Proposed ban on surrogate ads: Industry braces for spend impact

BY Team PITCH

The era of covert and sneaky ads where alcohol brands promote products like sparkling water or CDs will soon be a thing of the past as the government’s upcoming ban on surrogate advertising is set to eliminate these indirect promotions.

The Centre’s new draft rule has sent ripples through the liquor and tobacco industries, as well as the marketing world, where professionals are now scrambling to rethink their strategies and find innovative ways to engage consumers.

window.googletag = window.googletag || {cmd: []}; googletag.cmd.push(function() { googletag.defineSlot('/21740140234/e4m_story_page_para3_small_horizontal_banner_3_728x90_normal', [728, 90], 'div-gpt-ad-1595331589677-0').addService(googletag.pubads()); googletag.pubads().enableSingleRequest(); googletag.enableServices(); });

Interestingly, according to a report on global ad spend forecasts, ad investment in the beverages category is expected to grow by 7.2% in 2024, easily exceeding the average growth of 4.6% expected across all sectors. Looking specifically at alcoholic drinks, brands will need to develop a full understanding of their audience, be confident in their campaigns and delivery, and avoid spreading themselves too thinly over the myriad platforms available to them.

window.googletag = window.googletag || {cmd: []}; googletag.cmd.push(function() { googletag.defineSlot('/21740140234/e4m_story_page_para3_small_horizontal_banner_3_728x90_normal_next', [728, 90], 'div-gpt-ad-1601359261569-0').addService(googletag.pubads()); googletag.pubads().enableSingleRequest(); googletag.enableServices(); });

exchange4media reached out to marketers to explore how the government’s ban on surrogate advertising for liquor and tobacco brands will reshape their marketing strategies.

While some marketers expressed sympathy for the brands and the advertising industry, others viewed the move as a positive step towards fostering transparency and honesty.

 According to Barin Mukherjee, co-founder and CEO of Digital Refresh Networks, the new ban might deal a serious blow to the liquor industry while also posing difficulties for creative and media agencies.

“A potential ban on surrogate advertising could be a significant blow to the liquor industry specifically. Since surrogate ads often target a specific demographic through seemingly unrelated products, these brands wouldn't have that option anymore.

“They’d need to find more organic ways to connect with consumers, potentially through sponsorships or content creation that feels more natural. This shift could create challenges for creative and media agencies currently managing surrogate campaigns for alcohol companies. Overall, the impact would likely be most acutely felt by the liquor industry, forcing them to adjust their marketing strategies,” Mukherjee told exchange4media.

Chandramouli Nilakantan, CEO of TRA Research, concurs that the new regulation will impact advertising strategies and push media outlets to explore new sources of revenue.

“The ban on surrogate ads has significant implications for the media industry, impacting advertising strategies and revenues. If indirect promotion of restricted products like alcohol and tobacco is prohibited, media outlets will have to find alternative revenue sources,” Nilakantan said.

However, he also believes that this shift will ultimately benefit consumers by promoting a more transparent advertising environment.

“But this shift is very beneficial for consumers, as it reduces exposure to misleading advertisements that can promote unhealthy behaviours, fostering a more transparent and honest advertising landscape,” he said.

Expressing concern over how this move would adversely impact the huge ad spends by liquor brands, Shradha Agarwal, Co-Founder and CEO, Grapes, said, “it will create a huge dent for us.”

“If the surrogate ad gets banned, the impact on advertising agencies will be huge because the amount of spends that we do through surrogate advertising, or the number of activities that we do, is huge. In fact, it is going to create a huge dent for us also.

“Plus, the fact that advertising in this category has become increasingly convenient by using superficial branding techniques will pose a major challenge under the new rules. The shift will necessitate more creative and meaningful messaging, particularly given the substantial ad spends in the industry,” Agarwal said.

Suggesting a solution to this, Merlin Coutinho, VP - Marketing, Lemma, said that brands will adapt to new advertising restrictions and could try ‘silent campaigns.’

“While the bigger debate of surrogate vs brand extension campaign continues, brands will adapt to new advertising restrictions. Brands could embrace creative strategies like 'silent campaigns.' These campaigns subtly convey brand messages without direct promotion, allowing for impactful engagement.

“For instance, a 'Keep Walking' campaign with inspirational content promoted in public spaces and influencer amplification can effectively communicate brand values,” he said, adding that brands can also explore influencer partnerships, interactive workshops, and gamification to connect with audiences in innovative ways.

“By using these approaches, liquor and tobacco brands can navigate advertising bans, build authentic connections, and maintain a strong market presence,” Coutinho said.

Talking about the impact of the new draft rules on the way brands will have to connect with consumers, Neena Dasgupta, CEO and Co-Founder, The Salt Inc. said, "While the full extent of the impact will be clearer upon the release of the final regulations, it's undeniable that this move will necessitate a major shift in marketing strategies for these brands.”

She said that there could be a heightened focus on innovative approaches and advertisers will likely explore more subtle and nuanced ways to connect with consumers.

“Product integrations within organic content and storytelling formats will become more prominent strategies. Brands will anticipate a strategy shift towards building genuine connections with consumers through authentic and compelling storytelling, leading to impactful brand experiences. This transition will also demand creativity and adaptability from industry players as they seek to maintain brand awareness and consumer engagement in this new regulatory environment, she said.

As per Lloyd Mathias, brand strategist and strategic investor, “It's going to have a definitive impact because a lot of alcohol brands, and other categories as well, have been very cleverly using alternate methods of marketing.”

“Furthermore, I think that companies are expected to be ethical, so now they can't try any other trick. It's going to have a huge impact on the media, given that some of these categories are pretty large.

“If you look at brands like Kamala Pasand and more, I would say it's going to be bad for them, but I think it's a good decision at the end of the day. It's high time that these things become more effective, as opposed to just paying lip service,” he said.

Tags : Advertising Tobacco Liquor Surrogate Ads