In India, they call them ‘heroes’ – the actors, singers and dancers who attract millions of fans on the subcontinent and beyond, and who have made Bollywood (plus Jollywood, Kollywood, Tollywood, Sandalwood, Chhollywood and other regional Indian cinema centres) the world’s biggest film industry. To put this into perspective, Indian cinemas attract around seven times as many punters a year as those in the United States and Canada combined.
The pulling power of professional cricketers, India’s most revered sportsmen, almost matches that of its film stars. When India met Pakistan in Adelaide, Australia, in the opening match for both teams in the 2015 Cricket World Cup, it is estimated that a billion people on the subcontinent tuned in to watch. Add to this stellar viewing figures for the Indian Premier League – a national club competition which includes top players from all over the world, as well as locally – and it is little surprise that advertisers are so excited about opportunities in India.
Yet aside from these mega-successful few – and despite India’s phenomenal economic growth – most of the country’s 1.3 billion citizens still live on a low income, with over two-thirds based in rural areas and around one-quarter being illiterate. Many Indians endure a tough, laborious existence, often working multiple low-paid jobs or engaging in subsistence farming in order to scratch a living. The glamorous exploits of these Bollywood heroes – in terms of both their fictional lives on screen and their tabloid-documented real lives – and cricketing megastars represent an escape for the watching millions, a fleeting glimpse of what can be achieved given the chance. Call it the Indian Dream, perhaps.
This is why hundreds of people regularly mass outside the upmarket Mumbai homes of Shah Rukh Khan, Amitabh Bachchan and Salman Khan, just to catch a glimpse of their Bollywood heroes; and why shrines have been built to honour actors such as Kushboo and Naritha, and athletes such as Sachin Tendulkar.
It also explains why even the loosest association between one of these heroes and a brand can compel the most discerning Indian consumers to hand over cash for a particular product. “In India, celebrities and public figures are not just artists; they’re an emotion,” explains Garima Juneja, principal and co-founder of Delhi-based social media marketing agency Viralcurry. “People actually love them and connect to them on a personal level. This is the reason why celebrities and public figures are hired for brand promotions. People have that emotion which goes: ‘If Amitabh Bachchan or Hema Malini is asking me to buy this particular brand of water purifier, then it must actually be good for me and my family.’”
Sweet and sour
With the cult of celebrity in full swing and so much trust residing in the stars of silver screen, cricket pitch and goggle-box, the marketing opportunities presented by celebrity endorsements are abundant. While it is difficult to quantify their full impact on brand owners’ sales and on the Indian consumer market generally, measuring how much these endorsements are worth to the personalities themselves is more straightforward. Global financial services firm Duff & Phelps published a report in November 2016 which revealed that the top 15 most valuable Indian celebrity brands are worth over $691 million collectively, with actor and dancer Shah Rukh Khan, who tops the list, worth $131.2 million alone. The highest-valued sports star is cricketer Virat Kohli, who places second overall, at an estimated $92.4 million; while the highest-ranking woman, actress Deepika Padukone, comes in third, at $86.4 million.
However, recent developments illustrate that endorsements are not always easy money. In April 2016 Mahendra Singh Dhoni, captain of India’s cricket team for limited-overs formats, quit as brand ambassador for real estate company Amrapali. Dhoni severed ties after the residents of a problem-prone Amrapali project in the city AUTHOR
Celebrity endorsements are big business in India, where a nod from a Bollywood star or pro cricketer can be enough to convince consumers to part with hard-earned cash. But new legislation could be set to change this
India’s tough new take on celebrity endorsements
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of Noida began tagging him on social media, pressuring him either to force the firm to ensure completion of pending work or to dissociate himself from it.
Foreign stars keen to cash in on India’s lucrative celebrity endorsement market have also fallen foul of public opinion. Irish actor Pierce Brosnan – perhaps most famous for his stint as James Bond in the late 1990s and early 2000s – faced widespread criticism earlier this year after appearing in ads for a version of paan, a chewable mild stimulant with proven carcinogenic effects, which is typically spat out onto floors, pavements and walls by users, leaving unsightly and indelible red stains. A social media storm followed Brosnan’s ads for the Pan Bahar brand and the actor soon issued a statement suggesting that he had been duped into thinking that the product – some versions of which contain tobacco, which it is technically illegal to advertise in India – was a breath freshener and tooth whitener.
Things became even more serious when Nestlé’s popular Maggi instant noodles were deemed unsafe by India’s food safety regulator in 2015, following fears that they contained harmful levels of lead. Celebrities who had endorsed the product did not escape the backlash. Mumbai-based non-governmental organisation the Watchdog Foundation reportedly filed a criminal lawsuit against Nestlé, naming not only nine of the company’s directors, but also three past and present brand ambassadors for Maggi – Bollywood stars Amitabh Bachchan, Madhuri Dixit and Preity Zinta. Around the same time, an official from India’s consumer affairs ministry told the Times of India that celebrity endorsers “would be liable for action if the advertisements are found to be misleading” – likely referring to the regulator’s additional admonishment of Nestlé after it discovered that labelling on Maggi packaging suggesting that the noodles contained “no added MSG” was misrepresentative.
It is easy to dismiss these incidents as part of a creeping compensation culture, as some Indian commentators have done. However, there has also been vocal support of these and other similar cases targeting celebrity brand ambassadors. The Indian authorities have also sat up and taken notice. After all, if celebrities wield such influence over society and leverage that power for commercial gain, should they not be held at least partially responsible if the products and services they promote turn out to be sub-standard or dangerous?
According to Nishad Nadkarni, associate partner at Khaitan & Co in Mumbai, Section 53 of the Food Safety and Standards Act 2006, Sections 270 and 273 of the Penal Code and Section 2(1)(r) of the Consumer Protection Act 1986 could be interpreted as holding celebrities liable. “But while there is legislation that seeks to regulate inappropriate advertisements, the Indian legal scenario does not presently feature an umbrella legislation that holds brand ambassadors liable for promoting products or services that are detrimental to the consumer,” he adds.
In the wake of the Maggi, Amrapali and Pan Bahar scandals, Indian politicians have been considering the introduction of legal penalties for celebrities who endorse products and services that are deemed detrimental to consumer interests. If they make it onto the statute books, these proposed rules could have a significant impact on advertising and trademark strategies for brand owners operating on the subcontinent.
“There is no codified law to govern the use of celebrity endorsements; however, there are recommendations by a parliamentary standing committee constituted to examine the Consumer Protection Bill 2015 to incorporate strict provisions to tackle misleading advertisements and also to make celebrities liable for misleading the public,” says Ranjan Narula, managing partner at RNA Attorneys in Gurgaon. “The committee also mentioned Actress Deepika Padukone at a launch for Yamaha scootersForeign stars keen to cash in on India’s lucrative celebrity endorsement market have also fallen foul of public opinion
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in its report that the word ‘endorsements’ should be included in the bill, as it is not currently. Also, the word ‘endorsement’ should be defined so as to leave no room for any confusion.”
In putting together its report on the Consumer Protection Bill 2015, the standing committee appears to have recommended tough penalties for brand ambassadors who are seen to be making false or misleading claims about the products or services they promote. “The committee strongly feels that misrepresentation of a product, especially a food product, should be taken very seriously, considering the influence of celebrities and high net-worth individuals or companies,” the report stated. “The existing laws are not deterrent enough to discourage manufacturers or publishers from using such personalities for misleading advertisements. The committee, therefore, recommends that stringent provisions may be made in the bill to tackle misleading advertisements, as well as to fix liability on endorsers/celebrities.”
The suggested penalties include fines of Rs100,000 (approximately $1,500) and up to two years’ imprisonment for a first offence, increasing to Rs500,000 (approximately $7,400) and up to five years in prison if the brand ambassador goes on to offend again – with provisions for further increases based on factors such as sales volume of the products in question. While such fines would be a trifle for some of the world’s highest-paid actors, brand owners and marketing professionals are already protesting that the threat of a custodial sentence goes too far and would diminish celebrity interest in promoting products.
Nadkarni points out that the original proposals failed to indicate whether the suggested penalties ought to apply to brand owners, marketers or brand ambassadors – or all three. “They did seem to suggest that misleading ads need to be brought under control, but also that celebrities need to have some sort of liability,” he explains. “It wasn’t really clear whether the
Irish actor Pierce Brosnan advertising Pan Bahar term of imprisonment applied to celebrities, though it was possible to read as such.” He points out that several parties are involved in any one brand endorsement campaign – including the celebrity brand ambassador, the product manufacturer and the broadcasters and publishers which run ads featuring the ambassador. “So questions remained about how much liability you can really attach to endorsers – do they really have the ability to assess product claims? And to what extent? Plus, there wasn’t much clarity as to what liability manufacturers, celebrities and other parties have respectively. So now there has been further debate in Parliament and, as far Actress Madhuri Dixit advertising Nestlé’s Maggi instant noodles, which were deemed unsafe by India’s food safety regulator in 2015
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as brand ambassador imprisonment is concerned, that seems to have been reconsidered.”
Recent news reports suggest that the government has dropped the standing committee’s proposal to impose a jail term on brand ambassadors. Instead, the recommendation would now appear to be for a maximum penalty of Rs1 million for a manufacturer of an unsafe and hazardous product, with a possible two years in prison for a first offence. ‘Publishers’ – taken to mean newspapers and magazines, as well as advertising agencies, PR firms and the like – and broadcasters could also face fines of up to Rs1 million for their involvement in such offences. For celebrities, the reported revised penalties are a fine of up to Rs1 million and a one-year ban on brand endorsements for the first offence, and a penalty of Rs5 million and a ban of up to three years on endorsements for second and subsequent offences. For firms which put out misleading advertisements, the government has suggested a maximum Rs5 million fine and a jail term of five years. With regard to the updated proposals, India’s consumer affairs minister has been quoted as saying that the government’s aim is to get the bill passed during Parliament’s winter session – which would likely mean the rules coming into effect in early 2017.
Narula appreciates the desire to protect consumers from unsafe products or deceptive advertising. “Here, celebrities are given the status of demigod,” he points out. “Whatever they endorse or say, people blindly believe it.” Thus, from the point of view of protecting consumers, the proposed rules can be regarded as a positive development. However, he is also aware of the practical issues they raise. “It may not be possible for celebrities to personally check, for example, a manufacturing unit to confirm quality control practices or whether a company employs child labour. Therefore, it may be to an extent unfair to hold celebrities personally responsible for a manufacturer’s mistake. At the same time, celebrities should avoid advertisements that indulge in puffery where the claim appears misleading.”
Nadkarni agrees that it is reasonable to expect celebrities to undertake due diligence before agreeing to endorse a product. “It is important that prospective brand ambassadors and their counsel are satisfied about the standard and quality of the product or service, ensuring that the requisite approvals from the appropriate statutory authorities have been obtained, and also by seeking a representation in the endorsement contract that the claims made by the company are true and correct and are approved by the relevant government authorities,” he explains.
However, extending brand ambassadors’ personal liability for deficient products or services beyond such precautionary measures would likely be seen as overly harsh. This is especially the case since the Bollywood performers and professional sportspeople who serve as brand ambassadors are unlikely to have the expertise to evaluate specific claims.
The fear among brand owners, celebrities, trademark counsel and marketing professionals alike is that the proposed rules could have a chilling effect on celebrity endorsements in a country where these are seen as Actors Rajinikanth and Amitabh Bachchan at a film premiereSOURCE: BOLLYWOOD HUNGAMAActor and dancer Shah Rukh Khan launching the Tag Heuer Carrera Monaco GP limited edition watchSOURCE: BOLLYWOOD HUNGAMAcritical to sales. “This recommendation looks very vague to me,” argues Juneja. “There are times when you use certain products – home appliances, for example – for years without ever knowing there was something wrong with them. Like what happened with Maggi – everyone was eating it for years. How would the brand ambassadors know about the quantities of lead it contained? It’s a very weird thing to rope celebrities into such issues.”
She also points out that while larger brand owners may not be significantly affected by the proposed legislation, it could have a disproportionate impact on smaller players farther down the food chain – which are seen as crucial to India’s economic progress. “If this happens, it will have a negative outcome only,” she explains. “It will make the markets very uncertain. This is a time when YouTubers and bloggers are rising and being signed up for endorsements and as brand ambassadors. At this growth stage, if problems like these arise, they might affect the overall media industry.”
There is some suggestion that even before the proposals were tabled, celebrity endorsements were beginning to lose their lustre for brands in India. The Economic Times reported last month that Coca-Cola’s recent decision not to renew its endorsement deal with controversial movie star Salman Khan – despite an angry social media reaction from diehard fans – was just “one example of coolly calculated business decisions many companies are taking”, in recognition of the fact that “celebrities and brand ambassadors are no longer worth the big money they cost”. Khan was reportedly the most expensive Often the drivers behind haphazard endorsements are local distributors looking to boost sales in their region
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celebrity on Coca-Cola’s books, charging Rs180 million (approximately $2.6 million) for a two-year deal.
Other big-name tie-ups which have ended lately include Pepsi’s 11-year association with cricketer Dhoni. And India’s three biggest advertising spenders – e-commerce titans Amazon, Flipkart and Snapdeal – no longer have any active celebrity endorsement relationships.
While marketing strategies are undoubtedly changing as India’s consumers grow more sophisticated, closer examination reveals that brand ambassadors have not been consigned to history just yet. Rather, it would appear that brand owners are opting for a more measured and targeted approach to endorsements. Despite dropping Dhoni, Pepsi has retained contracts with his teammate Kohli and actor Ranbir Kapoor – both younger and more active on social media. Meanwhile, it has hired celebrity chef Vikas Khanna as an ambassador for its Quaker oats brand, seeing him as a “source of authority” which should appeal to more judicious consumers.
This move towards more meaningful celebrity endorsements is a positive one, according to Rajesh Kejriwal, director at Saffron Brand Consultants in Mumbai. He suggests that the tightened regulation proposed by the government could complement this – leading not only to a safer environment for consumers, but also higher-quality work for brand owners from advertising and marketing agencies. “Some of these agencies just used to pay the money to slap any high-value celebrity on a campaign,” he explains, rather than matching the brand or product in question to someone with a real connection to it. He adds that often the drivers behind these haphazard endorsements are local distributors looking to boost sales in their region, rather than the brand owners themselves. Kejriwal thinks that the new liability rules will make brands and marketers think more carefully before choosing brand ambassadors, ultimately leading them to hire celebrities that actually have some connection with the products or services that they are endorsing.
There are still plenty of creases to be ironed out, points out Nadkarni – not least the fact that the proposed penalties do not take into account the individual brand power of celebrities. “It’s a step in the right direction, but you just can’t compare one celebrity to another because their positions in society are different,” he argues. “A celebrity is a celebrity is a celebrity; but their respective ability to draw a crowd will be different from one to the next. This at least recognises that they have some amount of responsibility.” He disagrees that the rules will have a chilling effect on the endorsements bonanza. In fact, he argues that enhanced liability – with the need to understand efficacy claims and other factors such as chemical composition in greater detail – will put celebrities in a better bargaining position with regard to brand owners: “Many will end up agreeing to terms laid out by the celebrity if they really want that particular celebrity to endorse them.”
All in all, the real impact of the new regulations cannot be properly assessed until they are in place. Narula’s parting advice for brand owners is this: “There’s no need
CelebrityBrand rankBrand value ($ million)Previous rankShah Rukh Khan1$131.21Virat Kohli2$92.54Deepika Padukone3$86.17Salman Khan4$58.36Priyanka Chopra5$44.911Ranbir Kapoor6$36.62Ranveer Singh7$35.7NewHrithik Roshan8$34.18Mahendra Singh Dhoni9$31.13Amitabh Bachchan10$26.413Kareena Kapoor11$25.510Anushka Sharma12$24.514Akshay Kumar13$23.915Alia Bhatt14$22.6NewKatrina Kaif15$17.89TABLE 1: Top 15 most valuable Indian celebrity brands 2016 Personal careFood and beveragesAutomobilesE-commerceJewelleryTop advertising brandsLuxThums UpRenaultBigBasketKalyan JewellersLakmeMagnumTVSQuikrMalabar Gold & Diamonds JewellersPanteneKwality Wall’sHondaMake My TripTanishqColgateRoyal StagCiazSnapdealNirvana Diamond JewelleryHead & ShouldersTropicana SliceHeroAsk Me BazaarPNGTop endorsersKareena KapoorSalman KhanRanbir KapoorRanveer SinghAmitabh BachchanAnushka SharmaAlia BhattAkshay KumarShah Rukh KhanKareena KapoorShraddha KapoorPriyanka ChopraAmitabh BachchanRanbir KapoorSonam KapoorDeepika PadukoneShah Rukh KhanRanveer ShinghAlia BhattDeepika PadukoneAlia BhattAnushka SharmaAlia BhattAmitabh BachchanShraddha KapoorSOURCE: “Embracing the Change: A Concise Report on India’s Most Valuable Celebrity Brands 2016”, Duff & PhelpsTABLE 2: Top sectors using celebrity endorsers
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Virat Kohli advertising
Vicks throat lozenges
to panic. These rules will bring better transparency in the
area of celebrity endorsements. If you are a responsible
company following best practices, you will still attract
celebrities to promote your product. It will actually help
you to differentiate your brand, as celebrities will be
increasingly careful about not accepting any and every
brand endorsement opportunity that comes along.”
For brand ambassadors, he recommends the
common practice of including a clause in endorsement
contracts to the effect that the brand-owning company is
making no false representations and that ads follow the
guidelines and principles laid down by the Advertising
Standards Council of India. “Depending on who they
are representing, trademark counsel can safeguard
the rights of the parties by having suitable indemnity
clauses included. They can ask questions on the claims
or promises that an ad makes through a celebrity and
advise whether these can be adequately supported by
documents, market research, industry reports or other
He expects that once the new rules are introduced,
the potentially substantial penalties will lead celebrities
to demand greater transparency and ensure that claims
are accurate. “They should ask for quality control reports
and ask that the company back up their claims and
any puffery of the product,” he explains. “It’s time for
celebrities to ask questions and forge a relationship with
the product and brands they are endorsing.”