India’s booming advertising industry stands at a crossroads, facing potential disruption from a new Supreme Court mandate that stems from the case against Patanjali. Traditionally governed by specialised regulations and agencies, the landscape is now shifting toward a self-declaration regime that could morph into a cumbersome and catch-all pre-certification process. Such changes risk severing an essential connection between businesses and consumers—stifling innovation and economic growth in one of India’s most dynamic industries.
What is the SC order?
The Supreme Court’s proactive stance arises from a high-profile case where the Indian Medical Association sued Patanjali Ayurved for misleading Covid-19 cure claims. In response, the court issued binding guidelines on 7 May 2024, aimed at curbing misleading advertisements. These guidelines mandate that advertisers submit self-declaration forms on a government portal before their ads can be published across print, broadcast, and online media.
Currently, advertisers adhere to specific codes and guidelines enforced by various agencies, depending on the content and medium of the ad. For instance, the Ministry of Consumer Affairs oversees surrogate and influencer ads, while the Ministry of Health and Family Welfare regulates health-related ads. Violations are established based on ex-post assessments by such agencies. The Supreme Court’s new directives threaten to upend this system, potentially leading to a slippery slope where all ads might require pre-certification akin to political advertisements.
Also read: CCPA can’t fight online marketing tactics with rules. Teach Indians about ‘dark patterns’ first
What will self-declaration entail?
The Election Commission of India (ECI) and its Media Certification and Monitoring Committee (MCMC), enforce a mandatory pre-certification process for ads on electronic media from registered political parties. Once a self-declaration form, transcripts, and the content itself are submitted to the MCMC, then the ad is cleared. This applies to print ads too in certain cases.
However, pre-certification is no guarantee of responsible advertising, especially in the digital age. Ads are now embedded in all types of content, such as memes and product placements in influencer videos. Automated and programmatic advertising make regulation trickier, with limited human intervention and live transactions between publishers and advertisers. While traditional ad buying was done manually and included making requests for proposals, tenders, quotes, and subsequent negotiations, programmatic buying uses software to replace all these steps. The speed improves outcomes for advertisers, but a lack of middlemen and decentralised processes leaves little scope for a bureaucratic self-declaration mechanism. This challenge compounds when programmatic transactions are made for live content, within seconds.
The Supreme Court’s proactiveness in identifying the public interest implications emanating from misleading ads is welcome. However, prescribed remedies are laden with public interest concerns of their own.
Also read: Guidelines on online gaming a self-regulation template. But iron out 5 complexities
Impact on India’s advertising industry
India is in the middle of an advertising boom. The advertising industry is expected to grow at 9.86 per cent this year. Digital advertising surpassed traditional mediums like TV and print for the first time in 2023. A majority of ad spending next year is anticipated to be on online services. More than 30,000 small and medium fast-moving consumer goods brands now compete for ad market share.
Ads enable brands to communicate with consumers. They help widen and deepen markets, earn customer loyalty, and differentiate products. Advertising plays an equally important role for consumers. It helps create relationships with brands, which can be both functional and utilitarian, or psychosocial and emotional. A 2021 Ipsos report on global trends found that people prefer brands with aligned corporate purposes and values, like fighting climate change and taking up social issues.
Indian consumers also have high ad tolerance. Nearly 80 per cent of them also trust ads, particularly those endorsed by celebrities. Ads that are transparent, relatable, and carry personal stories and experiences attract consumers. Targeted advertising, which is more prevalent in digital markets, also serves the consumer interest. Consumers are more likely to buy brands that recognise them and suggest relevant recommendations.
Also read: Digital Competition Bill can stifle opportunities for MSMEs while aiming for a fairer market
A viable path
There are smarter alternatives to the Supreme Court’s self-declaration mandate to effectively combat misleading ads. Strengthening the Central Consumer Protection Authority’s (CCPA) capacities could be a viable solution. The CCPA already regulates various ad categories and enforces duties on advertisers to prevent misleading ads. This includes bait, surrogate, and children-targeted ads.
The CCPA’s efforts are complemented by the Advertising Standards Council of India (ASCI), which monitors and addresses violations in digital advertising. It defines ‘digital media’ to include areas like advergames, sponsored posts, branded content, promotional blogs, paid-for links, gamification, in-game advertising. ASCI, a specialised body, scans 45,000 digital ads monthly, checking for misleading content and escalating issues to the CCPA or issuing advisories. Empowering ASCI further could enhance its effectiveness without imposing additional burdens on advertisers.
Brands are not just crucial for consumer welfare but also form a significant part of the economy’s intangible capital. Burdening advertisers with increased compliance will stymie the industry and is not in public interest. Instead, empowering consumers to detect and report misleading ads to bodies like the CCPA and ASCI offers a more balanced approach.
The author works at Koan Advisory Group, a technology policy consulting firm. Views are personal.
This article is part of ThePrint-Koan Advisory series that analyses emerging policies, laws and regulations in India’s technology sector. Read all the articles here.
(Edited by Theres Sudeep)