Opinion | New Ad Bill set to affect celebrity endorsement biz

With her spectacular win at the World Championships, ace shuttler P.V. Sindhu is set to see her brand endorsement fee soar. However, celebrities like her will have to be doubly sure of the kind of ads they do thanks to the new Consumer Protection Bill cleared by the upper house of Parliament earlier this month. Guilty manufacturers, service providers, and brand ambassadors now face fines and jail terms for making misleading claims in advertisements. Celebrities endorsing misleading ads can be fined up to ₹10 lakh.

Brand experts have welcomed the move. Brand strategy specialist Harish Bijoor calls it an “excellent piece of legislation”. Samit Sinha, managing partner, Alchemist Brand Consulting, sees it as a step in the right direction, “as the existing mechanisms do not adequately protect the consumers from getting swindled by unscrupulous companies”. Sanjay Sarma, brand expert and founder of boutique advisory firm SSARMA Consults, too, says that consumers have often fought long, hard, and lonely battles in consumer courts for their rights against large companies. “This bill would empower them and encourage more people to come forward and report false claims by brand owners or brand ambassadors that may lead to a buying decision.”

They feel endorsers are liable for “misleading” claims, too. “The manufacturer and brand label are relatively passive. The brand endorser is at the front line, putting his or her personal brand pull to create pull for the brand in question. Responsibility and liability, therefore, belongs to all these three entities,” says Bijoor. Sinha also thinks ambassadors should be accountable. “After all, they are paid handsomely to endorse brands and the reason that they command their huge fees is because they know that they have a significant influence on how people perceive the brands they endorse.”

Brand ambassadors have been huge beneficiaries at the cost of gullible customers. “Take the real estate industry in India, for example, where companies have robbed consumers of their life savings and paid hefty fees to their ambassadors, and built personal wealth as well without delivering on their promises. We have been unregulated for far too long and it is time that celebrities shouldered their share of the responsibility,” says Sarma. The new bill is likely to impact the celebrity endorsement business in different ways. For one, several categories, which hang on the periphery of socials ostracism, such as alcohol, cigarettes and, maybe, even oils, covert sugars and fast-food, might find it tough to get a good brand endorser, says Bijoor. Additionally, brand endorsers will now want to get themselves indemnified before signing a deal. A tribe of ‘brand due diligence’ personnel will emerge as intermediaries between the brand endorser and manufacturer/brand-owner, he adds. Sarma says agreements will be more stringent and celebrity lawyers and agents will earn more, pushing the cost of endorsements higher. Those who can still afford to do so, will continue to use them. However, a lot of the fly-by-night brands and dubious brand owners will be filtered out in the process, he adds.

In several instances, though using a celebrity endorser is considered to be a safe bet by brands, it is also a sign of laziness and/or bankruptcy of imagination on the part of the marketing team and/or their advertising agencies. “Unavailability of this option will force them to think harder,” says Sinha. Often celebrity endorsement deals are done directly by companies and the agencies simply toe the line and retrofit campaign ideas based on the endorser. “I would imagine agencies will also be much relieved with the new turn of events and discourage clients from endorsement-led ads. This may lead them to do more insightful, meaningful, engaging and idea-driven campaigns,” adds Sarma.

Bijoor expects the return of the company mascot. “Remember Gattu of Asian Paints, Goody the Nerolac Tiger, and Fido Dido for beverage brand 7 Up? Mascots cannot refuse signing brand contracts with difficult categories or cause harm by getting into trouble in their real lives, like getting into a Chinkara shooting controversy, for instance,” he says.

In the new bill, the penalties are less harsh compared to those in other developed markets. Sarma says that globally the emphasis is on fair trade and consumer protection laws are stronger and penalties higher. Under the Consumer Protection (Fair Trading) Act) in Singapore, for example, a company can go completely out of businesses if it is found to be engaging in unfair practices under some provisions. Adds Bijoor: “When it comes to product liability and brand-endorser liability, the world is getting to be a tight place to operate in and rightfully so.”

Shuchi Bansal is Mint’s media, marketing and advertising editor. Ordinary Post will look at pressing issues related to all three. Or just fun stuff