Brands might get excited and feel that their advertisement in digital media has reached a huge mass, but what they are not understanding is that the trust and credibility that they need to build their brand can be received by advertisement through credible means i.e. mainstream media.
--BY RANJIT ACHARYA
The advertising market in Nepal is not very encouraging at present. We can see some growth, but it is not benefiting us much because the growth is mostly in digital marketing on social media platforms. Advertising business was growing by 15-20% annually before the COVID-19 pandemic. But the pandemic affected the growth. Though normalcy has returned in every other sector, the advertising industry has not revived in the way it should be reviving.
The market share of print, radio, and television has declined after the pandemic. The market of print media has declined by 30-35%, and ads flowing to radio stations have come down by 10-15%. Likewise, the television market has likely gone down by 8-10%.
But, the market share of digital and social media has increased. The sector has seen a growth of around 25-30%. But we cannot estimate the growth of social media as a huge chunk of revenue mobilized through social media goes outside the country.
Similarly, the hoarding boards segment, which has shifted to digital format lately, has also witnessed growth. But a lot of hoarding boards have also been removed which has affected our revenue. Advertisements flowing to Nepali online portals have grown. But, the size of the advertising market cannot be evaluated since we do not have enough data.
Due to the present liquidity crisis in the country, advertisers are not aggressively advertising the way they should have advertised. The way advertisers used to advertise in print media at the forefront seems to have diminished. It seems that many advertisers have opted for online mediums as physical copies of most of the newspapers were closed down during the pandemic.
The major advertisers such as steel, cement, liquor, and four-wheelers have also cut down their advertising expenses due to various reasons. Similarly, the government ban on the advertisement of alcoholic beverages in print media has also affected advertisement flow to print media. Because of the ban, companies manufacturing and distributing alcoholic beverages changed their advertisement style and opted for the digital medium.
Overall, the market for advertisement in the present scenario is not so encouraging. However, the industry is optimistic that the market will return to normalcy and grow gradually.
For many years, no new brands and products have been launched in Nepal. This is also one of the reasons why the advertisement sector has not grown to its fullest. Instead, the industry at present has diminished. However, the exposure of brands seems upward as they are more active on digital and social media platforms.
Of late, the government has made some policy changes, such as bringing the Advertisement Act, after a continuous effort of all the stakeholders from the advertising sector. It also formed Advertising Board Nepal in December 2020 to regulate and monitor the entire advertisement market of the country. Everything was vague in the past because there were no laws and policies for the sector. Now with policies coming up, it seems that the government is trying to create a favorable environment for the advertising sector.
Having said so, the advertising board has not been able to function in the way it should. Even now, the members of the board do not understand the advertising sector and know what to do to move this area forward. They are still in the process of finding out and learning. They are trying to work but it is not sure whether they are moving in the right direction.
The board should have strictly tightened the publishing and broadcasting of advertisements that are not allowed in the country. They should have been stern in the implementation of the clean-feed policy as well. But they failed.
Clean-feed means television feed without any additional digital on-screen graphics or text in their transmissions. As per the clean-feed policy brought by the government, Nepali channels are not allowed to air foreign advertisements. They are also not allowed to play advertisements in foreign languages or the ones that are dubbed in Nepali.
After the government implemented the clean-feed policy, we asked the advertisers of our neighbouring country India to advertise in Nepal in the Nepali language. However, we have been unable to explain to them effectively the growth of the Nepali market and market possibility, and convince them that if they advertise in Nepali channels, they will definitely get the expected result and inform them about the results others have received upon advertising here in the Nepali market. Multinational companies in Nepal, which used to be dependent on advertisements coming from India, have started making advertisements of late. But they have not increased their spending on television. Due to this, the market has not grown as fast as it should have.
Organisations such as the Advertising Association of Nepal (AAN), Advertisement Board, and media society should have played a collaborative role in marketing, but it has not happened so far. The sale and distribution of products from India are still going on in Nepal although they are not advertising in Nepal. So, even though the clean-feed policy has come into implementation, it seems to be ineffective. Clean-feed was targeted at companies that do not advertise but sell goods in Nepal based on advertising done in India. But, it is ironic that we have not been able to reach such companies and do marketing.
Stakeholders had assumed that the implementation of the clean-feed policy will expand the Nepali advertising industry. However, we do not seem to have achieved any goals. We are weak in formulating work procedures for the policy we came up with. It is our problem that we brought the policy but failed to work on the mechanism that is required to implement it. This is our weakness.
Also, there is a lack of coordination between different stakeholders and bodies in the advertising sector. The Advertising Board has taken some initiatives in this direction, but they are yet to be effective.
In addition, there is a new trend at the moment. A lot of Nepali channels have brought many international reality show franchises. This has also caused the outflow of a huge amount of money. The channel does not benefit from it as around 80 percent of the amount is spent on production. But consumers are getting to watch good programs.
While the government has been asking the private sector to advertise, grow the market, and become independent, it does not seem to be supportive. The government can encourage Nepali companies to increase production by providing some facilities such as VAT or tax exemption. By doing so, the government can take an initiative to solve the problem of balance of trade prevalent today. But it has not happened.
I think the government should bring some campaigns like ‘Independent Nepal’ where it should be clear that if Nepali products are to be advertised, the government will give concessions. Because the more you advertise, the more publicity there will be, and the demand, as well as sales of that product, will also increase. This would eventually help replace the imports.
It is high time the government brought umbrella campaigns such as India’s ‘Swach Bharat Abhiyan’ to encourage people to use Nepali products. But our government has not shown such interest, or has not been able to understand or does not dare to do so which is our challenge.
There has been no encouragement to the corporate or private sector from the government side. There are sectors that the government can tap into and develop the economy. One example is the insurance sector. This is the least exposed area in our country. Instead of encouraging this sector to increase advertisement, the government has set a limit for advertisement in the insurance sector. The same is the case with the education sector. A large number of youths go abroad for higher studies using a huge amount of foreign reserves. Instead, if efficient education institutions can advertise without any limit, then I think, the rate of youths going abroad might be reduced as the students can get a lot of information and understand about the colleges here in the country itself. Rather, the government has limited advertisement for such sectors.
The changing behavior of consumers has also impacted the advertising sector. Today, the consumption of media has changed. While the consumers used to get information through fixed positions such as television, newspaper, and radio, today, they can get information via any means at their convenient time. It is necessary to integrate conventional media and new media.
With the change in consumer behavior, our media houses have to change themselves but it is not happening. Therefore, the advertisement in our mainstream media such as newspapers, television, and radio is declining, while digital and social media platforms are witnessing growth in advertisement revenue.
While saying so, there are two types of impact of advertisement on consumers - one who takes the information through the advertisement and the other who sees and believes. It is really difficult to gain the trust factor from digital and social media. Consumers have trust in our mainstream media even today. So, the advertisers should also understand this. The brands might get excited that their advertisement in digital media has reached a huge mass, but what they are not understanding is that the trust and credibility they need to build their brand is received by the advertisement through credible means. The attention span of the consumers at the moment has been reduced to 2.76 seconds. It is difficult to gain attention span through social media. The advertisement through social media may reach a huge mass. But there is no guarantee that the consumers have taken the information. The advertisement reaches a huge mass but the impact cannot be gained through social media.
The negative impact of this can be seen two to three years later when consumers tend to shift from the brand they are using to another brand. Brand loyalty deteriorates and will create a big challenge for the brands. To prevent this, brands should start working on this from today. They should understand that the mainstream media is still effective and their use should be increased.
All in all, no business or industry can show its presence in the market for long without advertising. So, advertisement is very necessary at present. Seeing advertisements on social media and thinking that it is visible to everyone is wrong. Even if the large mass sees it, they don’t pay attention to it and everybody needs to understand it.
Mr. Acharya is CEO/ Creative Head - Prisma Advertising, since 1991