Good, bad and often rather ugly, market messages have been bombarding urban residents in Nepal over the years. With the entry of consumer goods from multinational and transnational companies into the market over the last five years, brand wars too are here to stay-Yamaha vs Kawasaki, Coke vs Pepsi, Lever vs Colgate-Palmolive, Daewoo vs LG. And now the Buddha Air and Necon rivalry has taken the battle to the skies.
Traditionally, agencies in Nepal were sales-driven and did plenty of release work, translating copy and dubbing soundtracks for release here, and most creative work came from a certain other country. But agencies are now creative driven, technical support has grown and the sudden growth in media is helping fuel the ad boom. Senior players say the industry has been growing at a steady 15-18 percent per year since the arrival of multinationals agencies and manufacturers. "We have seen and been part of the growth. In fact, McCann Erickson was the first multinational ad agency to be granted an industrial license in 1998 to operate here in Nepal-with full foreign equity, and recognised as a service industry," says Kaushik Ghosh, Country Head, McCann Erickson. "The growth in the industry indicates that clients are serious about this market. Not just having a threshold ad presence but increasing ad spend," he adds.
Bhaskar Rajkarnikar, president of the Advertising Agencies Association of Nepal (AAAN) says that in fiscal 1999-2000, the industry grew at 25 percent. Growth has slowed this financial year to 16 percent, but AAAN predicts it will jump back up to the region of 25 percent in fiscal 2001-2002. Boom time is predicted mainly due to the proposed satellite television channels that both Nepal Television and private operators are considering, greater media opportunities in print and radio, and the entry of even more multinationals.
Just ten years ago, things were really different. There was only the Gorkhapatra and Rising Nepal, and one radio station. There were (dubbed) short films in the theatres, (dubbed) jingles on radio (also dubbed) and (translated) calligraphy for print ads. The only real advertisers were tobacco and beer and liquor manufacturers. There was very little technical backup. Five years ago there was only one scanning house-Prisma. Today there are four state-of-the-art places doing image setting and the works. "There has been a quantum jump in production values. Good commercials have been made in Nepal," says Kaushik Ghosh. The development of media options has also fuelled growth-the number of publications has increased and so has quality colour publishing and short film production. "In the early days, we were ashamed to show our publications to clients," says JK Sthapit, veteran ad man and head honcho at Echo.
No one's arguing that things are different, but some say it's early days yet to diagnose boom-time. Multinational agencies like Thompson Nepal and McCann Erickson, who handle the big accounts like Coke, STC, Nepal Lever, the distilleries and the chow-chow makers are the exception, they say. "The size of the slices in the pie may change, but the total ad-spend is virtually the same," says Sanjeev Sharma Creative Head at Crayons Electra. If, for example, liquor advertising is low one year and increases the next, it's likely that some other segment, like the noodle industry, will be spending proportionally less. "The AAAN may say that the industry is worth Rs 1.5 billion, but I think it is roughly half that. Just add up media ad revenues (TV, print and radio) for a realistic figure," says Joydeb Chakravorty, MD of Thompson Nepal. Ad budgets have increasing at a steady 15-20 percent over the last five years, but the media inflation rate has been roughly 10 percent. The general feel is that growth has been steady. "The industry here is chugging along. It has not gone through the crest and trough high-low like other places," says Kaushik Ghosh.
Others agree, not for reasons of volume, but unprofessional industry habits-competition is marked by unhealthy undercutting and driven by commissions. Hankering after commissions is simply bad for business. Presumably, there is enough business for everyone, and no vital need to undercut and cheat. On the other hand, clients also need to understand that good agencies here can deliver, and that the cheapest deal may not really be the best. Ravin Lama, MD of Stimulus Advertizers, is fond of saying: "If you pay peanuts, you'll get monkeys." To make matters worse, there is no tradition of pitching, a process whereby clients get to see concepts from a number of agencies, and award the account depending on the quality of work alone, a process that's pretty fair and also professionally rewarding. Only in UN agencies is it mandatory. "It's all very ad hoc. How can you compete with a one-man, briefcase agency," asks Ravin Lama, referring to the many "agencies" that do not have to worry about overheads, or practically anything else, and even offer free art work to clients.
A lot of this may have to do with the fact that there's no regulatory body to oversee the relationship between media houses, agencies and clients. The Advertising Agencies Association of Nepal was formed with the objective of bringing together all the players, lobbying the government and setting standards that would be beneficial for the industry as a whole. AAAN is the only body that liaises with agencies, the media, clients, consumer groups and the government. Ravin Lama, a consultant to the AAAN, says: "It is a free-for-all now. There are agencies out here taking clients for a ride. And clients who don't understand advertising as effective business. It's the commission business that drives the industry." AAAN has been lobbying for a national advertising policy, and last week Association heads met with officials of the Ministry of Information and Communication. "We are trying to evolve a code of conduct for agencies, and the media. Right now our immediate demand is for a national advertising policy," says Bhaskar Rajkarnikar, president of AAAN.
A regulatory body can ensure that if a client defaults on payment, he will not find ad space in a publication or the services of another agency until the dues are settled. "Here there are any number of agencies willing to take up work with clients who ought to be blacklisted. The same goes for agencies," says Ravin Lama.
What about shifts in major segments? With the ban on tobacco and alcohol advertisements in the electronic media, the biggest spenders have now shifted to event promotion, sponsoring sports and a greater presence in the print media. "If the ban is extended to print media, these houses will move even more into events and sports," says Sanjeev Sharma of Crayons Electra. The growth of the ad industry has also spurred on the event management industry.
So if agencies can get past issues of ethical business, and take brand-building where it's never been before-bowling contests, art shows, basketball matches-does this mean they'll be better situated to put out, well, better ads than the generally sorry specimens we're bombarded with now? Agencies typically get defensive and blame "the masses". "The success of a campaign depends on whether it generates the desired sales or not. General comprehension levels have to be kept in mind-ads aren't meant for only the upper crust," says Terence D'Costa, a copywriter at Echo. "Most award winning international ads have terrible failures as far as generating sales are concerned," says Ravin Lama. Some add that pushing a brand here is tough because advertising also encourages the sale of clever fakes. "Take the instance of P&G. They have two brands-Head and Shoulders and Pantene-but the market is flooded with fakes," says Sanjeev Sharma of Crayons Electra.
Another major factor responsible for the delayed emergence of the industry is the lack of trained manpower. "You do not get trained creative people servicing the media. There are no institutions, and the few local agencies here are owner-driven. Having personnel from a third country isn't the best choice-one needs local market knowledge on what drives brands," says Joydeb. There are others who feel that the multinational agencies in Nepal should look beyond their business volumes and help develop the industry as a whole. "There should be open workshops, seminars and other interaction. What is the point of a few people speaking one language and the rest another?" asks Sanjeev Sharma. Thompson Nepal's Joydeb says they already do: "When we interact with local photographers, cinematographers, printers and pre-process people, we are also into local capacity-building," says Joydeb. Agencies and industry watchers say it's time to play catch-up, however it happens.
Nepal is a minuscule market in global terms, but it is strategically important and could soon emerge as a location of choice for MNCs to set up manufacturing facilities catering not only to the domestic market, but also to the huge North Indian segment. It really could be boom-time for agencies, and it's important they handle it right. Little can be done about quality so long as agencies take a dim view of "general comprehension levels", but regulation through a body like AAAN is a positive step. The next priority should be market research-there's simply no data for media planning. "Five to ten years ago it just didn't make sense because there were hardly any media options. With the growth of the media sector, this will be an important part of any agency's work," says JK Sthapit. Agencies will now have back their work with hard facts. "Forget agency claims, even circulation figures put out by media houses are suspect. Good research is key-the future is all about media planning," says Sanjeev Sharma. Agencies might well have been stumbling in the dark until now. What have they been working off? "Just gut feel. There has been some work done for the UN and multinationals, but there is no readership survey or television ratings," says Ravin Lama.
Nepal is prime advertising ground for agencies. "Nepal is a young nation if you look at the population pyramid. And advertising growth means that youth are being exposed to a lot of trends. It is a crazy mix of orthodoxy and extreme cosmopolitanism," says Sanjeev Sharma. It's going to be interesting to see where advertising goes in the next few years. AAAN, anticipating this, and to provide incentive for good work, started an Ad Club for the industry three years ago. They even announced an award, Kriti, for the best campaign. "We are still in the process of inviting ads for the competition. We'll do that in the next two months," says Bhaskar. Industry watchers and ad professionals are waiting-in the next few years this could prove crucial in establishing a benchmark for quality. Until then, we'll just put up with ugly billboards and mind-numbing jingles.
