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August 2016 Cover Story

Published on: 2016-08-31 15:57:18     2085 times read    0  Comments

“Despite various limitations, Nepali ad agencies are producing quality advertisements delivering worthy results”

Santosh Shrestha, President Advertising Association of Nepal (AAN) Managing Director Mars Advertising & ResearchSantosh Shrestha
President
Advertising Association of Nepal (AAN)
Managing Director
Mars Advertising & Research

How are preparations going for the 9th Crity Awards? 
Last year’s unfortunate events have held us back. However, preparations are in full swing for the 9th edition of the Awards. We had organised a pre-event three months ago. The five-member Crity Awards Committee under my coordination formed by a mass gathering of AAN is actively working on this. The committee is looking into introducing international references regarding the standards and categories of these types of award ceremonies. We have been meeting to develop such standards and award categories.  Similarly, we also want to organise the event differently from previous years. We will invite foreign speakers. It is a very ambitious project for us and we intend to take the Crity Awards to an international level. The preparations are going smoothly and we aim to organise the event before the Dashain festival. 

What are the new trends in promotion and marketing in Nepal?
Experiential marketing is becoming an effective tool when it comes to promotional strategies in Nepal at present. More brands are using this to promote their products. Consumers can touch, feel and test the products before they decide to buy. Similarly, the promotion and marketing of products and services through digital platforms such as online portals and social media has also been noticeably increasing. Meanwhile, the traditional style of promotion and marketing is still dominant here. Print media leads the advertising platform followed by the broadcast media (TV and radio). 

How are the advertisers and ad agencies adopting the new media platforms?
The adoption of new trends is essential for businesses to maintain their relevancy in any sector. Advertising agencies are also embracing the changes in marketing and promotional activities. Agencies are advising their clients to adopt new platforms in terms of media planning and execution of their promotional activities. Ad agencies are starting to establish divisions to look after digital and social media.  

How dynamic is the Nepali advertising Industry?
Changes in the advertising industry are obvious as the fraternity itself is a dynamic field. The dynamism of the advertising sector is tied to the dynamics of the market and consumers. There are different aspects of advertising. One is the changes in technology which causes the advertising sector to adopt new styles and platforms of advertisements and promotions.  New possibilities are being introduced in the market and the behaviour and tastes of consumers change with time.  The Nepali advertising industry has also been adopting these changing dynamics time and again. 

What is the size of the Nepali advertising industry both ATL and BTL combined? And how has it grown over the last five years?
AAN for the last fiscal year has estimated the industry’s total annual turnover volume at around Rs 5 billion.  However, the earthquake and the blockade badly affected the advertising industry stalling its growth severely. Had conditions been normal, the size would have exceeded Rs 6 billion. Nevertheless, after the end of the blockade, the volume of advertisements has been rising significantly. The recovery has been at a satisfactory pace. The Nepali advertising industry has been logging a tentative growth rate of 10-15 percent over the past few years. 

The availability of actual data is always a major issue in the Nepali advertising industry. Why has AAN not been able to establish a database system which it targeted to build by 2013-14? 
The ad industry is not the only sector facing problems created by lack of data. It is an irony that many sectors in the country rely on estimations, guesses rather than research based on facts and figures. It is challenging for us to obtain credible and transparent data for our sources. To find the accurate data, either AAN has to conduct thorough research itself or outsource it to professional research institutions or a government agency such as the CBS should come forward. We have been informally collecting data using our experience, PR and other sources. Nevertheless, we officially launched the digital database while celebrating the 26th anniversary of AAN in late Jestha. Right now the database includes tracking of print media advertisement data on a sector wise, product wise, campaign wise and media wise basis. Since resources are low at the moment, other media platforms will be tracked later. 

Where are most of the advertisements at in Nepal?
Since the domestic brands are not dominant in the Nepali market, trading businesses that import foreign products provide the most advertisements here. Nevertheless, the manufacturing sector also is an important advertiser. Talking sector wise, FMCG Products, consumer electronics, BFIs, educational institutions and consultancies,  automobile, construction materials and equipments, tourism and hospitality, telecommunication and internet services are the biggest advertisers.

Which category of ads do you consider effective at present? Which particular ads have attracted you recently?
Being the President of AAN, it will be quite difficult for me to submit my personal opinion on particular advertisements. We have the Crity Award to honour the best advertisements produced by Nepali ad agencies. Though, category wise there are many successful ad campaigns. In recent years, ads for construction materials and equipment, consumer electronics and gadgets, FMCG products, automobile and educational institutions have increased significantly.

What are the things obstructing the growth of the Nepali ad industry?
The absence of proper policies and guidelines has caused problems for us. There is a need for the National Advertising Policy in this regard. It will create a policy framework for the effective management of the industry. The government’s decision to implement the clean feed policy as a part of the National Media Policy will support the industry to an extent. It will help us to increase the quantity of advertisements raising employment and creativity. It is estimated that the size of TV advertisements will double after the implementation of the policy. Similarly, it will help lessen the direct cultural influence of other countries in Nepal.  Implementing the policy is also important for the long term sustainability of the media and advertising sector.  

Secondly, the low profit margin of the Nepali ad industry is also another impediment. A high industry margin is required to acquire the latest technologies, attract a creative workforce and enhance the capacity of the existing human resources and other aspects of the business.

The absence of entry barriers in the advertising sector is also another challenge. Opening an advertising agency does not require a high level of investment. This has led to the mushrooming of agencies in Nepal causing unhealthy and unethical practices to grow in the industry. 

How do you think these issues can be addressed? 
Policy initiative is the way forward. It will become mandatory for the ad agencies if there are legally binding provisions in place. It is difficult for AAN to syndicate the ad agencies in today’s open economic environment. The government’s decision to establish the advertising council is a right step towards this. We thank the government for its decision as we had been lobbying for the formation of a regulatory body for a long time. With the representation of close stakeholders, we hope that the proposed council will formulate policies and monitor the ad business to ensure the industry’s healthy growth.  

How is the competition between the agencies at present?
The market competition varies with the clients and their requirements. I see different layers of competition at present. With the clients seeking highly professional services, the competition is for creativity and quality of content rather than price and discounts. Meanwhile, the competition comes down to discounts if the clients focus on costs rather than quality. 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. Similarly, there are also such clients who seek average quality which results in average outputs.  

 Indian adverts look catchier and effective compared to advertisements produced in Nepal. What factors do you think are obstructing Nepali ads from raising the level of creativity?  
We are largely exposed to Indian advertisements at present. I think that we should not expect the same level of creativity. Indian and other foreign advertisements have high budgets and are produced by highly trained professionals in hi-tech environments. I do not agree with the argument that Nepali ads are not creative. Despite limitations across multiple areas, Nepali agencies are producing quality advertisements delivering worthy results. Many MNCs have started to produce advertisements in Nepal due to the level of cost effectiveness here.  This increasing trend indicates the advertisers’ gradual trust in the level of creativity in our work. 

How much, on average, do advertisers spend on adverts in Nepal?
It depends upon the product’s life cycle.  If the products are in the introduction phase, companies allocate about 8-10 percent of their total sales budget. Likewise, if the product life cycle is in the mature phase, advertisers are likely to have ad budgets averaging two to four percent based on sales. 

Nevertheless, there is no rule of thumb regarding the allocation of ad budgets. Companies deploy various types of advertisement budgeting strategies. Some companies have their promotional budgets prepared evaluating the levels of money allocated by competitors. Some apportion budgets focusing on current sales targets while others may have ad expenditures based on their previous sales targets. Similarly, some companies allocate ROI-based advertisement budgets. Likewise, some have ad budgets on the basis of objectives and tasks. 

The lack of clarity in promotional objectives is said to be hampering the advertising output of agencies too. Don’t you think that agencies need to have proper communication with their clients to have clarity in objectives?
Creative agencies led by highly professional teams do not have to face such issues. They properly communicate and brainstorm with their clients. They prepare strategies based on market research, facts and figures alongside the experiences they have gained over the years to hit the target. Nevertheless, such complaints arise with clients who don’t take advertising seriously and think adverts are just expenses rather than investments in an environment where the agencies have to operate at low margins. Such problems also arise when the agencies have to work on certain projects in a short period of time.

What’s the workforce in the Nepali ad industry like?
Since the brain drain is high here, it is difficult for agencies to find creative people. The low industry margin is another. Agencies cannot attract and retain an efficient workforce as they do not have adequate financial resources. Advertising has not established itself as a glamorous field to work in full of money in Nepal yet as in the developed world. When the industry margin develops more and the Nepali ad industry is fully developed, then the problems we are facing at present will go away. We can then even hire foreign ad professionals. 

Similarly, the media also has a role to play in this regard. Since the sector is our close stakeholder, its overall development is also important for us. If the credibility, professionalism and transparency in the media sector increases, it can attract more people thus positively impacting our business as well. 

Talking about Mars Advertising and Research Pvt Ltd, what are the areas of focus for your agency?
As a full-fledged advertising agency, we focus on creative parts, brand activation, event and research. Production of radio advertisements is another key area for us. We are handling events and research projects of local as well as multinational clients. We also provide service as a release agency for other agencies regarding the radio advertisements. Many agencies use our service as a gateway to broadcast their radio commercials throughout the country. 

Who are your top clients?
We work with Chaudhary Group for the promotion of its educational institutions and various FMCG products, MAW Entreprises for its automobile brands such as Yamaha, Skoda and Fiat, Bhatbhateni Departmental Store, Hyundai vehicles and personal care brand Nivea. We have a very good client base in the local and foreign educational sector. We recently worked as the Creative Partner in The Kathmandu Post Edu Fair. 

 

“Conventional and new media platforms are complementing each other”

Ujaya Shakya, Vice President, AAN Managing Director Outreach Nepal Pvt LtdUjaya Shakya
Vice President, AAN
Managing Director
Outreach Nepal Pvt Ltd

 

How is Nepali advertising changing? How is the emergence of digital and social media platforms changing the advertising scene?
Nepali advertising is changing gradually. With the increasing media penetration, the awareness among the customers has risen as they have more options now. According to the latest information, internet penetration for the country has reached 50 percent and mobile penetration stands at 90 percent. It clearly shows that we cannot ignore digital media. Nonetheless, digital media is not the substitute for traditional media. Both platforms are in fact complementing each other.  Advertising agencies these days planning for any campaign should think about digital media as well.  

It is not appropriate to think that traditional media will fade away with the emergence of digital media. We have to think of ideas effective for all mediums which will be determined by the subscribers of various platforms. While it may take some time for the end results to come, adapting to the change is essential in order to deliver good results efficiently. 

What is the size of the Nepali advertising industry at present?
There is no authentic data for the Nepali advertising industry. However, according to AAN, the industry makes Rs 5 billion a year. The advertising industry was growing before the earthquake and blockade. Last year’s unfortunate events took a large chunk out of the industry’s business.  The recovery is satisfying but full scale revival will take some time. 

Why is there no proper data about the Nepali ad industry? How is this affecting the ad business?
In many countries media data is available, collected through readership, listenership and viewership surveys. These are mostly carried out by committees comprising of representatives from advertisers, media companies and ad agencies. Such bodies then commission syndicated researches. The data obtained is used as common currency by the stakeholders not requiring customised research for individual companies. Presently, we are doing client funded customised researches which only work for individual agencies or companies. Many domestic companies and MNCs are unable to invest in the Nepali market due to the lack of valid advertising data. 

In our context, isn’t it the responsibility of AAN to compile the industry data?
I think it’s not only the responsibility of  AAN to conduct research as it is quite an expensive procedure. Ad agencies just work like a bridge between the media and advertisers. Nevertheless, as an umbrella organisation of the agencies, AAN can facilitate the process of data collection.  The kind of research that I mentioned above is being practiced across various Asian markets. I am hopeful that in the future we will be able to start this in Nepal too.    

What policy hurdles should the government remove to ensure the industry’s healthy growth?
Many problems have arisen due to the lack of an advertising policy. Effective policy support is needed to ensure the healthy growth of the ad business. There are several instances in the past where the government has tried to reduce the flow of advertisements from different sectors. 

One such example is the government’s decision to cap the insurance sector to advertise their services. The penetration of life insurance is not good in the country as people lack awareness. Awareness comes when frequent campaigns are conducted. But if there are such restrictions, the companies cannot properly conduct their advertisements and marketing campaigns which ultimately lead to a decline in business investments. 

With the government announcing to implement the clean feed policy, a long time demand of the Nepali advertising sector seems to have addressed. What are your expectations from it?
Currently, many multinational companies operating in Nepal are not advertising their products and services here. And the reason for this is the foreign channels which are easily accessible here. Fortunately, with the implementation of the ‘clean feed’ policy, the spillover from foreign channels will stop. Once the foreign ads are stopped, the MNCs with good sales here have to decide whether they want advertisements produced in Nepal to market their brands. 

Our television channels also need to invest now across different genres of content productions where the advertising for targeted audiences can be placed to carter the needs of advertisers.   

The cabinet has also decided to establish advertising council though the modality and the work area of the regulatory body is yet to be specified. What are the international practices regarding the modality and work area of such bodies?  How can it be efficiently practiced here? 
It is a good decision to have an advertising council that can act as a regulatory body to initiate best global and regional industry practices here. 

Generally the advertising council consists of representative from advertising industry, media and advertisers who. One of the key assignments of the advertising council in many nations is to commission National Media Survey (NMS), which helps to introduce syndicated media data that can act as a common currency among the stakeholders. This will also help to increase professionalism in media planning and advertising. Besides, such bodies also work for creating advertising policies and building platforms for skilled manpower development for the industry.

Who are your top clients? What are you top advertisement campaigns?
 We are working with clients such as Asian Paints, Dabur Nepal and Samsung. We worked on the ‘J Bancha Digo Banchha’ campaign for Ambe Cement. Similarly, we have worked with Shikhar Shoes and Dabur Nepal. We also did the ‘Dream Home Contest’ of Asian Paints which was quite successful. ‘Smart Banchha Jeewan’   is another notable campaign focused on family planning which also got featured in international advertising publications, a first for Nepal.  

Why have Nepali advertisements not been able to raise their creativity compared to foreign ads? Is budget a constraint?
It was true some years back. Nonetheless, the last five years have seen increasing levels of creativity in Nepali advertisements. Big brands such as Dabur Real, Asian Paints and Emami along with others have started producing promotional materials in Nepal. Most of the TVCs of Dabur Real juice and Asian Paints, for instance, are now produced in Nepal. Obviously, budget constraints are there as well. Due to the size of the market, advertisers spend less on marketing their products and services like they do in other countries. There are certain companies who are not investing on promotional activities at all. We cannot escape the questions related to creativity being linked to budgetary constraints. Ideas are more important than money. We at Outreach believe that creative ideas are the most important part of our business. Our ideas are successful only if the clients achieve their objectives.  

What new marketing tools have you been using?
Outreach’s sister agency Lemon does ‘experiential marketing.’ They avoid the traditional style of advertising and marketing. Instead they let probable consumers experience a product so that they get influenced and spread the word about the product. Word of mouth is an effective marketing tool. If consumers receive good experience of products, they will spread the word to other people and so on. Such experiences will be reinforced through print ads, TVCs, radio commercials and digital promotions. The point is, ultimately, experience will lead to purchase.    

Crity Awards is one of the most celebrated advertising awards in Nepal. How can it be managed in a better way?
There are areas where we can improve to broaden the horizon of the Crity Awards. Inclusion of certain sectors which are excluded is necessary.  Sector wise categorisation such as FMCG, automobile sector, social sector and consumer durables can extend the reach of the awards. Currently, these different segments are competing under the same segment. The purpose will be clearer if these segments are differentiated. Also we need to determine whether the ad results achieve the clients’ objectives. Similarly, the awards should evolve to become an industry-based show where we can bring media companies and advertisers together to discuss various issues which will enable us to tackle the challenges. 

Lemon Pvt Ltd, sister concern of Outreach, is the first Nepali advertising company to bag the Flame Awards Asia 2016 under the integrated marketing category. How significant is the Award for Outreach?
Flame Awards Asia is the most prestigious award program that celebrates the best in marketing and communication in presence of the region’s leading marketing and agency professionals judged by business leaders and marketing gurus of the region. Winning the international awards for Integrated Campaign competing with the region’s best players is actually a great achievement. It has not only boosted our morale but also has motivated us to work even harder, we want to carry on the momentum and also do wonders for other brands and make Nepal proud in the marketing and communication fraternity of the region. This should motivate both advertisers and other agencies in Nepal to work harder. The award Lemon has received proves that even the work we do for Nepal can make a mark and get international recognition if the agencies are able to showcase outstanding works. 

 

“Absence of appropriate criteria is fueling unhealthy competition in the advertising business”

Pankaj Pradhan, Executive Director Prismark AdvertisingPankaj Pradhan
Executive Director
Prismark Advertising

 

What major hurdles do you think are hindering the growth of Nepali advertising industry?
The Nepali advertising industry is not regulated like other sectors. There is a clear lack of any specific criteria for starting an advertising business. I don’t mean to discourage newcomers, but we need to understand that it is necessary for such 
an important industry to be led by experienced professionals. The absence of appropriate criteria is fueling unhealthy competition in terms of rates and other aspects. At present, many agencies are competing unethically threatening the sustainable growth of the industry.  

There are also other issues such as the sudden switching of clients from one agency to another. Many clients change agencies without clearing the due payments. It should be made mandatory for clients to take NOC (no objection clearance) from their respective ad agencies in case they want to switch to other agencies. This will ensure agencies of their due payments from the clients creating a healthy competitive atmosphere within the industry. 

How is Prismark competing in the ad market?
We believe in producing quality advertisements providing best services to our clients. We have been able to make good bonds with almost 20 agencies. We are sharing things to create a win-win situation in order to create a healthy platform in the industry.

How is the ad industry growing? What is the size of the business? 
We cannot find any exact data. 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. 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. 

How do you view the government’s announcement to implement the clean feed policy and establish the advertising council? What impact will these initiatives have?
Clean feed will definitely have a positive impact in the advertising sector. However, the modality of the policy is not clear yet. This policy can be a milestone in the development of theNepali advertising industry if properly implemented. Clean feed will mainly help the television sector. Television advertisements can grow up to four fold with the effective implementation of the policy. The proposed advertising council is also another positive step. It can act like a censor board to create a better environment in the ad market. 

How effective are the advertisements in digital and social media versus the traditional media? How are advertising agencies and advertisers adopting the changes?
In developed markets, the digital and social platforms have gained maximum height. In many places, the print papers and magazines are starting to close or are in the verge of collapsing. We also are not aloof tothese happenings. In fact, the last two years have seen the rapid growth of digital and social media here. Nevertheless,it can’t be claimed that the new media platform will completely replace or overtake the current ATL platforms.While adopting the change, our focus should be on how to integrate the traditional and modern media platforms at certain levels.  We will adjust according to the situation, target group and products.

The level of creativity is considered low in Nepali advertisements compared to foreign ones. What factors are holding back the creativity in our advertisements?
There is a notion in the industry that budgetary constraints are hindering the creativity in advertisements. I do not agree with this view. There might be the matter of costs in the execution of advertisements but the ideas come from the mind which does not require money. The only constraintcan be in the execution. Looking at the present scenario, we are doing pretty well in terms of creativity. Creativity needs exposure. We need to produce ads which customers will remember. 

Who are your top clients?
Currently, we are working with Hyundai, Suzuki two-wheelers, Apple, Karbonn Mobiles, Procter and Gamble, Smart Cell, NTC and Goldstar Shoes. 

 

“A successful advertisement helps advertisers to achieve their objectives”​

Shekhar Golchha, Executive Director Golchha OrganisationShekhar Golchha
Executive Director
Golchha Organisation

As an advertiser how do you view the changes is the advertising industry?
The Nepali advertising industry is changing very rapidly. Advertisements had a very low level of creativity 30 years back. That’s changing now and lots of advertisements have become commercialised. There are lots of researches being conducted on how customers view products and services and the agencies use their creativity to change the perception of people.  They understand the objectives of the advertisements and what the client wants.  The advertisement industry is growing on the basis of ‘right now technologies.’ However, there is a long way to go before we actually reach international standards.

How is Golchha Organisation carrying out its advertising? How do you engage with advertising agencies to market the products?
Though I can’t talk about the whole of the Golchha Organisation, we partner with multiple agencies. We have a completely separate marketing department whether it is for motorcycles or electronics or other businesses. Ad agencies are very important and are close business partners for us. We share our weaknesses and many confidential issues with them. We decide if our objectives are sales, positioning of brands or changing some other marketing targets. Then we allow the agencies to come up with ideas. This will give them opportunities to work in efficient ways. Usually, I am personally present during the meetings with the agencies. Though we do not sit together when designing the ads, at times we provide our input since we are the ones who work with the consumer in a close manner.

Which medium, print, broadcast (TV or Radio) or the internet do you think is effective for advertising?
We choose the media according to the objectives we have set. As we are rapidly shifting towards digital and social media, we have apportioned a small amount of our expenditure to it. We are in a phase where we have to double our budget so as to promote the products through the internet. As far as print media is concerned, it is still widely circulated throughout Nepal. So, we spend around 50 percent of our spending on promotions through print media.  We also use television as another mainstream communication tool. 

Nepali advertisements are criticised for not being creative when compared to Indian or other foreign advertisements. What are your observations on this issue?
The whole idea of creativity in an advertisement is to sell a product. If the advertisement is very creative but does not meet the objective, then there is no point in being creative. I don’t agree with the argument that says Nepali advertisements lack creativity. Nepal has a lot of creative people and there is no dearth of talent in our country. It is just that our market is small and there are limited things which we can do. 

What makes an advertisement successful?
Communicating with customers in the most effective and economical way makes a campaign successful. And a successful advertisement helps clients to achieve their objectives.

Ad agencies often say that a limited budget stops them from coming up with creative adverts. Do you agree?
It is a ridiculous thing to say that a client doesn’t give their 100 percent to create an effective advertisement. After all, the client is the one who is taking the risk and they decide what the budget should be. The agencies have to figure out and work on how they can achieve the maximum with the allocated budget. If the business is small, obviously the budget should be small. In that case, if they feel that they cannot do justice to the campaign, they should say this to their client prior to taking up the responsibility.

What’s your annual advertising budget?
We spend somewhere between Rs 35-40 million annually for promotional activities. 

The cabinet has recently decided to pass the clean feed policy. What kind of impact will it have?
I think when the clean feed policy comes in, the advertising industry will grow. However, there is reason to be afraid in that the Nepali media may not get domestic advertisements unless they are strong enough. This is because the Nepali channels have to compete with Indian and other foreign channels. As a businessman, feeling that foreign TV channels are more effective, I will give advertisements to the foreign channels. For an ad agency, this new system will come with fresh challenges and hopes as well. Nevertheless, it is and will be difficult for the Nepali media to compete with Indian or any other foreign peers in terms of content. If contents are weak, the biggest losers will be the media here. 

 

“Mindset of advertisers, agencies and the media is collectively obstructing the ad industry’s healthy growth”​

Prof Dr Bhoj Raj Aryal, Head, Central Department  of Management Tribhuvan UniversityProf Dr Bhoj Raj Aryal,
Head, Central Department 
of Management
Tribhuvan University

How do you evaluate the advertising scene in the country?
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. BFIs, for example, advertise even their minor services now-a-days which they used to hesitate to do 15 years ago.  Besides big business houses, youth entrepreneurs who start small business ventures are also advertising their products and services. They strongly embrace the advertising culture and allocate money for promotional activities. In recent years, digital media has come up as a platform for advertising. 

The actual size of the Nepali advertising industry is disputed due to the lack of proper data. What do you think is hindering the data management of such an important industry?
Yes, the size of the industry is quite unclear. However, independent research has found it to be worth around Rs 5 billion. Nonetheless, all available data and statistics about the domestic advertising industry are guesstimates. There is nothing concrete as yet. One of the reasons for this I think is due to the number of unmanaged advertisements. It is very difficult to keep official records as many advertisers directly send advertisements to the media. The growth of the industry is stagnant at present. Back in 2057/58 the industry witnessed a staggering growth of around 21 percent. Over the past few years, the growth rate has been swinging somewhere between 10-15 percent. 

What are the major impediments to the overall development of the advertising industry?
The mindset of advertisers, agencies and the media is collectively obstructing the sector from growing. The absence of a regulatory body is also causing problems. Investment is lacking in the Nepali advertising industry. Many ad agencies are not well equipped nor do they have an adequate number of trained professionals.  We cannot say that the whole industry has developed by just pointing to 10 or 20 ad agencies that are performing well at present. The aggregate factor of all this is the low level of creativity in Nepali advertisements. Meanwhile, the advertisers also do not play their roles properly. Many advertisers seek regular publication or broadcasting of their advertisements but hesitate to invest more in the production of adverts. There are instances where the same advertisements have been advertised for 14-15 years after they first appeared on television.

Similarly, the high number of media outlets across the nation is making it difficult for media to get ads properly. It is very difficult for media, especially outside Kathmandu, to sustain itself. This situation has led to a widespread disavowal of media norms among the outlets. Meanwhile, the Kathmandu-centric media outlets that are in a more comfortable position are engaged in unhealthy competition. Due to the limited availability of advertisements, they seek to grab whatever is available. 

The government has recently said it will establish a regulatory body for the ad industry though its work area and modality is yet be specified. What are your suggestions on formulating the regulatory framework? 
Such authorities are established in order to regulate the advertising business. If we look into the international practices of such bodies, they implement policies and formulate norms to ensure healthy competition between agencies, advertisers and the media outlets. 

India and Bangladesh, for example, have advertising councils that effectively implement the code of conduct for ad agencies, advertisers and media. We can see many unethical advertisements published or advertised here. Many adverts with baseless claims and flawed intentions are broadcast, ultimately harming the consumers. There is an urgent need to censor such ads. The proposed council can control such promotional contents. 

The government recently announced to implement the clean feed policy. What kind of impact will it have on the advertising industry?
The government’s announcement is a positive initiative. It will stop the unchecked inflow of advertisements that come along with the programmes from foreign TV channels. 147 foreign TV channels with 100 paid ones are uninterruptedly aired in Nepal at present. Implementing the policy is important as it can substantially benefit the Nepali ad industry. Once the policy comes into effect, the advertising business will flourish as foreign as well as Nepali media outlets will be required to broadcast or publish domestically produced advertisements. It will be a spur to increase the level of creativity in Nepali advertisements while also raising the prospects of further investments and employment in the sector. Nonetheless, the policy might have some short term impact mainly to the cable operators as they might face difficulties due to the insufficient number of domestically produced advertisements during the initial phase. If the clean feed policy is properly implemented, the size of the Nepali advertisement industry will double.  

AAN has not been able to be effective despite being the umbrella organisation of the ad agencies. What can be done to make it an important entity?
Resources are needed to maintain any institution. The resources can be anything from financial to human resource to data and statistics. AAN needs to conduct research studies and provide training for the betterment of the industry. It is an irony that the effectiveness of such an important business body established 26 years ago is often questioned. It does not mean that AAN does not engage in positive ventures. It has been organising the Crity Awards which itself is the most celebrated event in the Nepali advertising industry.

How do you view today’s shifting media scene?
I personally know many people who have stopped subscribing to newspapers. The shift 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. Though the print mediums still have a large share here, the coming years will be challenging for them as digital platforms are likely to become the leading medium. In the west, the digital media has largely overtaken the print media as the mainstream platform which I think will happen in Nepal in the upcoming couple of years. Nepali youths especially have strongly embraced digital and social media as an integral part of their lives. This has led to a gradual rise in advertisements in the digital and social platforms over the past few years. The cost effectiveness of digital/social platforms is likely to enable advertisers and ad agencies to focus on the quality of advertisements with international impact.

How effective are the advertisements in digital/social media versus traditional platforms?
Traditional print media has so far successfully maintained relevancy when it comes to the effectiveness of advertisements. However, the level of effectiveness is decreasing as many people with mobile devices and internet access are spending more time on digital/social media. The increasing number of advertisements in news-based websites and social networking sites clearly indicates this fact. The swelling number of digital/social media subscribers is pulling advertisers to the platform and away from print. Nevertheless, digital advertising is in a nascent stage here as the frequency of advertisements has not been determined yet. 

Nepali advertisements are often criticised for not be creative when compared to foreign ads. Apart from the lack of a creative workforce, what other factors are holding back the level of creativity?
The budget is an important aspect regarding the quality of contents.  By and large, ad agencies have to work with a limited budget which is not sufficient to raise the level of quality in the advertisements. If advertisers are able to spend a certain amount of money to publish or broadcast their advertisements for a whole year, then they should increase the production budget of the advertisements in order to raise the level of quality. 

 

“Declining profit margin is one of the major problems for the Nepali advertising industry”

Arun Sthapit Director- Client Servicing Echo Advertising AgencyArun Sthapit
Director- Client Servicing
Echo Advertising Agency

 

How do you evaluate the present scenario of the Nepali advertisement industry? 
The Nepali advertising industry has become a large business segment. The industry is constantly evolving due to the advancement of technology. The industry has opportunities and problems as well. The lack of a creative workforce is the major problem. Advertising is also seen as the custodian of brands as the agencies take charge of the brands. Nevertheless, most of the agencies are unable to carry on with brand planning due to the lack of a creative workforce, increased market competition and declining margins. I personally see the years 2003 to 2007 as an important era of advertising in Nepal in terms of creating advertisements and developing brands. But the scenario is different nowadays as the majority of advertisements look similar. There are the agencies managed by five people. And there are also full-fledged agencies which are managed by more than 30 people along with brand support.  

What is the size of the Nepali advertising industry (both ATL and BTL) at present? What is the annual growth rate?
Estimates by the Advertising Association of Nepal (AAN) put the size of the market at about Rs 5 billion though there is no specific data about the turnover of the Nepali advertising industry. Some believe the size to be much larger than this. There is no actual basis for quantifying advertising and the budget of the clients. It can be said that the market has been growing by 15 percent annually. The growth rate will be similar for this year but the profit margin has decreased.

What are impediments to the development of the Nepali advertisement industry?
 The most important thing is showing respect towards the creative thinking of people and respecting the profession. If everybody respects everyone, then this field could develop well. The next important aspect is paying proper salaries for creativity. The decline in profit margins has been one of the major problems for the Nepali advertisement industry. It led to advertising agencies spending more money than it earned. This has also increased an unhealthy competition among the agencies.

What policy hurdles should the government remove to ensure the industry’s healthy growth?
We exist in an environment where there are so many advertising agencies. Around 400 advertising agencies are registered at AAN. There has to be a regulatory authority that can look after the agencies. The government needs to understand how the agencies are working. There is a need for the categorisation of ad agencies. It will distinguish how many actually are active as full-fledged agencies and how many are ‘fly-by-night’ agencies. Similarly, it also important for the government to recognise the advertising sector is an industry. Likewise, media can also develop certain policies to spur healthy competition as it is the closest partner of the advertising industry. 

The cabinet has recently endorsed the implementation of the clean feed policy. What are your expectations from it? 
Once the clean feed policy is implemented the advertising industry will grow by leaps and bounds. I think business will grow by around at least 40 percent within one year of the implementation of the policy.

How effective are the advertisements in digital and social media versus the traditional media? How are the advertising agencies adopting the changes in media platforms?
The digital media and social media's effectiveness depends upon the profile of the products and targeted customers. If the products are targeted towards youths, then the advertising campaigns on digital and social media will be highly impactful. Likewise, digital media can also have a big impact on advertisers. Some advertisers solely depend on the digital platform. However, some need to be convinced about the effectiveness about digital and social media. Despite the significant shift in media platforms in the recent years, there are not many instances in Nepal where we can find advertising and marketing campaigns strategised specifically for digital and social media. 

Who are your top clients? 
Some of our clients are GSK, Mars International, Ncell, Dabur Nepal, Nepal CRS Company, Godrej Consumer Product Limited.

Why are Nepali advertisements not considered creative when compared to foreign ads?
Multiple factors contribute to this. Budgetary constraints, lack of skilled creative workforce and interference by clients are the reasons for Nepali advertisements not having higher levels of creativity. We also need to understand the fact that a bigger budget does not necessarily mean creative advertisements. There are many instances where advertisements made with low budgets look nice and more creative than the big budget ones. 


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