How does a creative director of an ad agency retain his creativity when he is subject to strict norms for certain kinds of advertisements? For example, he might have to create an ad for a company’s initial public offering (IPO) or a new fund offer (NFO) of a mutual fund house. These are ads where the list of don’ts is long and the regulator, the Securities and Exchange Board of India (SEBI), is clear that no kind of mis-selling, mis-representation or enticement will be tolerated when it comes to an investor decision to choose a particular IPO or NFO.

Atul Dube, partner, RK Swamy BBDO, and a veteran in financial advertising, says, “It is tough to be creative when the brands (coming out with an IPO) involved are not well-known, be it a neighbourhood builder or a small financial services company or a car accessory manufacturer, compared to established brands such as Dominos Pizza or Café Coffee Day.”

The SEBI code for marketing communication in case of public issues is clear. All communication should be based only on the offer document filed with the regulator and has to be strictly adhered to. This makes the room for creativity in statutory advertisements very narrow.

So how does the creative director manage to remain creative when the limits for creativity have been clearly defined? V Subramanian, Director, Adfactors Advertising, another IPO advertising stalwart, says, “The focus usually is on the company’s strengths and that is used to generate the idea, and hence the subject matter, while creating the ad.” For instance, while doing the creatives for Snowman Logistics, a B2B company that’s in the business of transporting items that need to be refrigerated or frozen, the agency showed how the company takes extra care to transport their customers’ products such as chocolates, ice-creams, pharmaceuticals or perishables. Based on this, a story is woven, else this can become a mundane exercise, adds Subramanian.

Companies coming out with an IPO usually come out with a corporate ad campaign which is then unveiled to the target audience — in this case the investor community — through various media vehicles. These ads carry a disclosure at the bottom that the company is proposing to come out with a public issue of securities and has to be approved by the merchant banker. Making tall claims in the ad is not allowed. “Any claim that companies make with respect to numbers in the ad has to be backed by statistics, while claims of quality have to be backed by proper certification such as the ISO,” Subramanian says.

So what prompted SEBI’s earlier crackdown on the content in advertisements and publicity material in IPOs? B Madhu Prasad, Chairman, Keynote Corporate Services, a merchant banker, says “The use of celebrities for promoting an IPO was forbidden and this happened after a jewellery company used this idea (in the year 2010).” Then there was the case of a bond issuer who used the word safety bond for an instrument which was relatively unsafe in its communication. “The regulator’s idea was to ensure that investors are not misled.”

Given the degree of regulation on publicity in an IPO, are there any ads which are still etched in people’s memory? Yes, says Arun Kejriwal, Founder of KRIS Research, an avid IPO watcher. He says, “One of the most difficult businesses is the shipbuilding business and the ad for the Pipavav Shipyard IPO in the newspapers showed a small boy with his paper boat. This was an-out-of-the box idea.” “Within the given framework we try and do our best” Subramanian sums up.

Thou shalt not …

An indicative list of do’s and don’ts laid out by SEBI

Ads for an IPO must contain only factual information. Projections, estimates, conjectures or any other matter not contained in the offer document is not allowed.

All public communications and publicity material during the IPO period must have a disclosure that the company is proposing to make a public issue of securities.

Companies have to make prompt, true and fair disclosure of all material developments relating to its business and securities that occur between the date of registering final prospectus or (red herring prospectus) by issuing ads. This also includes impact of subsidiaries and group companies which may have a material effect on the issuing company.

Companies have to obtain the approval of the lead merchant banker responsible for marketing the issue before releasing any ad or publicity material.

Ads and research reports issued by the company or any intermediary concerned with the IPO have several norms to follow. They are: no deception/manipulation/distortion in the ad or report, full reproduction of facts in the offer document, use of clear, concise and understandable language; no slogans or brand names, specially for the IPO including expletives, financial data to contain three-year past history, no excessive use of technical, legal terminology or complex language and excessive details which may distract the investor; no guarantee for profits, no use of models, celebrities, fictional characters, landmarks or caricatures or the likes; no use of ads in the form of crawlers on TV.

Ads should contain risk factors with equal importance.

Ads should not give an impression that the issue has been fully subscribed or oversubscribed during the period the issue is open.

No product advertisement shall contain any reference to the performance of the issuer during the IPO period.

An issue advertisement shall be considered misleading, if it contains statements made about the performance or activities of the issuer without necessary explanatory or qualifying statements, which may give an exaggerated picture of such performance or activities besides inaccurate portrayal of past performance or portrays it in a manner implying that past gains or income will be repeated in the future.