India: Strife Between The Advertising Industry And The Fastidious Indian Consumer

Last Updated: 9 June 2017
Article by Bhaavya Roy

"Advertising is legalized lying"- H.G Wells

Advertising Industry is the second fastest growing industry, both in Asia and in India. Over the time, it has evolved from being a small scale business into a large scale industry. There is no doubt that advertising is now a key player in global trade and commerce, hence there have been speculations regarding the ambit of advertising and where it tips the line to be unfair trade practice. The exposure and frolicking reach of advertisements in all its varied forms i.e. Print, Television and Digital was unprecedented to many. The purpose of this article is to put forth the expanse and global impact of advertising in the current scenario, its potential growth in the coming times and the consumer's perception of the same.

Global Sketch on Advertising

It would be factually appropriate and correct to state that the advertising is now a billion dollar industry. In 2010, the global expenditure on advertising was 412.54 Billion US Dollars. In 2012, sources predicted global advertising spending would amount to anywhere between 438 billion U.S. dollars and 542 billion U.S. dollars. United States is the biggest advertising market, with a projected spending of around 166 billion dollars in 2012. The estimated expenditure for 2017 is 547.37 Billion US Dollars which is expected to rise to a gargantuan 724.06 Billion US Dollars in 2020.1

Consumer trust in advertising mirrors to a certain extent the amount of money invested in different advertising mediums, every second person says they trust TV ads and e-mails they signed up for. Television has been the most relevant medium for advertising despite the advent of digital video providers like Netflix. Despite the fact that television industry has undergone a sea change over the last few years and it continues to maintain its importance in the field of advertising. Surprisingly, other types of online advertisements (which include the much hyped ads on social media) score much lower, with only one in every three consumers trusting online video or display ads. One reason for it can be that Television is the most powerful means to send a message and the audience it reaches is wider than digital media. Statistics depict that the advertising industry spending worldwide is growing at lightening speed. In 2009, the expenditure worldwide was roughly 350 billion US dollars, which is expected to rise to 500 Billion US Dollars in 2017 and sky rocket to a whopping 600 Billion US Dollars by 2019. The statistics further display that the growth rate of advertising spending from 2013 to 2017 has grown by 4.4 % but there will be a lull in it by .2% in 2019.2

Statistics also display that in 2015, personal recommendations were the most trusted form of advertising with 83% of respondents stating that they somewhat or completely trusted recommendations they got from friends and acquaintances. In 2015, 66% of the respondents claimed to rely on Consumer opinions posted online for products and services establishing it as another significant medium for advertising.3

Advertising & Marketing in India

Keeping in view the Digital India dream of P.M. Modi, the Indian Government has extended tremendous support to the advertising and marketing industry. The government has announced initiatives to push digitization in rural areas which will connect more people on the internet. The mammoth rise of advertising expenditure is likely to have a significant impact on the financial sector, resulting in change of policies by the Reserve Bank of India (RBI) which could result in a more favorable work environment for multinational companies investing in marketing and advertising. Also, proposed licenses for new banks and better market sentiments render the advertising and marketing industry fertile.

Print contributes a significant portion to the total advertising revenue, accounting for almost 41.2 per cent, whereas TV contributes 38.2 per cent, and digital contributes 11 per cent of the total revenue. Outdoor, Radio and Cinema make up the balance 10 per cent. India's digital advertisement market is expected to grow at a compound annual growth rate (CAGR) of 33.5 per cent to cross the Rs 25,500 crore (US$ 3.8 billion) mark by 2020.

The Internet's share in total advertising revenue is anticipated to grow twofold from Eight per cent in 2013 to 16 percent in 2018. Online advertising, which was estimated at Rs 2,900 crore (US$ 435 million) in 2013, could jump threefold to Rs 10,000 crore (US$ 1.5 billion) in five years, increasing at a compound annual rate of 28 per cent.4

Judicial stance on Advertisement

On perusal of the data provided above, it's observed that the Multi National Companies around the globe are making humongous investments for advertising and marketing. Subsequently, the National Consumer Redressal Commission and the State Consumer Forums have seen a rise in cases pertaining to puffery and hyperbole in advertisements.

In Colgate Palmolive Company & Anr V/s Hindustan Unilever Ltd reported at 206(2014) DLT 329, the Hon'ble High Court of Delhi held, that a certain amount of disparagement is implicit and as long as the advertisement is limited only to puffing, there can be no actionable claim against it. Also the law laid down by the Hon'ble Delhi High Court in Dabur India Ltd. V/s Colortek Meghalaya Pvt. Ltd. and Godrej Sara-Lee reported at 167(2010) DLT 278, that, what the courts need to consider in such cases is whether the impugned advertisement is "by and large truthful" and that an advertiser must be given enough room to play around in the grey areas in the advertisement brought out by it and that the plaintiff ought not to be hypersensitive.

Further, in Marico Ltd. V/s Adani Wilmar Ltd reported at CS (OS) Nos. 246 and 319 of 2013, It was held that in determining meaning of an advertisement, the Court has to take into account fact that the public expects a certain amount of hyperbole in advertising and test to be applied by the reasonable man would take claim being made as one made seriously. In this courts opinion comparative advertising is legal and permissible as it is in interest of vigorous competition and public enlightenment. Moreover failure to point out a competitor's advantage is not necessarily dishonest.5

A notable judgment reported in McDonalds Hamburgers Ltd. Burger king (UK) Ltd. [1987] F.S.R 112 warned that, advertisements are not to be read as if they were some testamentary provisions in a will or a clause in some agreement with every word being carefully considered and the words as a whole being compared.

Lastly in Monopolies and Restrictive Trade Practices Commission observed in  McDowell and Co. Ltd V/s Unknown reported at 7 February 1997,  that an element of humor or hyperbole contained in advertisement cannot be held to be  a misrepresentation but its just a matter of "puffing up".

Conclusion

On scrutiny of the statistics provided above, it would be safe to say, that the colossal expenditure in advertising has a significant impact on a global platform and this is anticipated to rise in the near future. The consistent growth of the advertising industry has made the Indian Consumer more aware and knowledgeable of various market trends. If India's digital advertisement market is expected to cross the US $3.8 Billion mark by 2020, one can imagine the ascend in consumer complaints our forums will experience. Further, the perceptiveness of the Indian and Foreign Courts exhibits its acknowledgement and true understanding of the Advertising Industry. As observed, the precedent does not state that advertisements are to be liberated and succored but instead appreciates the varied traits of an advertisement.

Can an advertisement be rigid and inexpressive in its representation? It cannot. The essence of an advertisement is in its humour and hyperbole, along with puffery being a necessary and accepted element for any advertisement. The primary characteristic of an advertisement is its creativity. Creativity which does not entail false information or false projection of goods and services but rather fuels the purpose of being eye-catching for the Consumer. Lamentably, the nature of an Indian consumer has become scrupulous and finicky.

Footnotes

1. https://www.statista.com/statistics/236943/global-advertising-spending/

2. Growth of advertising spending  worldwide 2017- www.statista.com

3. https://www.statista.com/statistics/236943/global-advertising-spending/

4. https://www.ibef.org/industry/advertising-marketing-india.aspx

5. https://indiankanoon.org/doc/131750016/?type=print

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