ASCI issues guidelines to limit the use of brand extensions as ad surrogates

The Advertising Standards Council of India (ASCI) has modified its guidelines for, Qualification of Brand Extension-Products and Services in the restricted category of advertising forbidden by law. These changes are described in ASCI code Chapter III Clause 3.6 (a) and specifically target brand extensions linked with prohibited categories such as spirits and tobacco.

While ASCI had particular brand extension guidelines in place, which were changed a few months ago, it was thought necessary to enhance these in light of mega-budget celebrity advertising during high-profile sporting events in India. ASCI's current rules require brand extensions to meet particular economic, investment, or distribution criteria to be recognised as genuine expansions. ASCI has now established certain criteria for advertising spends in proportion to the extension's turnover.

The New Code for Brand Extensions Key Features:

Advertising spending must be proportionate to the extension's sales turnover: ASCI has ordered that the advertising budget for genuine brand extensions of restricted master brands be proportionate to the extension's sales turnover. The ad budget proportions are capped at 200 percent (i.e. not more than 200 percent) of the extension's turnover in the first two years, followed by 100 percent (i.e. not more than 100 percent) of revenue in the third year, 50 percent in the fourth year, and 30 percent thereafter. The advertising budget covers all forms of media expenditure in the preceding 12 months, payments to celebrities for brand endorsements on an annualised basis, and the annual average money spent on advertising creation for brand extension in the previous three years.

This metric will guarantee that advertising investment is balanced in relation to the extension's sales performance over time.

1- Variants Launched Under Brand Extension: To be clear, any variants launched under the brand extension will not be deemed a new extension. The date of the first brand extension will be used.

2- Certification by Reputable Accounting Firms: To assure true compliance, all proof supporting the brand extension advertising credentials must be certified by a reputable and independent accounting firm.

3 - If a brand extension of a parent brand that falls within one of the limited categories fails to meet the new standards, ASCI will consider it a surrogate established to advertise a restricted category rather than a real extension. The revisions from ASCI will help to maintain the integrity of advertising in India, uphold ethical standards, and safeguard consumers from deceptive activities.

Manisha Kapoor, CEO and Secretary General of ASCI, elaborated on the new changes to the Brand Extension Guidelines, saying, As part of our ongoing commitment to consumer protection and ethical advertising, ASCI has introduced these new additions to the Brand Extension Guidelines. These safeguards are necessary to avoid the use of brand extensions as surrogates for advertising in limited areas. We feel that these rules will improve the industry advertising credibility.