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August 2016 Cover Story

Published on: 2016-08-29 15:58:03     3853 times read    1  Comments
Advertising Industry Now .. Where is Nepali Advertising Heading

--BY SANJEEV SHARMA

Advertising now has become a major business in Nepal. With the increasing number of media outlets across print, television, radio and lately the digital platforms, the promotion and publicity business has taken on a definitive structure as an industry that relies on creativity, glamour and money. The increasing presence of local and foreign brands and businesses across different sectors in the country has led to the huge flow of advertisements as companies vie to sell their products and services. 

From confectionaries and biscuits to gadgets to cars and BFI services, Nepali consumers are largely reliant on advertisements for information about the products and services available in the market. “Advertising has become something of a culture at present. The concept of advertising has been firmly established in the business sector in that businesses need to advertise their products and services in order to prosper,” states Prof Dr Bhoj Raj Aryal, Head of the Central Department of Management at Tribhuvan University. Aryal who is an expert in advertising and marketing points out that in today’s aggressive business climate BFIs even advertise their minor services which they hesitated to do 15 years ago. 

With the rising market competition, advertising campaigns help companies achieve their objectives. “Communicating with customers in the most effective and economical way makes a campaign successful,” says Shekhar Golchha, Executive Director of Golchha Organisation, one of the major advertisers in the country, adding, “And a successful advertisement helps companies to achieve their objectives.” 

The Evolution
It was in 1958 BS when advertising in Nepal took roots with the founding of Gorkhapatra daily. Mainly government notices were published in the newspaper as advertisements back then. After the collapse of the Rana regime in 2007 BS, consumer aimed advertisements began to grow at a slow momentum as various independent newspapers and magazines came into existence. During the Panchayat era, the flow of advertisements was steady and did not gather any noticeable impetus due to the unsupportive nature of the governments. The institutionalisation of the Nepali advertisement industry happened only after the political change in 1990 when the government adopted the open market economy. The 90s and 2000s saw rapid changes in the advertising business as print media followed by FM radio stations, TV channels alongside online portals and social media came to the fore.

Then, the opening of private businesses led to an advertisement frenzy. Despite the slump in manufacturing activities in the 2000s and the subsequent years, mainly due to the political instability and growing energy crisis, the service sector alongside import-based businesses and some local industries became and have become major advertisers in the country. According to Santosh Shrestha, President of Advertising Association of Nepal (AAN), the umbrella organisation of Nepali advertising agencies, advertisements of FMCG products, consumer electronics, BFIs, educational institutions and consultancies, automobile, construction materials and equipment, tourism and hospitality, real estate and housing along with telecommunications and internet services dominate the ad market today.

The Shifting Paradigm
The advertising scene has substantially changed over the last two and a half decades. 20-25 years ago advertisements were mainly focused on print media, radio, outdoor campaigns such as wall paintings along with a small portion of adverts going to television. Today, advertisements cover large sections of print, broadcast (TV and radio), online portals and also social media. Digital theatres (digital theatre advertising -DTA) and hoarding boards are also major outdoor platforms for advertising in Nepal.

Consumer behaviour is playing a key role in the increased flow of advertisements. With the rise in per capita income of Nepalis primarily fueled by remittances, a growing middle class and increasing youth population, the spending habits of Nepali consumers have changed drastically over the years. They now want to buy products from reputed foreign brands that were considered elusive 15 years ago.  Seeing this as an immense opportunity, well established global consumer brands ranging from apparels to automobiles are making their entry into the country’s market. This has led to a sharp surge in advertisement in recent years. “The scenario of advertising has changed due to the competition among the brands in the market,” says Bishal Purush Dhakal, Managing Director of Avani Advertising.  “For any kind of product, advertising is a tool to reach the masses via various mediums.”

Technology is also playing a key role. TV commercials (TVCs), for example, used to have little or no graphics and special effects in the past. Now-a-days, TVCs with higher levels of animations and special effects are being broadcast to grab the attention and pique the customers’ interest. 

With the introduction of new media platforms, technologies and the ever changing taste and behaviour of consumers, Nepali advertising agencies and advertisers are employing new techniques into advertising and promotional campaigns. Since advertising campaigns are designed to sell the product, it is important for the advertisers to capture the attention of customers. Experiential marketing and brand activation are some of the techniques that have been rapidly gaining ground, for instance. 

Ad Market Platform Wise
Despite the recent eye-popping development in the digital sphere, the Nepali advertising scene is still dominated by the print media. As per AAN, print media has the highest share of the ad market with 47 percent. Television and radio, meanwhile, have 19 percent each followed by the online portals and social media at five percent. The remaining 10 percent is shared between platforms such as digital theatre advertising (DTA), hoarding boards and digital displays. “Traditional media platforms such as print, TV and radio still have a say here as Nepal is a developing country,” notes Water Communication MD Nabin Shrestha. 

Media Platforms: New Vs Traditional
Over 11 million Nepalis or nearly 45 percent of the country’s population have access to the internet at present. The sharply increased internet penetration rate shows clearly that the Nepali consumer is swinging to online and social media platforms. Slowly but steadily, advertisements have begun to flow into the digital sphere. Though the platform is in a nascent stage in our context, advertisers are allocating small portions of their promotional budget for the online media. “As we are rapidly shifting towards digital and social media, we have apportioned a small amount of our expenditure to it,” says Golchha Organisation Executive Director Shekhar Golchha. 

In the wake of the digital media frenzy, debate is raging within the advertising industry on the effectiveness of online advertisements. “Traditional media is more effective regarding the advertisements than their digital peers,” notes Sudip Thapa, Managing Director of ANS Creations. He thinks that only a few brands and campaigns may reach higher levels through digital and social media. “We are also using the digital media as an experimental platform for our brands,” informs Thapa. 

Prof Dr Aryal, meanwhile, has different views. “The shift in media platforms is happening very fast as the expansion of internet services and growth of mobile devices is forcing mainstream media to go online. Almost all popular newspapers and magazines have their mobile apps which are continuously updated with various contents,” he shares. According to him, utilising the digital platform can be vital for the advertising industry as it can help Nepali advertisements go global. Nevertheless, the digital platform has yet to prove its relevancy.  International research has shown that the effectiveness of digital advertisements lasts only up to 40 seconds as users scroll or switch online pages rapidly. 

Nonetheless, one thing is certain, digital media has huge potential for future advertising as more Nepalis are likely to get connected to the World Wide Web in the upcoming days.

No Valid Data! 
It is bemusing in that despite having risen as a major industry, the Nepali advertising sector seriously lacks authentic data. Due to the absence of valid statistics, the actual size of the advertising business is disputed. Nevertheless, estimates put the total turnover of the industry to around Rs 5 billion annually. Meanwhile, it is also difficult to know the growth rate of the country’s advertising business. Experts and industry sources estimate the annual growth rate of the business as somewhere between 10-15 percent. All respondents interviewed by NewBiz point to the lack of research as the reason for the shortfall. “In many countries media data is available, collected through readership, listenership and viewership surveys,” says Ujaya Shakya, Vice President of AAN and Managing Director of Outreach Nepal. “Many domestic companies and MNCs are unable to invest in the Nepali market due to the lack of valid advertising data,” he adds. 

This has led to confusion regarding the actual size of the advertising business even among the people in the industry.  “According to AAN, the size of the advertising market is somewhere between Rs 5-6 billion. But I feel that it is higher than what AAN says. We have not been including the advertisements from the development sector as they do such activities by themselves,” says Pankaj Pradhan, Executive director of Prismark Advertising.“Similarly, newsletters, annual reports might not have been covered. I think the Nepali advertising industry is a Rs 7 billion business growing by 15 percent annually,” he adds. 

Meanwhile, Dinesh Kumar Thapaliya, Seceretary at Ministry of Information and Communication (MoIC) estimates the size of the Nepali ad market to be over Rs 10 billion combining both private and government/public sector advertisements. “Though we do not have actual data, I think advertisements from ministries, departments and other public institutions should come close to Rs 6 billion annually,” he estimates.    

Many industry sources connect the deficiency in the accumulation of facts and figures to the performance of AAN. Despite being the main body of the advertising industry, the association has not been able to perform in the way it should have, they say. AAN in 2013 aimed to establish a digital database by the end that year. The target of the database was to make advertising and media data across all platforms available for advertising agencies.  However, things did not go smoothly and the project was delayed. According to AAN President Santosh Shrestha, a digital database has been recently established which comprises advertising data about the print media. “Right now the database includes tracking of print media advertisement data on a sector, product, campaign and media wise basis,” he informs. Shrestha mentions that the lack of resources is holding back AAN to conduct research properly. “Since resources are low at the moment, other media platforms will be tracked later,” he says. 

Creativity Concerns
While the numerical increase of locally produced advertisements has been notable, the quality of the adverts, mainly TVCs, is an issue of great concern for the industry. Many people do not find Nepali advertisements creative enough after comparing them to foreign and especially Indian advertisements which they usually see on their TV sets. Advertising entrepreneurs point to various contributing factors for this. “Advertisements won’t be creative if the objectives are not clear. There is a communication gap between the advertisement agencies and advertisers. The clients do not properly brief their agencies about the products and services they launch or introduce into the market,” expresses Nabin Shrestha of Water Communication.  

He says that the agencies do not usually go to their clients with proper homework. “The definition of creativity is also not clear in our context. The agencies and their clients see creativity differently,” he adds. 

Many say that budgetary constraints are also hindering the level of creativity in advertisements as agencies have to work on limited promotional budgets allocated by their clients. According to many ad entrepreneurs, the inadequate revenue is holding them back from hiring people with creative ideas and using the latest technologies to come up with adverts that can attract consumers. “Clients look for quality work at low costs, which makes it difficult to justify what value for money means,” expresses Sekhar Chettri, Director of V-Chitra. 

 Meanwhile, entrepreneurs also see ideas as being the essential element to raise the level of creativity in our ads. “Ideas are more important than money,” says AAN Vice-president Shakya. While agreeing on the budgetary aspect of quality, he says that the level of creativity in Nepali advertisements has risen over the past few years. Arun  Sthapit, Director- Client Servicing at Echo Advertising Agency also agrees with Shakya. “There are many instances where advertisements made with low budgets look nice and more creative than the big budget ones,” he stresses. 

Workforce Situation
The lack of a skilled workforce for the advertising industry is also another factor obstructing the level of creativity in the advertising sector. “Creative people shift to other professions or they go abroad,” shares Aneesh Man Singh Basnyat, Director-Business Development of Project A. Pankaj Pradhan of Prismark Advertising points to the need of promoting advertising as a good career option among the youths. “We have not been able to glorify this industry to a high level. We have not been able to spread the fact that youths can have a career in this field,” he notes.

The scarcity of human resources in the advertising field is also tied to the absence of proper training. There is a clear shortage of specialised courses and training in advertising at Nepali universities and colleges. Tribhuvan University and Kathmandu University in recent years have incorporated advertising in their MBA and BBA curriculums. “These are only tiny initiatives and more is needed to produce an industry workforce at satisfactory levels. We need some advertisement labs where the students and trainees are trained through live cases of advertisements,” says Prof Dr Aryal. In the meantime, institute dedicated in research and trainings in advertising and media such as Infinity Education and Research Consulting and Trainings is also not seen much active in the recent years. 

A Disturbing Year and Recovery
2015 was a bad year for the Nepali advertising industry. The twin shocks of the earthquake and the border blockade took a large chunk out of the domestic advertisement market. The flow of advertisements came to a grinding halt as advertisers were unable to promote their products and services in the chaotic situation. As imports and production activities were sharply down and daily life was badly hit, companies had very little to sell. It is estimated that the advertising business went down by at least 50 percent in 2015. The main season of Dashain and Tihar saw a drastic slowdown when the flow of advertisements dropped by about 70 percent due to the border blockade. “Most of the agencies faced zero billing for 6-8 months,” recalls Sekhar Chhetri of V-chitra. After the end of the border blockade and Terai stir in early February, advertising activities began to rise and recover. 

Market Race of Ad Agencies
As various local and foreign brands are increasingly competing in the Nepali market, so are the advertising agencies. There are 298 advertising agencies registered at AAN currently. They are providing various services to their clients asfull-fledged (doing all activities of market promotion), releasing (advertisement publishing or broadcasting only), event management (organising and managing events), creative boutique (designing advertisements only), outdoor (doing external advertising only) merchandising (engaged in import or production of products and equipments required for promotion) agencies. 

Nevertheless, concerns about ethical business practices often surface within the industry. “Some agencies make ads at low costs and other agencies charge higher for the same type of ads,” says Aneesh Man Singh Basnyat of Project A. He wants a proper pricing mechanism and suitable standards for making ads put in place. 

Meanwhile, industry leaders also point to the demands of clients as a contributing factor for this. “The competition comes down to discounts if the clients focus on costs rather than quality in advertisements,” opines AAN President Shrestha. “This has caused an unhealthy environment in the ad industry as many agencies are engaged in cut-throat competition working in low margins rather than focusing on quality services.”

New Hopes on the Horizon
The government’s decision to implement the ‘Clean Feed’ policy and establish an Advertising Council has raised the hopes of the Rs 5 billion industry currently facing a host of problems. A July 22 meeting of the cabinet of ministers approved the Clean Feed Policy which will be implemented soon and also decided to establish the Council as a regulatory body. The government move is expected to ease the policy hurdles being faced by the advertising business. 

The clean feed policy is likely to be implemented by the next fiscal year with which it will be mandatory for foreign pay television channels that are aired in Nepal to be free of foreign advertisements.  Analysts hope that it will become a springboard for the industry as locally produced TVCs will be required to be fed to such foreign channels.  “This is quite a bold decision, which was taken after many years of persuasion. I strongly believe that the industry will grow not only economically but also it will help to enhance our creativity and content development skills in the longer run,” hopes AAN Vice- President Ujaya Shakya. Meanwhile, there are some challenges such as producing adequate number of TVCs to ensure the continuous airing of foreign channels across Nepal and maintaining proper workforce during the initial phase.   

Though the setting up of an Advertising Council has been approved, the modality of the proposed body has not been prepared yet. According to MoIC Secretary Thapaliya, the Council will focus on three major areas. “Firstly, it will function as a promoter of the Nepali advertisement sector.  Secondly, it will focus on the regulatory mechanism to better manage and arrange the advertising business by integrating the sector,” he says, while finally adding that its third role will be to act as a monitoring body to control advertisements harmful to society. According to him, MoIC will prepare work procedures and regulation after consulting with all stakeholders of the proposed body.

Experts Views on Nepali Advertising Industry 1 

Experts Views on Nepali Advertising Industry 2


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Good article. what is the historical background of 3D animation in advertising and which is the first 3D animated TVC in Nepal

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