Growth of Advertising in Nepal Post 1990

Key words: Advertising, Advertising trends, Advertising in Nepal, Development of advertising, and media studies.

Abstract: Advertising is one of the growing businesses around the globe. Advertising industry has been affecting not only how the business is done in this competitive world, but also how common people are leading their life by giving them options and often guiding them to choose what they need and want. Nepali people and media are not left untouched by advertising and its impact. Nepali people have started coming across several advertisements throughout the day due to increasing penetration of media as well as increasing investment in advertisements, which was not very common some decades ago. In this paper an attempt is made to examine the growth of advertising after 1990s and identify the key factors behind this development.  

1. Title of the study: Growth of Advertising in Nepal Post 1990

2. Introduction

In present society, if there is one thing that has been consumed by every one of us whether directly or indirectly, it has to be advertising. On a normal day, we come across hundreds of such advertising about various stuffs. These advertising have so aggressive and pervasive presence that we can hardly avoid them. Whether indoor or outdoor, on bus stops, on the way, in public places or institutions, on entering a city or leaving the town, what always remains around us is advertising. At home, we see them on our TV screens, pages of newspaper, pop-up ads while surfing internet. It seems as if the whole world has become a large hoarding board, exhibiting advertisement everywhere.

Advertising as a distinct form of persuasive and purposive communication is committed towards promoting good, services and ideas. It is a non-personal form of communication which has been endorsed by an easily identifiable individual or organization for gaining its goals. Advertising regardless of its type or strategy used is done for mainly one sole purpose – to augment sale of the advertised product. Thus, advertisement can be and has been a reliable tool employed by advertisers to trade their products, ideas and services among its probable customers.  

L.D. Rai[1] (2014) writes, 'Advertising can be meaningfully conceived as a marketing tool as a business proposition, as a communication channel and as a profession embedded in the industrial, social and cultural institutions. It means influencing or persuading a large audience of potential consumers at local, national and global levels. It means buying time or space in mass media for delivery of message or highly organized and identified sponsors.'

Over the time, advertising has not only flourished and gained momentum among advertisers, but also has grown up exclusively as a unique and independent profession. It has earned the potentiality of altering the economy of the modern society as well as affecting the society as a whole and its artifacts, lifestyle and behavior of common people. Advertising has worked as a stimulus for people in deciding what they should buy and what to avoid. People are tempted to buy particular products whether they really need or want those products.  

Advertising is key in a consumer economy. Without it, people would have a hard time even knowing what products and services are available. Advertising, in fact, is essential to a prosperous society. Advertising also is the financial basis of important contemporary mass media. Advertising is a major component of modern economies. In the United States, the amount that advertisers spend to promote their wares is about 2 percent of the gross national product. When the GNP is up, so is advertising spending. When the GNP falters, as it did in the early 1990s, many manufacturers, distributors, and retailers pull back their advertising expenditures (Vivian, 1993: 283).

In the words of Dominick[2], advertising fulfils four basic functions in society. First, it serves marketing function by helping companies that provide products or services sell their products. Second, advertising is educational. People learn about new products and services, or improvements in existing ones, through advertising. Third, advertising plays an economic role. The ability to advertise allows new competitors to enter new business arena. Finally, advertising performs a definite social function. By vividly displaying the material and cultural opportunities available in a free-enterprise society, advertising helps increase productivity and raises the standard of living.

Advertising has become an inseparable element of modern society and business. It will continue to affect our way of life, the way we perceive outer world and make demands and receive demands as well as how the business is done. Advertising is not anymore the business of a mediator between companies or individual who wishes to advertise their products or services. Now, it has the status of a full-fledged profession offering jobs to people from all walks of the life and significantly contributing in the GDP of the country having turnover in billions of rupees. 

3. Brief History of Advertising in Nepal

On the existence of advertising in our society, Rai (2014) writes, 'Advertising is not a new concept, but its role and commerce, techniques and technology, of the nations and international community. Modern advertising appeared almost as soon as people began to manufacture and sell products. The industrial revolution increased companies' manufacturing capacities and made advertising increasingly important as a way to reach new and larger market.

A country like Nepal with no connection to outer world until 1950s and no colonial past, it has comparatively shorter history of advertising.  The situation was worse as the country had a century long autocratic rule where freedom of expression was curtailed extensively. Thus, tracing out the beginning of advertising is not possible without discussing the history of media or more precisely the arrival of printing press and political circumstances of the then time.

Credit goes to the first Rana Prime Minister Jung Bahadur for bringing to the country its first printing press when he returned from his visit to Britain and several countries in 1851, i.e. 400 years after Germany's Gutenberg first invented the printing press whose duplications soon spread quickly all over Europe and other parts of the world (Kharel, 2010:166). 

The history of advertising in Nepal as divided by Rai (2014) falls into following four phases:

          i.            First Phase (1860s-1901)

        ii.            Second Phase (1901-1950)

      iii.            Third Phase (1950s-1980s)

      iv.            Fourth Phase (1990s onwards)

The First Phase witnessed the beginning of advertising in the form of advertising published in books. The first ever printed advertisement appeared in 1862 on the cover of Mokshashiddhi. It was an announcement about the book written by Krishna Giri and published by Manoranjan[3] Press. The second advertisement followed in 1888 also as an announcement published in Gorkha Bharat Jivan, a newspaper published from Varanasi. It took another eight years for the third ever advertisement in Nepali language. In 1896, it was also another announcement about the first monthly magazine in Nepali language.

The Second Phase (1901-1950) saw an increase in number of advertising in the country. With the publication of Gorkhapatra[4] in 1901, the formal beginning of advertising seems to be started. The very first edition of the newspaper had published the advertisement rates. Soon, the Gorkhapatra continued publishing several public notices, government orders and policies. Thus, this phase was thoroughly dominated by Gorkhapatra and the development of advertising has lot to owe to the first newspaper of the country.

Most probably, the foundation for the development of advertising was laid in the Third Phase (1950s-1980s). During this phase, the century long Rana oligarchy was thrown out and the dawn of democracy beamed in the country. With the first morning of new democratic system, country witness several other newspapers and magazines in the country, which significantly contributed in the development of the advertising. Then, came the first broadcasting media of the country – Radio Nepal – in 1951, marking the beginning of audio advertisement with embedded music. This was the phase which contributed immensely in shaping the modern form and content of the advertising practice in Nepal. And not to forget some early policy related to advertising sector was formulated during this phase. The recommendation laid by government formed Nepal's first Press Commission in 1957 read, "Newspapers need to be given advertisements of government offices, departments and secretariats."

The Fourth or the ongoing phase (1990s onwards), is the most important milestone in the development of advertising of the country. The phase is the sole nudge behind the situation of the sector wherever it has been. The arrival of completely new system of rule with the restoration of democracy opened the way for the development of free media which also directly contributed in the development of advertising sector as well. The open economy and market policy, rise in the number of varieties of media, realization of importance of advertising among the advertisers and institutionalization of the sector mark the growth of this profession in this period.

4. Growth of Advertising in Nepal after the Restoration of Democracy in 1990

It's undeniable that advertising sector is still in its infancy in Nepal in comparison to other countries. Even the country falls way behind its South-Asian counterpart India, which is one of the biggest markets of media content including advertisements.

Dr. Bijaya KC observes;

Advertising industry in Nepal has relatively a short history.  As most of the industries in the past had monopoly or near monopoly market structures, many firms did not realize the need for advertising and considered advertising expenses as additional financial burden for them. Advertising agencies in the early days were simply like "release offices" collecting advertisements from the clients and getting those inserted in the newspaper or get them broadcast from the radio for a commission. There were very few daily and weekly newspapers and no FM stations. Almost all advertisements and commercials used to be designed and prepared in India and abroad. Commercials and slides were exhibited as trailers in cinema halls. Most of the advertising agencies were run in small rooms with very few staff. Some agencies even operated their activities single handedly with the office confined to the pockets of their owner/proprietors. The whole advertising industry was much fragmented and unorganized. Disappearance of the agency and non-payment of the dues to the newspaper publishers and radio operator was common problem (Advertising, AAAN, June-August, 2008).

 This seems the right point to mention the remark made by Binod Bhattarai[5], who says, 'There are no publicly available studies on the growth of the Nepali advertising market, but there are other evidence to show it is one of the fastest growing service industries". Rightly indicated by Bhattarai, despite the advertising sector has short existence in the country, there are some tangible factors available that affirm that the profession has seen a steady growth in the country.

Although in the sector has been largely affected time and again owing to political and economical instability, advertising industry has experienced grown up over the period of last 25 years. There are some factors worth looking into to assess the growth of advertising in Nepal since the arrival of democracy in 1990.  

4. 1 Liberal Policy

Dr. Bijaya KC writes, "Due to the liberal policy of the government industries in Nepal have become highly competitive. The competitive landscapes of industries like banking, airlines, hotel, health, transport, confectionary, noodles, brewery etc. have changed a lot." With the fall of autocratic regime in 1990, the Government of Nepal adopted a comparatively liberal open economic and market policy. With the restoration of new system in the country in 1990s, the government has forged a national policy of information and communication covering extensively all the possible areas of communication and information including advertising sector of the country.

To account the positive change brought by liberal policy, Rai observes, "Since about two decades of liberalization regime, except for a brief hiatus of direct authoritarian intervention, the business of advertising in the country continue to grow in size and volume as an industry. Now there are some powerful and healthy media houses and television companies which are playing effective role in the media market challenging the domination of the state-owned print and electronic media."

The political system of the country can affect every other sector and let alone be advertising sector. Thus, it is largely due to the liberal system existing in the country that have hitch-hiked the sluggish advertising sector out of bumpy path to a more swift highway, which will positively contribute in its development in coming days too.

4.2 Increment in Concentration and Penetration of Media

Once the democracy was restored during the last decade of the 20th century, media was the sector which benefitted the most with the friendly environment. Now, every individual and institution could open their own private media, thanks to the newly arrived political system where right to freedom of expression and opinion was guaranteed as the fundamental rights in the provisions of the constitution. Many organizations tried their hand in the media industry. Not surprisingly, the most powerful media of the present days were established only after 1990. Several newspapers started its publications and later private radio stations emerged with the arrival of Radio Sagarmatha in 1997, which not only became the first community radio of the country but of the South-Asia as a whole. KC agrees, 'Various factors like phenomenal growths in radio stations, newspapers, and television channels, the growing popularity of cable television and satellite broadcasting, progress in computer technology, increasing use of Internet and World Wide Web have also contributed to the growth of advertising industry in the recent years.'  Now there are about 6 thousands newspapers, about 500 radio stations and nearly 75 TV stations in the country. Not to mention, these all media have helped in the development of advertising by providing time and space to the advertisement to its advertisers and offering varieties of options to them.

Similarly, along with increase in numbers of media outlets, media penetration has also augmented. People are paying more attention to media content. Several research conducted in the country have shown that people are spending more time watching TV, reading newspapers, listening to radios or surfing internet, which exposes them to advertising contents and ultimately benefitting advertisers.  

4.3 Introduction of Advertising Laws and Ethics

The country still awaits an independent body for monitoring and separate law for governing the operation of advertising sector. However, there are some media laws and regulations that govern the advertising sector as well.

After the restoration of multiparty democracy in 1990, a new Communication Policy (1992AD), and a series of media laws and regulations such as the Press and Publications 1992, the Copyright Act 2002, National Broadcasting Act 1992, The Press Council Act were enacted in accordance with the provision of the new Constitution 1990 AD. The new communication policy had created a favorable environment for development of free press, and a boom in media industry occurred, but even then no exclusive law to provide advertising business in the country was enacted, except a few inclusions in other institutional laws and code of codes (Rai, 2014:198).

There are other codes of conduct prescribed for the professionalization of the industry. Community Radio Broadcasters has issued its own codes of conduct for radio. Likewise, Press Council's Code of Conduct endorsed in 2003 was amended in accordance with the Interim Constitution 2007. These ethical guidelines have been also guiding the advertising sector of the country. Besides, Press Council has been providing subsidy to media houses for publishing and broadcasting public service announcement and advertisements and notices of government. According to a report published by UNESCO[6] (2013), 'In 2010/11, the DOI allocated 80 million rupees (approximately 800,000 US dollars) to the print media, and the distribution was based on classifications made by the PCN.'  

4.4 Larger Market and Flourishing Business

The market of Nepali advertising sector has been expanding annually. The advertising sector has seen huge turnover over the years. The prominent actor involved in advertising sector i.e. advertising agencies is not only growing in numbers but they are also dealing huge amount of money and making large profits. A country wide study on the Mass Media and Democratization n Nepal conducted by the Institute for Integrated Development Studies in 1996 found out that "in the 14 years between 1972-1986 the expenses on advertisement increased over 7 folds from o.4 billion rupees to 3.2 billion.   

Rai (2014) mentions, 'Official figures obtained from the stations show that advertisements revenue grow from about Rs. 20 million in the early 1990s to Rs. 119 million in 1999/00 almost a six-fold increases.' He further mentions, 'In recent years, the amount of money that these agencies spend on paying the media on behalf of their clients or the turnover or billing in Nepal is estimated to be around Rs. 3.42 billion, including both advertising and other promotional expenses. This gives an indication of the money the agencies make, especially where commissions are the only basis for doing business.'

Above mentioned figures are the evidences that show that the advertising sector is enjoying its best days and is likely to come across similar days as many multinational companies are seen opening their franchises in the country and opting to advertise extravagantly.

4.5 Institutionalization and professionalization of advertising industry

Undoubtedly, the advertising industry of the country in its early days. However, this should not be taken as a lame justification for compromising its professionalism and institutionalism. The first step towards its institutional development was taken about five decade ago. The first advertising agency of the country named Nepal Advertisers was established in 1960 and since then there has been ever-increasing number of such ad agencies. But those early ad agencies were mostly working as mediators or brokers between advertisers and media houses. In the following decades – between 1970s to 1980s – there were about 400 ad agencies working in the country of which 150 were operating. What can be regarded as the milestone in the institutional development of the country came in 1991, when a group of like-minded professional interested and involved in advertising business formed an organization called the Advertising Agencies Association of Nepal (AAAN), later came to be known as Advertising Association of Nepal (AAN).  By the end of 2010, there are nearly 500 registered ad agencies out of which 120 such agencies are associated with AAN.

Emphasizing the adoption of professionalism within the advertising industry of Nepal, Rai (2014) recalls, 'From the year 1991 professionalism began to influence the practice of advertising with the establishment of the Advertising Agencies Association of Nepal (AAAN) in 1991 which in 2001 had memberships of 125 agencies. By 1999, there were 75 advertising agencies which were registered with the Gorkhapatra Corporation for handling advertising business, and in fact they handled 80 percent of the Corporation advertising, while AAAN 125 members-agencies handled on an average 85 percent of all advertisements appearing in different media of Nepal.'

Besides these factors, the advertising sectors governed by the legal frameworks of the country and abiding by the existing codes of conduct also show that the industry has been professional to greater extent. Likewise, the industry has become an independent business and many individuals are considering making career in this field. The industry has been offering numerous employment opportunities to enthusiastic and creative manpower – copy writers, designers, consultants, vendors, freelancers, photographer, directors and others.

5. Conclusion      

Other parts of the world boast a comparatively longer history of the advertising in comparison to Nepal. Advertising as a non-personal communication, persuasive communication and marketing tool entered into one of the least developed countries – Nepal – very lately because of its shady past long spent in autocratic regime and as alien nation from other countries. As the country was deprived of freedom of expression and allowance to open private media, the modern advertising sector opened up only six and half decades ago with the arrival of democracy in 1950. Slowly and gradually, the sector has been gaining momentum along with the political transformation of the country despite some ups and downs. Now, the sector has seen steady scenarios after the restoration of democracy in 1990. Owing to several factors like liberal political situation, free media laws, opening of market and flourishing market, legal and ethical frameworks and increased professionalism, the advertising industry has become a multi-billion sector of the country. Based on these factors, improving circumstances and realization of significance of advertising for business purpose, one can speculate that the industry is likely to live its more glorious days in the coming decades.           

***

References:

• ·         Devkota, Grishmabahadur. 1967. Nepalko Chhapakhana ra Patrapatrikako Itihas (History of Press and Newspapers of Nepal). Kathmandu: Sajha Prakashan.
•  
• ·         Dominick, Joseph R. (1999). The Dynamics of Mass Communication (6th Edition). New York, USA: McGraw-Hill Companies, Inc.
•  
• ·         Kharel, Beena. 2006. Women in News Reporting and Conflict in Nepal. In Changes and Challenges: Women in Newspapers in South Asia (Kavita Shetty, ed.). Singapore: Asian Media Information and Communication Center.
•  
• ·         Kharel, P. 2010. A Study of Journalism. Kathmandu: Nepal Association of Media Education. 
•  
• ·         Prajapati. U. (2013). 'Understanding Advertising and Public Relations: Effects in News Media'. In P. Kharel (ed). Select Media Topics. Kathmandu: Central Department of Journalism and Mass Communication, TU.
•  
• ·         Rai, L.D. (2014). Introducing Advertising: History, Principles and Practice. Kathmandu: Bhrikuti Academic Publications.
•  
• ·         UNESCO. (2013). Assessment of Media Development in Nepal. Kathmandu: UNESCO.
•  
• ·         Vivian, John. 1993. The Media of Mass Communication. Boston: Allyn and Bacon. 

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[1] Lal Deusa Rai is an Associate Professor involved with Central Department of Mass Communication and Journalism of Tribhuwan University since the establishment of the department itself. He has authored several books related to media so far.

[2] Joseph R. Dominick is media scholar associated with University of Georgia and has authored three other books than "The Dynamics of Mass Communication".

[3] 'Manoranjan Press' is stated as the second press of Nepal. It is believed that Manoranjan Press had printed some books before 1991 BS. According to Grishma Bahadur Devkota, Manoranjan Press set up in Thahiti had printed four series of 'A Collection of Nepal Acts' in three years. The Collection of Nepal Acts had 1038 pages, which is supposed to be the first ever book printed in the country.

[4] Gorkhapatra is the first newspaper of the country, started publishing in 1901.

[5] Binod Bhattarai is a freelance journalist and has authored several books related to media.

[6] 'Assessment of Media Development in Nepal: Based on UNESCO's Media Development Indicator' was a report published by UNESCO office Kathmandu in 2013. The research team consisted of Prof. Parsuram Kharel, Prof.  Chiranjibi Khanal and Gokul Prasad Pokhrel (Nepal Press Institute), Dil Prasad Shrestha, Tanka Dulal and Shalini Tripathi (MITRA).