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ASCI Introduces Amendments to Brand Extension Guidelines

The Advertising Standards Council of India (ASCI) has introduced amendments to the brand extension guidelines to prevent the misuse of brand extensions as surrogates for advertising in restricted categories (such as liquor and tobacco).

Certain objective criteria have already been laid down by the Council to assess the genuineness of unrestricted product or service brand extension of a product whose advertising is prohibited by law. The press release dated December 14, 2023, specifies that a need was felt to strengthen the existing guidelines considering the “mega-budget celebrity campaigns” that were held during the sporting events in the country.

The additional criteria prescribed are as follows: –

  • Advertising budget for genuine brand extensions of restricted master brands has to be proportional to the extension’s sales turnover. For this, limits have been prescribed based on the date of the extension’s launch; the ad budget must not exceed 200% of sales turnover in the first two years of launch, 100% in the third year, 50% in the fourth year and 30% thereafter. Here, ad budget would include –
    • Expenditure across all forms of media in the last 12 months;
    • Payments made to celebrities for brand endorsements, on an annualised basis;
    • Annual average of amount spent on advertising production for the brand extension in the last 3 years.
  • For variants launched under the brand extension, the original date of the first brand extension would apply. The same will not be considered as a fresh extension.
  • In case the brand extension of a parent brand that falls under the restricted categories does not fulfil the amended criteria, the same will be treated as a surrogate created to advertise a restricted category and not as a genuine extension.

The evidence in support of the brand extension’s qualifications for advertising has to be mandatorily certified by a reputed and independent CA firm.