ASCI Tightens Brand Extension Rules for Restricted Categories

Mumbai, Dec 14 (PTI) Outsmarted by companies deploying surrogate measures to continue promotions, the advertising industry's self-regulatory body ASCI on Thursday revised its guidelines on brand extension restrictions.

The revised guidelines focus primarily on the ad spending to be in proportion to revenues of brand extensions, putting certain caps and restrictions.

It can be noted that brands in restricted categories like alcohol, which are not allowed to advertise, often launch products in unrelated categories like mineral water and music to continue campaigns that help establish a recall in consumers' minds.

In a statement, the Advertising Standards Council of India said the revision was driven by "mega-budget celebrity campaigns during high-profile sporting events in India".

Earlier, the restrictions provide for brand extensions to cross certain thresholds of business, investment or distribution criteria for them to be considered genuine extensions. However, specific criteria has now been added for advertising spending in relation to turnover of the said extension.

It has mandated that the advertising budget for genuine brand extensions of restricted master brands has to be commensurate with the extension's sales turnover, specifying that the proportions for the ad budgets are capped at 200 per cent of the turnover in the first two years of launch of the extension, followed by 100 per cent of revenue in the third year, 50 per cent in the fourth year, and 30 per cent thereafter.

To ensure genuine compliance, all evidence supporting the brand extension's qualifications for advertising must be certified by a reputed and independent CA firm.

"These measures are essential to prevent the misuse of brand extensions as surrogates for advertising in restricted categories. We believe that these guidelines will strengthen the integrity of advertising in the industry," the body's chief executive and secretary general Manisha Kapoor said.