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TV stations to lose Sh120m monthly as Ariel, Omo whitewash each other

BUSINESS
By Macharia Kamau | September 29th 2013

By Macharia Kamau

A turf war between two of the largest washing detergent brands in the Kenyan market has left local broadcasters reeling from a substantial revenue loss.

Procter& Gamble, the manufacturers of Ariel and Unilever, the makers of Omo, locked horns in court over an advert that has been airing on local TV stations in the recent months.

The initial casualties of the battle are television stations after a court ruling on September 17 suspended the airing of the advert until the case is concluded.

Experts note that local television stations as well as the media buying agencies could miss out on a huge amount of money that Procter and Gamble could be spending on airing the suspended advert.

The firm had taken a number of slots on the major television channels during prime time – between 7pm and 10pm – when TV stations have a huge and captive audience.

During this peak time, the rates for placing an advert on TV are usually high as broadcasters make efforts to capitalise on the huge audience by selling them to advertisers.

For instance, a 30 second slot on one of the highly rated local channels during the peak hours goes for as much as Sh179,000. Several slots on this and several other TV stations could easily translate to more than Sh1 million every evening. The advert has not been airing for close to two weeks now.

Unsubstantiated claims

“The amount of money that the company spends on advertising would have a significant effect on TV stations and the media buying agencies given that the two are the biggest advertisers in the detergents section,” said Lenny Ng’ang’a director Saracen Media.

In the three months to March 2013, the firm spent Sh360 million advertising its different products on TV (42 per cent), radio (46 per cent) and newspapers (12 per cent). The firm also manufactures Always sanitary pads and Pampers diapers.

Ng’ang’a said that though Procter and Gamble may have recouped the initial amount spent in creating the advert, by not airing the advert, it could be missing out on an essential category of buyers that have to be nudged or need little persuasion to make a purchase.

“They could have recouped on the initial investments in the time that the advert run. What they might be losing on are the sales that would have been made by convincing the undecided customer,” he said.

Stain removers

In the suit, Unilever has challenged how factual the advert is. The advert promotes Ariel as the best stain removal detergent ‘in one wash’; with Unilever arguing that it is not grounded on facts.

Unilever is aggrieved at Procter & Gamble’s prime time television advertisement that promotes Ariel as the best stain removal detergent compared to other products. The advertisement runs promoting Arial as a one-wash detergent compared to other powder brand.

Unilever says the advertisements are in breach of several laws including the Competition Act, the Code of Advertising Practice and Direct Marketing Rules.

Ng’ang’a notes that situation where an advertiser uses falsehood in their marketing and advertising materials is rare in the country, especially among the large corporations.

“The large advertisers and agencies usually stick to facts, their adverts are normally grounded on truth and are also bound by ethics. It is the small advertisers that usually make unsubstantiated claims and get away with it most of the times,” he said.

Also affected to a great extent by the suspension on airing the advert are the media buying agencies that book space for the adverts on television stations. These firms also struggle to position their clients — the advertisers — slots at the most opportune timing and for their work, they earn a commission of between 15 and 18 per cent of what the advertiser pays to the media outlet.

This means that in the first quarter for instance, the media buying firms earned 15 per cent of the Sh360 spent by Procter and Gamble.

“The suspension of airing of the adverts might mean that the advertising and marketing agency might also have to hold on some other marketing activities like below the line advertising. These firms are paid on commission and there will be a revenue loss,” said James Ngomeli chairman Chartered Institute of Marketers (CIM).

Competition Authority

“There is a lot of work that also goes for a marketing campaign to take place, these will be efforts that go to waste.”

The advert such as the one by Procter and Gamble could take as much as Sh15 million to produce, which Ngomeli noted is an investment that is now tied down.

He added that there is need to strengthen arbitration mechanisms among marketers and advertising professionals, noting that at the moment the industry lacks strong arbitration mechanisms.

At the moment, professional body like the Association of Practitioners in Advertising (APA) play the arbitration role but has in the past been faulted at it is an industry body and has no legal backing.

“We do not have surveillance on ethics and other such issues or even a dispute resolution mechanism that would have resolved the issues even before heading to the courts,” said Ngomeli.

“I think the Competition Authority has a mandate but also lacks the expertise. As the economy grows and companies increase their marketing activities as well as more multinationals set up, we could see more of these issues… the conflict will grow and it would be good to have a body to check on such practices or even vet the adverts so that they do not infringe on the rights of others,” Ngomeli said.

Wellness goods

The two brands are at the moment the largest detergents in the country with a market share of 25 per cent for Ariel and 18 per cent for Omo, according to a recent Consumer Insight survey.

Other popular detergents include Sunlight also manufactured by Unilever (17 per cent), Toss by Kapa Oil Refineries (6 per cent) and Ushindi by PZ Cussons (6 per cent). P&G supplies the Kenyan market with Ariel products manufactured by its subsidiary in Egypt.

P&G early last decade stopped manufacturing in Kenya in favour of Egypt but maintains a trading presence. The company manufactures a wide range of beauty, household and wellness goods.

 


 

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