The Advertising Standards Council of India (ASCI) has tightened guidelines for brand extensions in restricted categories such as liquor and tobacco. This has been done to prevent misuse of brand extensions for surrogate advertising in such restricted categories. The self-regulatory body has now added provisions that require “advertising budgets of brand extensions of restricted master brands to be commensurate to extension’s sales turnover.”

This comes at a time when concerns have been raised about surrogate advertising through mega-budget celebrity campaigns, especially during big-ticket sporting events using brand extensions in restricted categories.

Ad spends

ASCI’s guidelines already had provisions that mandate that for a brand extension to be considered genuine it must meet certain thresholds of business, investment or distribution. Now, it has also added provisions to ensure ad spends are in proportion to the sales turnover of the brand extension. “The proportions for the ad budgets are capped at 200 percent of the turnover in the first two years of the launch of the extension, followed by 100 percent of revenue in the third year, 50 percent in the fourth year, and 30 percent thereafter,” the updated guidelines for brand extensions stated.

The ad budgets will include media expenditure across all forms of media in the previous month, payments to celebrities for brand endorsements on an annualised basis, and the annual average money spent on advertising production for the brand extension in the previous three years, it added.

The updated guidelines also state that variants launched under the brand extension will not be considered as a fresh extension and the original date of the first brand extension will apply.

In addition, to ensure genuine compliance, all evidence supporting the brand extension’s qualifications for advertising must be certified by a reputed and independent CA firm. “If a brand extension of a parent brand that is under one of the restricted categories don’t meet the updated qualifications, ASCI will not consider it to be a genuine extension, but a surrogate created to advertise a restricted category,”it added in a statement.

Manisha Kapoor, CEO and Secretary General, ASCI, said the updated guidelines are expected to contribute to strengthening the integrity of advertising in India, upholding ethical standards and protecting consumers from misleading practices. “These measures are essential to prevent the misuse of brand extensions as surrogates for advertising in restricted categories,” she added.

ASCI’s guidelines already have provisions that require brand extensions that are present in the market for more than two years to have a sales turnover of over ₹5 crore per annum nationally or ₹1 crore per annum per State. It also defines criteria for brand extensions that are present in the market for less than two years among other provisions.

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