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Celebrity endorsement under threat

News, 15 November 2016

NEW DELHI: Celebrities who appear in misleading ads could be banned from the lucrative endorsement business, under new rules being put forward by the Indian government.

These would see them being fined up to Rs 10 lakh for a first offence, rising to Rs 50 lakh and a three-year ban for a second offence, the Business Standard reported.

And since celebrities are thought to feature in almost half of commercial ads aired in India, there are potentially major implications for the advertising industry, especially for those working with brands in the personal care, food and beverages, automobiles, e-commerce and jewellery sectors, which make greatest use of such endorsements.

The issue hit the headlines last year during the food safety scare that enveloped Maggi noodles, when a local advocate took out a case against three actors who had appeared in ads for the product.

One likely outcome of the new rules will be that brands end up paying more for the backing of any given celebrity, as they become more choosy about who they lend their names to.

"Celebrities will now become more conscious, responsible and more importantly, discerning while taking on brand endorsement projects," noted Jagdip Kapoor of marketing consultancy Samsika, with fewer such roles leading to higher fees to compensate.

But consumers should benefit, he added, as brands avoid making outlandish claims in their marketing.

The planned legislation extends beyond the most visible face of any infraction, with companies themselves facing fines and publishers and broadcasters also in the firing line.

Opinions are divided on the worth of such moves, with the head of one celebrity management agency expecting that nothing much would change except that lawyers would benefit as they "get into the details to include indemnity and damage clauses in the contract" brands had with endorsers.

Others felt the focus ought to be on stronger consumer protection laws. And, the Standard asked, could misbehaving celebrities be penalised by the brands they endorse?

Data sourced from Business Standard, Advertising Age; additional content by Warc staff