies Association of India) has been fighting a fierce battle to
defend this remuneration model, agencies have already started looking at fee based or
performance linked remuneration models.
Internet is the hottest phenomenon of the decade. Dotcoms (as the Internet companies are
popularly known) have lured away some of the best talent from the advertising industry.
This also proved a blessing in disguise. Advertising industry itself was too slow to adopt
to this new medium. And after the dotcom boom got over all these advertising
professionals who left the ad industry in favour of dotcoms, wanted to join back. In the
process, ad industry now has professionals who understand the Internet medium. A few
agencies even spun off separate division for providing services on communication using
Internet.
Indian advertising agencies were uncertain about their future at the beginning of the
1990s. Following a cash crunch in 1991, the industry was bracing itself for a recession. In
1992, chief executive of India's largest advertising agency forecast a growth rate of 12 to
14 percent for coming three years i.e. from 1993 to 1995. This was considered as too
optimistic by some other stalwarts of the industry. The actual performance defied all these
gloomy forecasts. Table 1.7.1 (a) encapsulates the industry performance in nineties.
88 Doctor, V. and Alikhan A. (1999): Opcit.
32
Table 1.7.1 fa)
Advertising Ind ustry Growth Rate in 1990s
Growth (in percentage over previous year
Year
1990-91
17.1
1991-92
25.2
1992-93
36.5
37.4
1993-94
1994-95
49.5
1995-96
30.4
1996-97
22.4
17.9
1997-98
1998-99
17.8
1999-2000
24.8
(Source: A&M, September IS, 2000)
But, some industry observers were still skeptical, and felt that apparent boom in Indian
advertising in the nineties should partly be accounted for the steep increase in media costs
during these years and does not represent a true increase in advertising volume. The
unprecedented growth towards the end of the decade is accounted to the boom in
computer software industry and the internet based businesses.
In business terms, most agencies have had a rather mixed decade. The first part of decade
saw them euphoric with rapid growth post the liberalization boom. In the second part of
the decade they hit the wall. The economic recession, coupled with Asian Crisis, saw
growth rates falling (though nothing like the extent to which they fell elsewhere in Asia).
But with the decade ending, agencies are looking to new futures. The years to come are
likely to see changes, for the simple reason that agencies are ending the century in the
new hands. Or more precisely, back in the old hands of the multinationals. More and
more agencies are agreeing to let the multinationals take majority stake and control of the
business. Yet there are exceptions like Triton Communications Pvt. Ltd. and ib&w
Communications, both home grown agencies, founded in 1990s and can be termed as all
Indian agencies.
In the short run this shift of interest among the owners of Indian agencies had probably
led to the pervasive feeling of drift in the industry. Current owners were no longer much
interested in the future of the agency, as they seek to cash out; the multinationals are still
too busy sorting out their house in the rest of Asia to take control here. Ultimately, of
course, they will. And they will drive the changes of the next decade. Industry is even
33
witnessing the return of the expatriates. And it's balanced by the many Indian expatriates,
now not just in Middle East, but in Southeast Asia, Australia and even the US. So the
circle of the industry get completed. From multinationals to multinationals. But, this time
with a lot of difference in the market structures and the economy89. The difference is in
its size. In early forties, the size of the industry was Rs. 50 million, which increased to Rs.
1910 million in 198190 and stands Rs. 102,534 million today91.
The Indian advertising industry has grown strongly over the decade of nineties on the
back of strong economic growth and deregulation. Advertising spend has grown
approximately 3.8 times the GDP growth rate: It is expected that in the next few years,
the advertising expenditure will grow at around two times the GDP growth, with Rs.
122.7 billion of advertising spending in fiscal year 2005, which is 0.47 percent of the
GDP92.
1.7.2 Subsidiary Advertising Agencies
Advertising agencies in India, in keeping with the tradition of their counterparts in the
United States, usually do not solicit new business from advertisers whose interests may
conflict directly with those of the agency's existing clients. An obvious drawback of this
policy from the agency's viewpoint is that it places limits on agency growth. Some large
advertising agencies have managed to get around this restriction by establishing allegedly
independent subsidiary of affiliate agencies that can pitch for new business without being
accused of creating a conflict with existing client. One of the earliest and most successful
examples of this type of agency is Contract Advertising, which was established in 1969 as
a subsidiary of HTA. In 1993-94, Contract was the ninth largest Indian agency in terms of
capitalized billings. Sixty percent of its shares are owned by HTA and the rest are held by
HTA's parent company JWT. Other subsidiary agencies are Karishma Advertising
(wholly owned by Lintas India), Hansavision (owned by R K Swamy/BBDO), InteractVision (owned by Mudra Communications) and The Edge Communications (owned by
Everest Advertising).
Doctor, V. and Afikhan A. (1999): Opcit
'*1 The financial Express July 2, 1999
11 A&M September 15, 2000
34
1.7.3 Financial Advertising Agencies
Financial advertising became an almost parallel advertising industry in the late eighties
and early nineties. It actually began in seventies with pioneering work done by Frank
Simoes Associates (FSA) and Clarion. The first campaign for an equity issue was FSA's
1973 campaign for Taj group (when Taj International was being built). Then, as even
now, there were restrictions on what could be said, and the agencies looked for ways to
get around them. Initially, for example, the ads couldn't talk about the 'Issue' - the
solutionwas headlines that used 'share' in a variety of punning ways93.
The real boom in financial advertising can be attributed to the compulsory FERA dilution
in the late seventies. Companies, who were forced to dilute the foreign equity, released
ads simply saying 'FERA Dilution Isssue1. This was coupled with the government's tight
money policy to control inflation. The available bank funds tended to go to Public Sector
or on things like loan melas. This compelled many companies to go to public directly for
raising money for expansion. This triggered off lots of advertising related to this.
Advertising agencies benefited. A few advertising agencies like, Pressman Advertising
and Marketing Pvt. Ltd., and Sobhagya Advertising Services took it up as their
specialization and started offering specialized services like investor's relations, press
relations etc. to their clients.
This was followed by another boom in financial advertising in the late eighties and early
nineties. The liberalized industrial policies of Rajiv Gandhi government triggered off this
boom. The specialized financial advertising agencies, which were geared up to take up
the demands of this market benefited by this boom. A few new specialized outfits also
cam in like Concept Advertising (break away from Pressman), Clea Advertising
(breakaway from Pressman Advertising), Imageagds, Adfactors, and Percept are a few
known names. Even the established mainstream advertising agencies tried to cash-in on
the boom and launched divisions or separate agencies specializing in financial
advertising, like Trikaya Grey launched Options (in collaboration with Dew Rogerson of
UK) and HTA launched Fortune94. With the end of the boom these agencies downsized,
92 Business Standard, November 6, 2000.
93 Doctor. V. and Alikhan A. (1999): Opcit
91 Chiravuri, S. (1992): “Cashing in on Client Confidence". In: The Best ofBrand Equity— '92. Bombay,
India: The Economic Times/Bennett, Coleman and Co. Ltd., pp. 13-14.
35
•n?
or switched to other functions like public relations, but the importance of specialized
financial communications was established.
Critics of the financial advertising agencies have alleged that their work tends to be in the
nature of "tombstone advertising," a mere statement of the highlight of the stock offering,
with no evidence of real creative effort. This scenario is expected to change in the near
future, as the Indian investment market is stabilizing after the lessons from infamous
scams of Indian Stock Markets. In the future, companies making stock offerings have to
compete actively for the scarce rupee of the Indian investor. With the latest ICICI
campaign featuring Amitabha Bachchan, and advertisements form stock brokers like
Moneypore.com, it is becoming clearer that financial advertising is going to see a lot
more changes in the future.
1.7.4 Specialized Agencies
Apart from financial advertising agencies offerings have started covering the non­
advertising aspects of marketing communications like sales promotions, database
marketing, event markeitng and management and exhibitions etc. A few agencies like
Elephant Design, WhichCraft are specialist in these aspects only where as some of the
mainstream advertising agencies have started their specialized outfits to cover these
services. Some of the examples are O&M Direct, Mudra Interactive (for internet
communication), Horizon (Mudra's initiative for PR) etc.
1.8 Advertisers in India
Between 1959 and 1971, the advertiser universe was around 3000. But, advertisers who
consistently advertised in English dailies throughout this period, were only 53. The
number was higher between 1966 and 1971 at 225. This shows that only seven percent of
the advertisers who entered the news columns were really interested in advertising with a
view to brand building for their products and services95. Advertising critics, especially in
the less developed countries, have always alleged that advertising promotes demand for
products that are not relevant to the needs of the local economy.96
And advertising
agencies are blamed to put their creative talents into something which is not productive
95 The Financial Express July 2. 1999
% Tanscy, R. and M.R. Hyman. (1994): “Dependency Theory and the Effects of Advertising by ForeignBased'Multinational Corporations in Latin America", Journal of Advertising, 23 (I I): 27-42.
36
for the developing economies overall. Regardless of whether one agrees with this
viewpoint, it is relevant to bear it in mind while examining the patterns of advertising
expenditures by corporations in India.
In table 1.8 (a) let us examine the top Indian
advertisers and rank them from 1-10 for consecutive three years, i.e. from 1997-98 to
1999-2000. What we notice is that these are the companies, which are generating a good
amount of direct and indirect employment, contributing to the state's exchequer from
collected taxes and responsible for desire for a higher standards of living amongst
consumers.
Rank
1.
2.
1997-98
HLL
ITC
3.
Colgate Palmolive
Table 1.8 (a)
Top 10 advertising spenders
Rank
1998-99
Rank
HLL
1.
1.
ITC
2.
2.
3.
(I)
Colgate-Palmolive
3.
1999-2000
HLL
Colgate-Palmolive
India
ITC
(I)
4.
Dabur India
4.
Dabur India
5.
6.
Videocon
International
McDowell & Co.
Nestle India
5.
5.
6.
Nestle India
McDowell & Co.
7.
8.
BPL
Dabur India
7.
8.
Nestle India
Videocon
International
McDowell & Co.
Tata Tea
7.
8.
9.
Bajaj Auto
Godfrey Phillips
India
9.
Bajaj Auto
Godfrey Phillips
India
Britannia Industries
Tata Tea
4.
10.
6.
10.
Maruti Udyog
Godfrey Phillips
India
9.
10.
(Source: A&M October 31, 2000 and March 15, 2000)
Also evident from the table is that most of the top advertisers have been the marketers of
consumer non-durable items, who have believed in the concept of brand building for a
long-term and healthy growth of the business. And for the brands to be built marketing
communications, especially advertising has an important role to play.
The opening up of broadcast media in the seventies was a catalyst in making leading
advertisers realize the importance of brands. Through the sixties, it was lack of
competition that had made brand building a low priority. Most of the advertisers thought,
why to bother about advertising and marketing when simply getting the distribution right
would ensure sales. The only exception was the textile industry. The competition was
37
intense in this industry and so were the number of brands, like Raymond's, Bombay
Dyeing, and Thackersey's Cholee. Textiles dominated the Indian advertising so much so
that, a few of the industry people even suggested splitting the annual industry award into
textiles and non-textile category97.
Indian manufacturers gave tough competition to multinational brands from the mid­
seventies. Most commentators have presented anti-MNCs and pro-national policies of
government as the prime reason for this phenomenon. But a close look on the competitive
scenario of that time would reveal that, apart from getting support from the government,
especially the small scale manufacturers, a few of them made intelligent use of media to
leverage themselves into becoming an effective threat to established business. The most
dramatic example was a cheap looking washing powder with a jingle insistently repeated
on radio. This was Nirma. Nirma's success over Levers stunned marketers into realizing
the importance of building their brands, and of using the new media to reach out to lower
income urban and rural markets. Seventies witnessed the sustained campaigns aimed at
building brands. A few of these examples are, Liril (with its waterfall ad), VIP suitcases,
Raymond's and Jenson and Nicholson. Radio was not the pre-requisite for brand building
- Raymond's was largely press-based while Jenson and Nicholson managed through
hoardings.
1.9 Advertising Organizations
According to a framework proposed by Batra, Aaker and Myers, advertising involves
communication between the advertiser
(source) and the consumer (receiver). This
communication process is made possible by a variety of “facilitating institutions,” such
as advertising agencies, the media, market research suppliers of other services including
photographers, television and film producers, and printers. It is also governed by a
number of “control institutions,” such as government, competition, consumer groups and
trade association98. This framework is useful in examining some of the organizations that
have an impact on the advertising industry in India.
Doctor. V. and Alikhan A. (1999): Opcit.
98 Batra, R., Myers, J.G., Aaker, D. (1996): Advertising Management, 5lh edition. Prentice Hall, New
Jersey, USA. 3-33.
38
1.10 Advertiser Organizations
1.10.1 Indian Society of Advertisers
The Indian Society of Advertisers (ISA), which is based in Mumbai, is the main
organization representing advertisers. The ISA publishes a newsletter to inform its
members of significant developments.
1.11 Media Organizations
1.11.1 Indian Newspaper Society
One of the oldest and most influential organizations affecting advertising business in
India is the Indian Newspaper Society (INS), formerly known as the Indian and Eastern
Newspaper Society (IENS). Membership of the INS is comprised of the publishers of
most major newspapers and magazines of India. The importance of the INS stems from
the fact that it is responsible for conferring accreditation to advertising agencies. It has
also laid down rules and regulations, and a code of advertising ethics, that have had a
significant influence on the functioning of the Indian advertising industry.
Accreditation from the INS entitled agencies to a 60-day grace period in the payment of
print media bills. In the absence of accreditation, the amount of credit allowed to an
agency depends on the agency’s relationship with individual media vehicles. As stated in
the Preamble to the Society’s Accreditation Rules, the objective of the accreditation
process are: “(a) to ensure that recognition is awarded only to such agencies which can
carry on business observing the ethics of maintaining high professional standards; (b)
ensuring that all advertising agencies conduct their business in conformity with principles
laid down by the Society; and (c) ensuring that member newspapers do not suffer on
account of sudden insolvency and/or liquidation of advertising agencies”99.
The rules and regulations of the INS also contain important provisions pertaining to
agency compensation and commissions. Accredited advertising agencies are entitled to
receive from member publications, “the minimum and maximum commission of 15
percent.” Provisionally accredited agencies are entitled to a 10 percent commission.
Accredited agencies are enjoined not to share or split this commission with other agencies
or with their clients.
w Shiva Ramu, S. (1991): Opcil
39
1.12 Agency Organizations
1.12.1 Advertising Agencies Association of India
The Advertising Agencies Association of India (AAAI) was formed in September 1945
and now has 120 members on its roster. These 120 agencies are said to account for nearly
75 percent of advertising business in India. The AAAI is actively involved in protecting
the interests of member agencies. For instance, when the Government of India tried to
impose a tax (deductible at source) on the standard 15 percent commission received by
the agencies, the Association filed a petition on behalf of its members.
The AAAI does occasionally participates in the resolution of conflicts, although such
intervention is usually restricted to conflicts involving interagency relationships, or clientagency relationships that are likely to have an impact on the industry as a whole. When
necessary the Association also takes punitive actions in the collective interests of its
members. For instance, the Association barred Tara Sinha McCann-Erickson (TSME)
from its fold when the agency took over a disputed client from another agency.
1.13 Other Organizations related to Advertising
1.13.1 Advertising Standards Council of India
The Advertising Standards Council of India (ASCI) was incorporated in October 1985, as
a nonprofit body. The promoters of the council include executives from major advertisers,
agencies and print media. The primary objectives of the ASCI are to administer a code of
ethical practices in advertising and to encourage self-regulation100. The code of ethics has
been drawn up to ensure the truthfulness of claims made in advertisements, to safeguard
against misleading advertising, and to ensure that advertisements are not offensive to
generally accepted standards of public decency.
The ASCI has limited legal powers to compel manufacturers and agencies to adhere to its
code of conduct. The Council itself does not evaluate advertisements; rather, it serves as a
channel for others’ complaints against advertisements. On receipt of a complaint, the
Council asks for the advertiser or the agency to comment. If there is no reply, the Council
decides on the course of investigation during its biweekly meeting. If the complaint is
Shiva Ramu, S. (1991): Opeit
40
upheld on the basis of the on the basis of the ASCI’s code of ethics, the advertiser is
asked to withdraw the advertisement. If the advertiser fails to respond, the Council
approaches the advertising agency or media to drop the advertising.
1.14 Advertising Regulations
1.14.1 Legal Regulations
The advertising industry in India is obviously affected by all the laws governing various
mass media, as well as marketing practices. In addition there are certain laws, or parts of
legislative enactment, that are directed specifically at the industry, which determine both
the broad framework within which the industry ia allowed to operate, as well as the
content of its output101.
1.14.2 Freedom of Speech and Advertising
The India Constitution, one of the world’s longest, has several provisions that have a
bearing on the freedom of the mass media. The most important of these is Articla 19
(l)(a), which states :”AU citizens shall have the right to freedom of speech and
expression.” This right is qualified by Article 19 (2), which provides that the state can
impose reasonable restrictions on its exercise ‘Mn the interests of the sovereignty and
integrity of India, the security of the State, friendly relations with foreign States, public
order, decency or marality, or in relation to contempt of court, defamation or incitement
to an offence.” Although the press or mass media are not specifically mentioned in
Article 19(1 )(a), various judicial decisions have affirmed that this constitutional
provision is wide enough to include freedom of the press and, implicitly, the freedom of
other, other mass media.
Within this constitutional framework, advertising is accorded less protection than political
speech. In 1960, the Supreme Court of India ruled (in the case of Hamdard Dawakhana
[Wakf] Lai Kuan Vs. Union of India) that there was a distinction between commercial
advertising and advertising concerned with the expression and propagation of ideas.
According tot he court, only the latter form of advertising could claim the full protection
of Article 19(l)(a) of the Constitution.
101 Venkatcswaran, K.S. (1993): “Mass Media Laws and regulations in India”, Singapore: Asian Mass
Communication Research and Information Centre (AMIQ.
41
1.14.3 Laws Regulating Advertising
There are four laws that directly affect advertising practices in India. The 1969
Monopolies and Restrictive Trade Practices (MRTP) Act includes misleading
advertisements under its definition of “unfair trade practices.” The Act defines an “unfair
trade practice” very widely to cover several acts aimed at promoting the sale, use or
supply of any goods or services that causes loss or injury to the consumers of these goods
or services. Apart from prohibiting factual mis-representations with respect to price and
quality, the Act also forbids “bait and switch” practices. A Commission (the Monopolies
and Restrictive Trade Practices Commission, or MRTPC) established under the Act has
powers to adjudicate upon receipt of complaints and to issue injunctions102. In the past,
the MRTPC has dealt with complaints that comparative advertisements constitute an
unfair trade practice. In one such dispute, the MRTP commissioner declared that he
cannot initiate action against an advertiser making comparative claims unless the
aggrieved party can
provide evidence of “specific damage” caused by the
advertisement103.
The Drugs and Magic Remedies (Objectionable Advertisements) Act of 1954 contains
provisions that forbid the publication of advertisements concerning drugs that may be
used for certain prohibited purposes, for example, to procure miscarriages or prevent
conception in women, to improve sexual pleasure, to correct menstrual disorders, or to
diagnose, prevent or treat certain specified diseases. The Act also prohibits the
publication of advertisements for a drug if the advertisement gives a false impression
about the true character of the drug, or makes false claims for the drug104.
The Indecent Representation of Woman (Prohibition) Act of 1986 was introduced in
response to growing demands, especially from women’s organizations, to curb the
exploitation of women by the media. The Act makes it an offence for any publication or
advertisement to depict a woman, or her body, in an indecent or derogatory manner.
Offences are punishable with imprisonment and/or fines105.
I0- Vcnkatcswaran, K.S. (1993): Opcil
103 Chakraborty, T. (1994): “Negative Advertisements: Court's Can't Control the War of Words", Pioneer,
New Delhi.
Iul Venkatcswaran, K.S. (1993): Opcil.
42
The Emblems and names (Prevention of Improper Use) Act of 1950 impose restrictions
on the use by anyone, including the media, of certain emblems and names. For example,
one cannot use the Indian national flag, the name emblem or official seal of the United
Nations, the official seal of the Government of India, or of any state governments, except
under such conditions as may be authorized by the government106.
Apart from the laws just outlined, the conduct of sweepstakes, contests and promotions is
governed by the Prize Competition Act of 1955. The Lotteries (Control) Act also contains
provisions that are relevant to advertisers who want to conduct such promotions. The
Defamation Act of 1952, which regulates matters of slander and libel in general, has also
been evoked by parties prosecuting advertisers for comparative advertising practices107.
In the case of financial advertising, the Securities and Exchange Board of India (SEBI)
exercises significant control with regard to limiting the types of claims that advertisers
can make, as well as stipulating certain statutory disclosures that must be made.
The Cable Network Act (2000), has been brought with the objective of preventing the
cable networks from showing pirated movies, prohibiting advertisements for liquor,
tobacco and infant mils substitutes and for ensuring that the cable networks show at least
three Doordarshan channels. The Government has also allowed Direct to Home (DTH)
TV, but received signals will strictly have to follow the provisions and restrictions under
this Act108.
1.14.4 Regulation by the Media
Print Media Regulations: In addition to the regulations imposed on advertising by means
of laws, the print and broadcast media also have codes of ethical conduct, by which
advertisers must abide. Newspapers and magazines that tare members of the INS are
expected to conform to the Society’s Code of Advertisements Ethics and Medical
Standards109. Most of the injunctions issued by the INS pertain to advertising claims of a
medical nature, along the lines of the Drugs and Magic Remedies (Objectionable
Advertisements) Act of 1954. The print media are enjoined not to accept advertisements
containing endorsements by doctors who are not recognized Indian Medical Practitioners.
1(17 Chakraborly, T. (1994): Opcil
108 India 2001- A reference annual. Opcit
43
Further, according to the code, “no advertisement will be accepted containing claims or
illustrations which are distorted or exaggerated in such a manner as to convey false
impressions or containing statements of a ‘knocking’ or ‘extravagant nature’110.
Broadcast Media Regulations'. As the INS has no statutory powers to implement its code
of ethics, compliance by member publications is purely voluntary. On the other hand, the
broadcast media in India - AIR and Doordarshan - are virtually government monopolies,
although there are some moves to privatize these institutions (this does not include private
channels like STAR, ZEE or SONY and other regional channels). Even though AIR and
Doordarshan do not have statutory enforcement powers, their near-monopoly status gives
advertisers no alternative but to comply with their regulations. Both AIR and
Doordarshan now use the Code of Ethics for Advertising in India issued by the ASCI, as
the primary guideline for broadcast advertisers. In addition both the networks have their
own regulations. These guidelines imposed by the AIR and Doordarshan codes can be
classified into three categories: (1) restrictions on product and services, (2) restrictions
based on target audience sensibilities, and (3) other executional restrictions.
Restrictions on products and services: Certain products and services cannot be advertised
on the broadcast media. Prohibited products include cigarette and tobacco products,
patent medicines, matrimonial agencies, hypnotists, fortune tellers, foreign goods and
foreign banks, betting tips, non-governmental lotteries, and most form of financial
services offered by non-governmental organizations. Alcohol advertising is not permitted
in any medium throughout India. On the other hand, medically approved contraceptive
products can be advertised - hardly surprising in a densely populated country, whose
government actively encourages citizens to limit the size of their families to one or two
children. As of now these restrictions on advertising do not apply to cable and satellite
channels.
According to an industry newsletter, Doordarshan is trying to increase its advertising
revenue by removing the ban on advertising certain products categories. In 1994,
Doordarshan declared its intention to permit the advertising of foreign products, including
Shiva Ramu, S. (1991): Opcit
II" u,;,i
44
banks and financial institutions, jewelry, mutual funds, hair dyes, matrimonial agencies
and astrological services111. This clearly represents the network’s willingness to
compromise some of its public policy goals in order to remain commercially viable.
Restrictions based on audience sensibilities: The codes for AIR and Doordarshan state
that “advertising should be so designed as to conform to the laws of the country, and
should not offend against morality, decency and religion susceptibilities of the people.”
Advertisements that deride any race:, cast, colour, creed or nationality are prohibited. This
regulation is reflective of the government media’s desire to play a pro-social role in the
eradication of the caste system. Accordingly, advertisements should not criticize friendly
countries, attack any religion or community, contain obscene or defamatory content,
incite people to violence or violation of law and order, cast aspersions against the
integrity of the President and Judiciary, criticize any person by name112.
Other Executional Guidelines'. Advertisers are requested not to incorporate “any such
effects which might startle the viewing public.” Examples of such effects cited in the AIR
and Doordarshan codes include rapid gunfire or rifle shots, sirens, bombardments,
screams, ruacous laughter and the like. Foreign commercials, or commercials primarily
featuring foreign models were not accepted by Doordarshan, although there is nothing in
the network’s official code regarding this policy.
Advertisements on television are shown in a single pod at the beginning of a programme,
and no commercial interruptions are permitted with in a programme. Sometimes,
commercial pods preceding popular programmes can last as long as thirty minutes.
Sponsors of television programme are also required to provide a visual break (or “wipe”)
between programme content and commercial pods, to reduce the possibility of viewers
confusing the two. (A similar stipulation exists in the United States with respect to
advertising on child-oriented programmes.) Doordarshan has relaxed these rules recently,
so as to allow commercials to be placed within programmes.
111 RcdiHuston Precision Media. 1994.
112 Venkateswaran, K.S. (1993): Opcit.
45
1.15 Advertising and Children
Doordarshan’s code also contains a section on advertising and children, which stipulates
that “no advertisement for a product or service shall be accepted if it suggests in any way
that, unless children themselves buy or encourage other people to buy the products or
services, they will be failing in their duty or lacking in loyalty to any person or
organization.” Also, “no advertisement shall be accepted which leads children to believe
that if they do not own or use the product advertised, they will be inferior in some way to
other children, or they are liable to be condemned or ridiculed for not owning or using it.”
Clearly, it would be easy for advert isers to circumvent the spirit of these provisions while
adhering to them to the letter113.
The regulations imposed by the government-owned broadcast media in India are
motivated mainly by genuine pro-social concerns. However, in many instances,
Doordarshan has been known to supplement its overall guidelines with periodic circulars
issued by bureaucrats coming to grips with this relatively new advertising medium. Often
these stem from an attempt to micro-manage advertising executions.
As a means of implementing its regulatory code, Doordarshan will not run advertisements
unless the videotape for broadcast is accompanied by a storyboard that has a written
approval of a Doordarshan official. This confers considerable discretionary authority
upon the bureaucrats responsible for this “pre-censorship” process, although in practice,
such powers are seldom misused. Advertisers wishing to avoid costly errors are advised
to get such approval even before they start shooting the commercial. Approval of a
storyboard by Doordarshan does not guarantee that the network will agree to run the
commercial as shot, as there might, be substantial differences between the storyboard and
the finished commercial.
1.16 Self-Regulation
Self-regulation in advertising is a relatively recent phenomenon in India. The primary
self-regulating body is the ASCI, which was established in 1985. The influence of the
ASCI is demonstrated by the fact that its Code of Advertising Practices is referred to as a
primary guideline, by both AIR and Doordarshan. The objectives of the ASCI, and its
Venkaleswaran, K.S. (1993): Opcit.
46
procedures for dealing with complaints about advertisements have been discussed earlier
in the chapter.
1.17 Convergence laws
Convergence of media is another technological revolution profoundly influencing the
media scenario. Convergence is coming about in various branches of entertainment like
film, TV and music industry. All of these use computers, CDs, audio/video tapes. The
same satellite and optic fiber is being used as infrastructure transmitting information
whether for telecommunication or for computers or for broadcasting. At the receiving end
the computer is being used as a tool not only for information processing, but also for
receiving information and broadcast programmes. The Government has been trying to
work out the details of Convergence Law, which will address the problems of
development and regulations of the three related sectors, namely broadcasting,
telecommunications and information technology in a unified manner. These laws will also
govern any form of commercial communications through these elements of converged
media.
1.18 Consumer Issues
1,18.1 Changing Consumer Attitudes
The increased commercialization of television, along with the extraordinary growth of
television households in India, has created a consumer revolution114. The all-pervasive
medium has been able to bring the hitherto unknown lifestyle of the people of industrially
developed nations into the living rooms of most middle and upper class Indians. Because
middle classes in general are more prone to go in for “cultural borrowing”115, the desire to
imitate the lifestyle of their westernized counterparts has received a tremendous boost. An
executive from a multinational alcohol marketing company described the Indian middle
class as having “the right kind of attitude: they are willing to try out new brands, new
tastes”116.
Until the 1980s most Indian consumes were fiscally quite conservative. A typical Indian
family would buy goods primarily from savings. Being in debt was socially unacceptable.
m Narayan, S. and Roy, M.G. (1994): "The New Credit Culture’’, Business World, April 6-19, pp. 12-21
115 DeMoorji. Marieke K., and Warren J. Keegan. (1991): “Advertising Worldwide: Concepts. Theories and
Practices of International, Multinational and Global Advertising”, London: Prentice Hall.
47
Only housing loans were viewed as somewhat acceptable. Even big-ticket items such as
electronics, appliances, motorcycles and automobiles were bought out of savings. The
fiscal value are now going through a drastic transformation. In 1993, a study
commissioned by the Housing Development and Finance Corporation (HDFC) estimated
that 15 percent of middle-class homes had taken some kind of a loan to buy consumer
durables, double the level of 1990. Forty-four percent of households owning television
sets, 23 percent of those owning a refrigerator, and 10 percent of owning a car had
financed their purchases117 (Narayan and Roy 1994).
Private finance companies, including multinational banks, viewed this trend with great
expectation. In 1994, GE Capital (a subsidiary of General Electric) entered into a joint
venture with HDFC, known as Countrywide Consumer Financial Services (CCFS), to
capitalize on the boom in consumer financing118. Citibank, the world’s largest issuer of
credit cards, entered the Indian market in earnest in 1988-89. They became the market
leaders in first few years itself119 (Advertising and Marketing 1993c). Many banks foreign and domestic - have followed suit in the credit card business.
Not all Indian consumers are joined the credit-happy bandwagon. The market research
study commissioned by HDFC classified Indian consumers into three segments,
depending on their attitudes toward credit. Estimates of the relative size of each segment
are not available. The three segments identified in the study are defined as follows:
1. Hedonists-. These consumers are not inclined to postpone the gratification of their
desires. Hedonists are not too concerned about the high interest rates involved in
consumer financing (typically more than 22%).
2. Hard-nosed realists'. Unlike the hedonists, these consumers weigh the pros and cons
of installment purchase schemes. Under the right circumstances they are willing to
pay the price for immediate gratification of his or her needs.
3. The die-hard traditionalists: Conservative and debt-averse, these consumers prefer to
live within tlHr means, even if it means putting off big-ticket purchases.
"(l Advertising Age International. 1994. Changing Demographies, October 17 (I): 11-16
1,7 Naravan, S. and Roy, M.CS. (1994): Opcit.
118 Ibid.”
48
The findings of the HDFC study must be viewed with some caution, as they are based on
a relatively small sample. It should also be noted that even in 1994, less than 30 percent
of consumer durable purchases were financed'20.
It is too early to say whether the culture of conspicuous consul lption and immediate need
gratification will undermine India’s high savings rate (nearly 20 percent), which is second
only to Japan’s, according to some estimates. However, the growth in consumption in
some sectors has been quite remarkable. For example, in the 1980s the population
increased by about 19 percent, but domestic electricity usage and the sales of personal
goods, clothing, kitchen utensils and gadgets increased by eight to ten times as much. In
addition ready-made brand name clothing sales more than doubled between 1987 and
19990, the number of washing machines in use more than tripled between 1987 and 1990,
and the number of cars on Indian roads more than doubled between 1984 and 1991121.
The growing appetite for consumer goods, especially among middle-class Indians, has
invited criticism from many quarters. Critics view the Indian middle-class as avaricious,
insensitive and self-indulgent, but others argue that they are a dynamic group, whose
hunger for consumption can only spur the economy toward higher growth122.
1.19 Changes in the Rural Market
It is an oft-quoted truism that India lives in her villages. Only around 20 percent of the
country’s one billion people live in metropolitan centers. Yet most discussions of Indian
advertising (and consumers) focus on the urban market, which has the maximum
disposable income and propensity to spend. Recently, however, several marketers have
begun to focus afresh on the relatively untapped rural market, sue to its growth potential,
as well as its impressive overall size. In terms of growth, rural shares of packaged
consumer goods have increased from 28 percent in 1984 to over 42 percent in 1992. The
sheer size of the market is illustrated by the fact that a 3 percent market share for a brand
of bath soap translates to a rural consumer base of over 12 million consumers123.
Il<’ Advertising and Marketing. 1993. Credit Worthy. December, pp. 160-166.
120 Narayan, S. and Roy, M.G. (1994): Opcit.
121 Operations Research Group. 1991. Expanding Consumer Markets, ORG Review. New Delhi: Operations
Research Group, p.l.
l32I)ubey, S. (1992): Opcit.
123 Bhandari, P. and R. Iyer. (1994): "Rural Marketing: The Rules of the Game", Advertising and
Marketing
49
It is true that there are substantial logistics and communication hurdles in reaching rural
consumers; the rural market is scattered over many small villages. At the same time,
marketers are only now beginning to realize that in many states, over 65 percent of the
population lives in 25 to 35 percent of the villages. Although marketers may not be able
to reach out to all of rural India’s 650 million consumers, they can nevertheless try to
reach around 150 million of them124.
From an advertising viewpoint, the major hurdles to reaching rural consumers are low
literacy rates, and relatively low penetration of television sets. Radio is perhaps the
medium best suited for reaching rural India, but most radio stations that are powerful
enough to reach rural audiences accept advertising only on a limited basis. The major new
media in India - including the new channels on the government-owned television network
- have targeted the urban elite, and their impact on rural audiences has been incidental at
best. This does not mean that television has had no impact on rural India. Many television
programmes especially those based on Indian Mythology, such as the Ramayana and
Mahabharat, have been extremely popular. The impact of this medium is expected to
increase with greater TV penetration of rural households. However, it is uncertain what
impact urban-oriented advertising messages will have on rural audience125. Marketers
need to tailor their messages specifically to the needs of rural audiences, instead of trying
to use common advertising for urban and rural consumers126.
Some innovative entrepreneurs are already offering media alternatives that are
appropriate for reaching rural consumers. These include video vans and point-of-purchase
video displays. Using the latter concept, advertisers can screen their commercials in busy
village markets, and communicate with them in a language appropriate for the region
(unlike network television advertising, which is primarily in Hindi or English). As
electrical outlets may not always be conveniently available, these entrepreneurs even
equip their video displays with self-contained gasoline-power generators.
Bose, D.K. (1992): “Reaching out to the Rural Millions". In: The Rest of Brand Equity '92, (original
article appeared on October 28, 1992). Bombay: The Economic Times/ Bcnett, Coleman and Co. Ltd., 3132.
125 Bose, D.K. (1992): Opcit
l2f’ Bhandari, P. and R. Iyer. (1994): Opcit.
50
Due to improvement in transportation and communication infrastructure, the buying
behaviour of rural Indian households is also undergoing some transformation.
Traditionally, male heads of households made all the key purchase decisions. An
improvement in rural literacy, coupled with greater access to information, has resulted in
a greater decision-making role of other family members. Better literacy has also made for
better brand identification. Earlier many villagers identified brands primarily through
their physical characteristics (for example, Hindustan Lever's Lifebuoy bath soap - India's
largest selling brand - was universally identified by its red colour; Nirma detergent
powder was identified by its yellow colour). Unscrupulous marketers sometimes exploit
the illiteracy of villagers by launching spurious brands that closely resembled successful
brands in physical features as well as brand names. Thus, "Teta Salt" tried to capitalize on
consumers' goodwill towards "Tata Salt", and "darbar Amla" hair oil rode in on the
coattails of highly successful Dabar Amla hair oil127. The presence of literate rural
consumer will probably render such tactics more difficult in the coming years.
1.20 Consumer Protection Issues::
The majority of Indian consumers are not gullible enough to be taken in by spurious
brands, such as those just described. However, until recently, Indian consumers were
relatively passive in their responses to unethical business and advertising practices. On
the face of it, India has a large number of laws to protect consumers, but their
implementation has been very poor128. The monopoly of government enterprises in key
sectors (such as air and rail transportation, telecommunications, insurance services and
electric utilities), and limited competition in many (but certainly not all) other sectors,
resulted in markets where the interests of the seller were much better represented than
those of the consumer. This scenario is changing slowly, but steadily. The consumer
movement has made significant gains in making buyers far more aware of their rights, as
well as in getting legislative protection.
The earliest Indian law dealing with the relationship between buyers and sellers is the
Indian Sale of goods Act of 1930, which is based on "the rules of justice, equity and good
127 Bhandari, P. and R. Iyer. (1994): Opcit
128 Sethi. M. and Sectharaman. I’. (1994): "Consumerism — A growing Concept". New Delhi: Phoenix
Publishing House.
5!
conscience"129. This law, nevertheless, contains the aphorism, caveat emptor, or "let the
buyer beware." The MRTP Act further laid the ground for the consumer movement by
defining unfair trade practices and by providing a mechanism for the redressal of
consumer complaints, through the creation of MRTP Commission, headed by a
government-appointed Commissioner. Until the passage of the MRTP Act, consumers
had no formal means of filing their complaints other than the courts of law. The
Consumer Protection Act (COPRA.) of 1986, probably the most important of consumer
legislation, takes this concept one step further. The Act provides for quick and
inexpensive redressal of consumer grievances through quasi-judicial bodies set up at the
district, state and national level. It provides this facility to three groups: individual
consumers,
registered voluntary consumer associations, and central
and
state
governments. Under COPARA, a consumer is defined as "any person who buys any
goods or hires or avails of any service for a consideration." The Act differentiates
between people buying goods for personal use, and those buying products for resale or
commercial purposes. The later group cannot seek relief from consumer court.
Consumers can complain against defective products, deficient services, restrictive and
unfair trade practices, and overpricing130.
The first complaint under COPRA was filed in 1988, in Hyderabad, the capital of
southern Indian state of Andhra Pradesh. A large government enterprise, ECIL Limited,
which sold television sets, was demanding service charges of Rs. 400 from consumers,
even during the warranty period when service was supposed to be free. A police
intelligence officer who had bought an ECIL television set learned about COPRA from a
newspaper article and decided to file a complaint. The district consumer forum directed
ECIL to refund the amount, along with 12 percent interest for the period. As COPRA was
a new law, ECIL simply ignored the directive. The forum then ordered the seizure of a
television set from the Company's retail showroom. This was a rude awakening for ECIL
managers, who promptly filed an appeal before the Andhra Pradesh State Commission.
The state commission upheld the district forum's decision. Noting that the company's
action had made impact not only on the complainant, but on many others, the state
commission issued a class action order directing ECIL to pay back all the customers who
had been charged unfairly. The class action portion of the commission's directive was
129 Sethi, M. and Scetharaman, P. (1994): Opcit
130 Girimaji, P. (1993): “A Guide to Consumer Protection Act”, The Times of India, New Delhi, October 22
52
later stayed by the Andhra Pradesh State High Court, which held that the other "victims"
had not complained. The original complainant, however, emerged victorious131. Due to
this and other subsequent incidents, COPRA was amended in 1993 to permit class action
suits for the first time in India132.
Since COPRA was passed in 1986, over 2.6 million Indian consumers have sought relief
in the 400 district-level commissions set up under the Act. Courts have handed down
rulings protecting consumers against a variety of private and government-owned
establishments, including the government-owned railways, insurance companies and
public utility companies133. Consumer activists are heartened by these statistics, but
caution that many more millions are unaware of their rights under this law134. A recent
book on the history of consumerism in India notes that the first formal consumer
movement is India was as far back as the 1940s, but teat growth since then has been
rather slow135. Poverty, illiteracy, indifference of the affluent classes and the lack of
organizational skills in consumer groups are some of the factors blamed for the slow
growth of the movement. Some commentators feel that the Indian consumer movement is
at last coming into its own, and that the pessimism expressed by Sethi and Seetharaman
(1994) is probably not justified136. According to a recent report there has been a sudden
increase in the number of consumer organizations in India during the last decade. In the
mid-1980s there were only about 80 registered organizations; in 1994, there were nearly
700137.
The growth of the consumer movement, bolstered by legislative developments such as the
1993 Amendment to COPRA, is a positive development for the Indian consumer. At the
same time, the increasing adoption of the ASCI's Code of Ethics is indicative of the
growing influence of self-regulation among advertisers. Nevertheless, if a recent report
about an increase in unethical business practices is any indication, both consumers and
131 Mehta, P.S. (1994): “Consumer Notes: Small, but Significant”, Pioneer, New Delhi, November 5.
132 Girimaji, P. (1993): Opcil.
133 Mehta, P.S. (1994): Opcit
134 Girimaji, P. (1993): Opcit.
135 Sethi. M. and Seetharaman, P. (1994): Opcit.
136 Jayanthi, C. (1994): “Educating the Indian Consumer", Pioneer, New Delhi, June 1 8.
137 Girimaji, P. (1993): “Consumer Movement Gaining Momentum”, Times oflndia. New Delhi, August 20
advertisers will have to remain vigilant in order to enjoy the benefits of economic
liberalization538.
1.21 Future Imperatives
Between 1950, when the first advertising agency started operating, and today, there have
been dramatic changes in the Indian advertising scenario. Most of the changes, however,
have occurred in the last two decades with the government's open-door policy,
liberalization and globalization, and most importantly changes in the media. With each
passing year the Indian economy is expanding at a rapid rate, especially due to the
aggressiveness with which the Government of India is seeking foreign investments. While
the winds of change bode well with the Indian advertising industry, it has started to feel
the growing pains.
Skeptics, who forecast the demise of Indian advertising agencies, ignore the fact that
business and other enterprises have an innate need to communicate with the native
publics. And there can not be a communication with the native public unless one
understands the cultural nuances, local dialects and temperaments of these people. Local
Indian agencies and the talents are the best people who will be able to understand these
cultural, temperamental and language diversities of this country. Therefore, the real
question is not whether Indian agencies will diminish, but simply in what forms will it
survive in the future?
According to Mr. Sam Balsara, Chief of Madison Advertising, "It's a pressure cooker like
atmosphere." With the runaway growth, the biggest problem facing the industry is the
shortage of talent. Until very recently most agency executives were trained on the job.
But with the per capita productivity that is required to stay in the business, agencies today
prefer ready-made talents. A.G. Krishnamurthy, Chief of Mudra Communications
Limited - largest Indian advertising agency, believes that at least 1800 new talents are
needed by the industry each year. A few post-graduate institutes dedicated io develop
advertising talents have opened up in the last few years, for example, Mudra Institute of
Communications Ahmedabad, and the Narsee Monjee Institute of Management Studies,
arc offering specialized courses in marketing communications. Yet many more such
1,8 Roy, M.G. and Mukcrjee, D.N. (1994): “From Smart Marketing to Dirty Tricks”, Business World, July
27 - August 9, pp. 22-29.
54
institutes will be needed in the years to come139. Advertising business is facing a host of
other issues. Such issues include the relative importance of the various types of
advertising over time, who will pay or what, what controls might be appropriate in light
of the changing media environment, and so on. To illustrate, it is inevitable that certain
advertising media will decline over time (e.g., National television) and a few other will
flourish (e.g., database marketing communication). Such changes in terms of advertising
business is predictable and should be considered healthy just as the evolution of a species
is in the natural world. The four critical areas for Indian advertising industry needs to
tackle are: (1) media; (2) legal; (3) consumer; and, (4) creative.
In the media arena, while changes and improvements in traditional mass media continue
to occur, a massive change is underway which blends the efficiency of traditional mass
media and the marketing potential of one-to-one interactivity. Examples of this blending
include, most importantly, the Internet. These new media mandate an examination of
four important and related issues. First, the issue of how advertisers can participate in the
development of such media to the benefit of all the parties involved must be carefully
examined. Second, issues related to audience measurement and who will provide them are
critical to the successful development of the new media. Third, the dynamics of how
consumers interface with these new media must be studied and understood. Finally, the
issue of how to most effectively and efficiently advertise in the new media environments
requires thoughtful study by marketers.
In the legal arena, with the new law of Indian government banning advertising and
sponsorships by tobacco and liquor companies, coupled with Cable Network Act (2000)
advertising industry is bound to see some setbacks in terms of turnover. At the same time,
unscrupulous marketers have been able to find ways to break these laws. The enforcement
bodies complain that they do not have enough powers to enforce these laws and the cable
operators feel that it is impossible to implement the laws due to technical reasons. These
difficulties are harming the image of advertising industry as a whole. The emergence of
new media will increase pressure on legislative bodies and courts - both inherently
suspicious of advertising - to take action to protect consumers. Central issues under legal
scrutiny arc related to laws that can be implemented keeping in mind the strengths and
1 w Wanvari, A. (1995): “The Final Countdown, Indian Advertising at Ihe Crossroads”, Calcutta, India:
Telegraph Supplement, Anand Bazar Patrika Limited.
55
limitations of enforcement bodies, can provide effective consumer protection and yet safe
guard the right to speech.
In the consumer arena, markets are increasingly becoming more global and multicultural.
Virtual as well as foreign-based multinational firms using “niche marketing” techniques
will more important in garnering the consumer’s brand loyalty worldwide. Th e
increasing globalization of business places unique demands on advertising agencies to
evolve into either ‘specialists’ or ‘generalists’ in terms of their scope of services, market
coverage, media expertise and creative competence. Increasingly, there will be a premium
paid to those who are able to recognize cultural differences plus adapt quickly to different
and changing environments.
In the creative arena, the move is towards the marrying of new artistic, cultural and
communicative forms. With its ever-increasing capabilities, the computer continues to
change the visual communication and advertising businesses. In the emerging era; for
example, images and type are layered, precariously balanced and sized, ghosted, running
hither and yon around the page and generally deconstructed. Increasingly, images operate
purposefully in dissonant patterns. Creatives must meld the strategic and innovative into
contextual visual solutions, often in emerging media. Creating advertising for the Internet,
for new CD technologies, for new broadcast and telecast medium is rich with
possibilities.
In fact, this is a trial times for the Indian Advertising industry. With the help of
advertising and other sophisticated marketing techniques, the huge Indian middle class
has internalized the culture of consumption. India has become an open market. MNC
agencies and marketers are here to stay. There can not be any turning back now. The
future of advertising in India and Indian advertising is bright and challenging. As
unlimited as the imaginations of the marketing communication professionals who are
constantly seeking more effective and efficient means to promote the brands and
companies they represent. Advances in computer and communication technologies are
opening up unprecedented opportunities for advertising industry like virtual offices and
distant consulting: It is a time for great excitement and opportunity for Indian advertising
industry.
56
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