CHAPTER I

INTRODUCTION TO THE TOPIC

1.1 BACKGROUND

Master in Business Administration (MBA) is the semester wise academic program

designed for management students to provide comprehensive and practical education.

MBA Program in G. H. Patel P.G. Institute of Business Management is under the

affiliation of Sardar Patel University (SPU). It is a full-fledged learning program of four

semesters meeting the international standards of two years and constituting general

business courses and advanced courses for specific concentrations.

MBA program of Sardar Patel University requires summer internship of minimum six

weeks. The reason behind including summer internship is to give practical exposure to

the students. Internship is the form of applied knowledge that enhances the individual’s

ability and confidence level to compete in the dynamic and global business world. It is

also one of the pertinent ways to grasp the opportunity through exposure to the internal as

well as external environment of the organization. It is just like a training section in which

one gets familiarity with the corporate culture and gain practicability.

Over the year Nepal’s advertising industry has undergone through remarkable

transformation. Despite a gloomy economic scenario of the country plagued by political

instability, load shedding and liquidity crunch in the banking sector, the advertising

industry is continuing to grow. That’s why for my summer internship I selected one of

the top advertising agencies of Nepal i.e. Welcome Advertising & Marketing Pvt. Ltd.

The focus of my summer internship is to study the current scenario of advertising

business in Nepal and how it is affecting the business of advertising agencies.

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For my study I have chosen Welcome Advertising & Marketing Pvt. Ltd to represent all

the advertising agencies of Nepal because the opportunities, threats and problems

prevailing in advertising industry are same for all the advertising agencies competing in

the market. By doing summer internship in Welcome Advertising & Marketing Pvt. Ltd.,

I came to learn many things like how an advertising agency functions, how

advertisements are made, what are the reasons that made this agency one of the top

advertising agency in Nepal.

Since I have tried to incorporate all the information that i have learnt during my

internship period, I have titled my report as “Advertising Business in Nepal and SWOT

Analysis of Welcome Advertising & Marketing Pvt. Ltd.”. The topic itself is so clear

about what the report is all about. The report mainly talks about current scenario of

Nepalese advertising industry and highlights the main features and functions of Welcome

advertising. It also provides the information regarding the strength, weakness,

opportunities and threats (SWOT) of the company.

1.2 OBJECTIVES

As discussed earlier the focal point of the summer internship program is to make the

students participate in the real life organizational setting and provide the opportunity to

apply the knowledge and skills they have learnt during entire study. The objectives of my

study are listed below

To learn about the current scenario of advertising business in Nepal.

To observe the working of the advertising agency of Nepal.

To acquire knowledge regarding the opportunities and threats prevailing in

Nepalese advertising industry.

To identify how the advertisements are made.

To be familiar with advertising rules and regulations of Nepal.

To analyses the strength and weakness of Welcome Advertising and

Marketing Pvt. Ltd.

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1.3 METHODOLOGY

This report has been prepared on the basis of a six weeks internship experience at

Welcome Advertising and Marketing Pvt. Ltd, Kathmandu. For the preparation of this

Internship report, both the primary and secondary sources have been used. The primary

information was obtained through the interactions with the employee of the company.

The secondary information was mainly collected from the booklets, newspapers,

published documents and internet browsing. Apart from that few books, websites and

previous internship reports have been referred to get a detailed overview of the format as

well as materials and information.

1.4 LIMITATIONS

The limitations faced during preparation of the report are as follows:

The time period of six weeks of internship was not sufficient for the detail

study of advertising industry of Nepal.

This report is mainly based on my individual understanding and knowledge

gained during the company’s internship period and theoretical knowledge

that has been previously studied

Policy in keeping some matters confidential prevented me from analyzing the

various critical facts and issues related to its financial statements

Since I had worked only in one agency, I could not witness and scrutinize

the true picture of all the advertising agencies of Nepal

However, I have tried my level best to gain adequate knowledge of advertising and the

corporate culture and sincerely make the report according to what I have learnt during the

internship period. The whole experience was an excellent learning opportunity as well as

an exciting challenge.

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CHAPTER II

ADVERTISING BUSINESS IN NEPAL

2.1 INTRODUCTION TO ADVERTISING

2.1.1 MEANING OF ADVERTISING

Advertising, generally speaking, is the promotion of goods, services, companies and

ideas, usually performed by an identified sponsor. Marketers see advertising as part

of an overall promotional strategy. The concept of advertising has assumed a

dynamic form with the use of the various mediums of communication. From the

newspaper, magazines, posters, neon and fluorescent signboards, billboards to the

commercial on TV, laser shows to inflated high-rise figures and objects, advertising

has come a long way.

The term advertising generally refers to paid forms of communication that are

distributed at the initiative of economic operators (by means of television, radio,

newspapers, banners, mail, Internet, etc.) as part of an intentional and systematic

effort to affect individual attitudes and choices in relation to the consumption of

goods and services. Advertising is the impersonal method of communicating

messages to prospective buyers. It involves transmitting standard messages to a

large number of potential receivers. Advertising is the key brand building tool in

modern marketing. It is also the art of persuasion of human minds through a range

of communication media. Advertising aims to create positive impressions about a

brand, an organization, or an idea in the consumers’ mind.

The American Marketing Association defines advertising as “any paid form of non-

personal presentation and promotion of ideas, goods or services by an identified

sponsor.”

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Advertising is a form of communication used to encourage or persuade an audience

(viewers, readers or listeners; sometimes a specific group of people) to continue or

take some new action. Most commonly, the desired result is to drive consumer

behavior with respect to a commercial offering, although political and ideological

advertising is also common. The purpose of advertising may also be to reassure

employees or shareholders that a company is viable or successful. Advertising

messages are usually paid for by sponsors and viewed via various traditional media;

including mass media such as newspaper, magazines, television commercial, radio

advertisement, outdoor advertising or direct mail; or new media such as blogs,

websites or text messages.

2.1.2 ELEMENTS OF ADVERTISING

Advertising has five key elements popularly known as 5Ms of advertising. These

are mission, money, message, media and measurement.

1. Mission

5

Advertising

MessageMedia

Money

Mission

Measurement

Fig 1: 5ms of Advertising

Advertising mission includes the objective or goals of advertising. The

advertising goals direct the whole process of creation, development, and

implementation of the advertisement campaign.

2. Money

Money indicates toward the financial resources available to a marketing firm to

develop and launch an advertising campaign. This aspect of advertising is

covered by the advertising budget.

3. Message

The message is the key element in advertising. The major purpose of advertising

is to effectively transfer the intended message to the target audience. Other

creative aspects such as appeals, execution framework, copywriting and artwork

support the effective delivery of the message.

4. Media

The media is the vehicles for delivering the message to the target audience. This

aspect of advertising involves evaluating and selecting the appropriate media.

5. Measurement

The measurement aspect of advertising involves advertising research. It

includes research conducted during the advertisement design phase, launch

phase, and after the campaign phase.

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2.1.3 OBJECTIVES OF ADVERTISING

Advertising is launched by the marketing firm with clearly stated objectives or goals.

Without advertising objective the firm is likely to spend huge amount of money in the

development and launching of advertisement campaigns and yet fail to realize good

results. Advertisement can be developed and launched to meet one or more of the

following goals:

Inform

The most basic objective of all advertising is to inform target audience about a brand,

product, organization, place, idea or any other entity. This objective is targeted at

achieving awareness, recognition and acceptance of the advertised entity by the

audience. All organizations that advertise their products or services would at least

expect the potential buyers to recognize their products or services available in the

market.

Persuade

A stronger objective of advertising is to persuade potential buyers about the attributes

and merits of the advertised entity. This objective aims at developing positive

feelings, judgments, and attributes toward the advertised entity.

Build Brands

A long term objective of advertising is to contribute towards building brand equity.

Advertisements add value to the brand through the development of brand image and

personality. Once a brand is successful in creating an image and personality it can

command higher price level in the market.

Encourage Purchase

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The ultimate objective of advertising is to encourage potential consumers to

undertake purchase behavior. Many advertisements for products and services invite

consumers to undertake immediate action by using a telephone or visiting the store.

Remind

Some advertisements are built just to remind the buyer about the organization and its

product. Consumers’ memory about a brand or company decays rapidly and they

have to be constantly reminded about the product and company. Most of the display

advertisements serve the purpose of reminding.

Support other marketing efforts

Some advertisements have specific goals related to other marketing efforts of a firm.

Advertising objectives may be formulated to support personal selling and sales

promotion campaigns. Advertisements launched during the introduction of new

products in a market are targeted at achieving the trial purpose.

2.1.4 ROLE OF ADVERTISING

Advertising is the most visible aspect of marketing. It is also the most glamorous function

in marketing. Business firms spend huge sums of money for creation, development and

communication of advertisements. In Nepal, more than Rs. Two billion is spent on

advertising every year. Advertising has big impact at the micro as well macro levels. The

impacts are economics, psychological, cultural and social. The following section

describes the benefits of advertising to a firm, channel members, consumers and the

society at large.

Benefits to a firm

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Advertising has become one of the strongest tools in today’s marketing. There is no

controversy in the power of advertising in contributing to the firm’s sales and profits. For

a business firm advertising has the following major roles to play:

1. Sales and market-share: Advertising increases the sales volume and market share

for the firm. Advertising creates new customers and also induces the current

consumers to buy more of a firm’s products and service. This contributes to

enhanced sales and increased market-share.

2. Brand image and positioning: Advertising is the major tool for developing a

particular brand image and establishing the brand’s position in consumers’ mind.

This helps in developing a separate identity for the brand.

3. Corporate image: Advertising helps to build a good image of a firm as a

manufacture of good quality branded products. The enhanced image helps the firm

to command better price for its products and services.

4. Competitive tool: Advertising has become one of the major important tools in the

market place. Advertising is used to encourage customers to switch brand in favor

of the firm’s brands by offering better value for money.

5. Maintain brand loyalty: Although advertising does not create brand loyal

customers but it helps the firm to maintain their loyalty by providing reassurance

to the loyal customers about the merits of the firm’s products.

6. Counter rumors: Advertising is a very important tool in countering damaging

rumors about the firm’s products and services. Such rumors are often spread by

competitors and quick action has to be taken to negate the rumors. For this

purpose, advertisement is the fastest tool.

7. Sales force effectiveness: Advertising assists in enhancing the effectiveness of the

sales force by informing, persuading, reminding and reassuring prospective

customers about the product or service.

Benefits to marketing channels

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Many middlemen also launch advertising campaigns at the local level with the

cooperation of manufacturers or on their own initiatives. The major benefits of

advertising to middlemen are as follows:

1. Increased sales and profits: The direct benefit of advertising is in the form of

increased sales that provides opportunity for higher profits.

2. Easy recognition of products: advertised products are easily recognized by

consumers. This makes the job of resellers easy. They need very little effort to

convince consumers about the merits of the product.

3. Promotes self-service: Advertising plays critical role in operation of self-service

stores as department stores and super markets. Consumers come to the elf-service

stores with adequate knowledge about the brands and execute their purchase

without the help of a salesperson.

Benefits to consumers

The consumer is at the receiving end of most of the advertisements. Most advertisements

are targeted at informing, persuading and motivating consumers. Consumers gain from

advertising in the following ways:

1. Information and knowledge: Advertising is a major source of information about

a variety of products and services offered in the market place. Consumers get

information about the product attributes, varieties, prices and availability through

advertisements. This information helps the consumers to broaden his/her

knowledge about the products and services.

2. Freedom of choice: The information and knowledge gained through

advertisements helps consumers to determine their choice over a variety of brands

available under a product category.

3. Reduce risks: Consumers normally undertake financial, physical, psychological

and social risks when they buy a product. Advertisements help the consumer to

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reduce the level of associated risks by providing reassurances through warranty,

after-sales services and product replacement guarantees.

4. Ego enhancement: Advertised products have more ownership value than

unadvertised products. Consumers can enhance their ego self-esteem in the society

by owning a high image advertised product.

Benefits to society

The society at large also receives the following benefits from advertising:

1. Change in attitudes and behavior: Advertising has made big impact to change

people’s thought processes, buying habits and purchase decisions. Advertising has

been able to establish new consumption behavior (western clothing, food,

education and technology) and new personal behavior (small family, birth spacing

and gender equality). Advertising has provided a way for the society to achieve

higher standard of living.

2. Economic impact: The huge amount of money spent on advertising stimulates the

national economy. It also provides employment opportunities to a large number of

people in the areas of creation, development and communication of

advertisements. Advertising has also power to manage demand. It can increase

demand for a product or service and stimulate demand in time of recession.

3. Education: Advertising has become one of the most powerful educational tools. It

educates people in use of products and services to achieve a higher standard of

living. Social advertising educates people in pollution control, environment

protection, gender equality and many other social issues. The most educative

advertisements in Nepal are found to be focused against drug abuse, child labor,

girl-child literacy and anti-polio campaigns.

2.2 HISTORY OF NEPALI ADVERTISING

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Advertising has a very long history. It has evolved over time along with socio-economic

development of mankind. The technical evolution in the field of printing process, camera

technology, computers and electronic media has greatly contributed to the development

in the field of advertising. The historical development of Nepalese advertising since its

primitive stage can be divided into two parts by era, means and medium.

1. Ancient Advertising

There are no records of any kind that tell us about the origin and history of Nepali

advertisements. The earliest form of advertising may thus be taken as the trumpet

blowing tradition of kings and maharajas to disperse royal messages. The advent of Mass

Communication in Nepal can be said to have been through such official proclamations,

which were usually accompanied by the use of musical instruments like drums or

trumpets. The age-old oral tradition of promotion by vendors selling their wares in the

market can also be taken as another early form of advertising

2. Modern Advertising

After the long practice of ancient means and medium of advertising, finally Nepal entered

into the era of modern advertising, though it is very much primitive if we observe it

through the eyes of the present state. The development of Nepalese modern advertising is

the same as that of world advertising. If we considered through means and medium’s

point of view, Nepalese modern advertising has evolved from print to radio and television

and finally to the cyber medium

Print media: To look at the history of modern advertising of Nepal we have to go

back to B.S.1908 (1851) when that time Prime Minister of Nepal, Janga Bahadur

Rana brought Gidde Press from his official visit to Great Britain. But, this press

only printed envelopes, tickets and government papers and didn’t contribute in

making the history of advertisement printing.

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The credit for printing the first advertisement in Nepal goes to the Manoranjan

Press situated in Thahiti. In B.S. 1919 (1862), this press had published:

Mokshashiddi, - a book by Krishna Giri on whose cover page the very first print

advertisement in Nepal is found. The ad was as follows:

Illustration 1: First Print Advertisement of Nepal

This is the first authentic advertisement in the history of Nepalese advertisement.

After that, to search the second ad we have to travel to B.S. 1945 (1888) when a

book called “Hasya Manjari” was published from the Bharat Jeevan Press in

Banaras. On the cover page of this book, whose cost was 3 ‘aanas,’ the following

ad about ‘Gorkha Bharat Jeevan’ was printed:

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Illustration 2: Second Print Advertisement of Nepal

It took 11 years, after the second ad, for the third ad to be printed. The last page of

Pt. Kapildev Sharma’s book ‘Nalopakhyan’ which was published in B.S. 1956

(1899) contained the following ad about the weekly paper “Sudha Sagar”:

Illustration 3: Third Print Advertisement of Nepal

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The three valid documents mentioned above were the advertisements in Nepalese

print media before the publication of Gorkhapatra, the state owned newspaper. The

publication of Gorkhapatra began from Baisakh 4, B.S. 1958 (1901) as a weekly

paper. The first ad appearing in Gorkhapatra premier issue announced what should

be done to get advertisements in the paper. The publication of the first newspaper

was followed by many others which published public notices, government orders

etc. In between B.S. 1958 (1901) and B.S. 2014 (1957), various publications in

Nepalese language were published and there were various forms of printing

advertisements, whether it was as notice, order, or regulation. Under the

chairmanship of Judge Krishna Prasad Chapagain the first Press Commission was

formed on Magh 20, 2014 (1957) B.S. The document forwarded by this

commission to the government on 31, Jestha, 2015 (1958) B.S. contained the 20-

point advices.

Printing by the private sector started with Kantipur Publication Private Limited’s

two daily newspapers- Kantipur (in Nepali) and The Kathmandu Post (in English)

around 1993. Independent content, a different point of view other than the

governments, and color page printing gave Kantipur publication some credibility

to the National papers. The color printing gave advertisers more flexibility with

design and also offered better rates because private sector had better flexibility as

opposed to government rules and regulations. Today, there are private newspapers

which have done good following Kantipur’s footsteps. News magazines like Himal

Khabarpatrika and Nepal, all of which have collectively contributed to the

developments in Newspaper Advertising.

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Radio advertisements

The history of radio broadcasting, in Nepal began in 2002 (1945) B.S. when the

first test transmission of radio was performed from the ‘Bijuli Adda’ situated at the

northeast of the then ‘Tundikhel.’ At that time, no one except the Ranas were

permitted to own a radio set. This radio broadcast, permission for which was given

to Kashi Raj Pandey by Prime Minister Padma Samser, could not be continued for

more than two months due to the interference by other Ranas. During this time,

whether any ads were broadcasted or not, there is no valid history. In 2004 (1947)

B.S. the publics were permitted to keep radio sets to hear All India Radio but, to

listen to the Nepalese radio they had to wait till the revolution of 2007 (1950) B.S.

which was against the contemporary Rana regime.

The contemporaneous freedom fighters for the first time aired the voice of the

public on Mangsir 20, 2007 (1950) B.S. from Bhojpur through a transmitter. The

same transmitter was brought to Biratnagar on Magh 17, 2007 (1950) B.S. and the

following request was aired from that radio named as ‘Prajatantra Radio’.

Illustration 4: First Radio Advertisement of Nepal

This radio, established in Raghupati Jute Mill, Biratnagar, is guessed to have

broadcasted a kind of advertisement in the form of notices and requests but not

commercial ads, though we can’t find any authentic history.

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Today’s Radio Nepal began its transmission on 20 Chaitra, 2007 (1950) B.S. as

state-owned radio broadcasting medium with the name of Nepal Radio. The

broadcasting of commercial advertisement must have begun thereafter, but it is

almost impossible to say which the first one was. The record available at Radio

Nepal as the first Radio Commercials in social notice form is:

Illustration 5: First Radio Advertisement of Nepal by Government

At first Nepal Radio had not provided advertising service, it was carried out by the

Ratna Recording Company, and this company paid Nepal Radio all in a single

installment. But today Radio Nepal has its own advertising service through this

service; it has been transmitting various types of advertisement. After 2051 (1994)

B.S., when Radio Nepal established FM Kathmandu under it, it has speeded the

flow of radio ads, however it is also felt that this has affected the flow of ads in FM

broadcasting. In mid-august 1999, Radio Nepal began using satellite in its

broadcasts which makes it the medium with nationwide reach. In 1997 Nepalese

had an estimated 1.7 million radio sets. Radio Nepal had more than 3.9 million

listeners. Independent Radio came to Nepal with the licensing of Sagarmatha FM

Radio in May, 1997.Later in 2055 (1998) B.S., the establishment of Kantipur FM

not only broke the 50-year long monopoly of Radio Nepal but also provided other

opportunities for airing the radio ads. Today, there are around more than 400 FM

stations (both locals and national) airing commercial and semi commercial

advertisements and about a dozens of FM Radios are in the process of airing

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Advertisements on Television

The idea of having television in Nepal was started in 2041 (1984) B.S. Only after 6

months, i.e., on 29 Shrawan, 2042 (1985) B.S. Nepal Television began its test

transmission. Probably, the days of TV commercials must have begun in those

days (the days of test transmission). On this very day, Nepal Television Project

became Nepal Television Corporation and television broadcasting was started in

regular manner. About 15.8% of the total broadcast time of Nepal Television is

occupied by the advertisements, now. In these advertisements, 53% are national

and the rest are international ads.

After 2058 (2001) B.S., the era of government television entered into the age of

private ones. Before this, few private companies had bought NTV time and were

broadcasting their programs and ads. But today, private channels like Kantipur TV,

Channel Nepal, Image Channel, Nepal 1, Sagarmatha channel, AV News etc. are

also airing advertisements along with Nepal Television’s national channel. Since

last couple of years, television because of its audio-visual beauty is emerging as

the prime medium of advertising.

Advertising on the Internet

In the last four years of 20th century, advertisements made a place in the Internet.

Online ads have begun in Nepal too. We cannot currently say that its effect is

decisive but it certainly is looking towards the positive direction. At present, about

more than 100 Nepalese web sites are involved in cyber advertisements.

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Advertisements in Films

Nepali movie history begins from 2006 (1949) B.S. Janseva hall, then

‘Sabhaghriha’ (Assembly Hall) with displaying Hindi films started the exhibition

of commercial films in Nepal. Though, we don’t have this hall now, more than 500

halls have been established in Nepal and these halls are showing advertising slides

of different products.

Which advertisement slide was the first to be displayed in a cinema hall, is still a

subject of search. But, speculation is that the displaying of slides began after the

establishment of Janseva Hall in 2007 (1950) B.S. It is also guessed that the first

advertisement slide must have been the noncommercial one, that too in the form of

notice. Although, after the penetration of television in Nepal there has been a bit of

deficiency in film advertisement, we find the ads of daily used products and social

ads in sufficient manner.

Advertising in Other Media

In this state, where the world has stepped into the 21st century, a condition has

been created to sort out what can and what can’t be a medium for Advertising.

Hoarding boards, display boards, wall writing, pamphleteering, ‘miking,’ etc., all

have become prevalent advertising mediums. Beyond these, visiting cards,

invitation cards and even various gifts are being used as advertising media. These

types of development in the concept and angle of advertisements have created such

a chaos that one finds it difficult to distinguish between an advertisement, news,

message, and notice. Whatever maybe, Nepalese Advertising has taken a big stride

towards the bright direction, in the past 140 years.

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2.3 PRESENT SCENARIO OF NEPALI ADVERTISING

Despite a gloomy economic scenario of the country plagued by political instability, load

shedding and liquidity crunch in the banking sector, the advertising industry is continuing

to grow. Braving the economic slump, Nepal's advertising industry has adopted a 'when

the going gets tough, the tough get going' policy. And it's working. In the short span of a

decade, Nepal's advertising has gone through the boom of the late 90s followed by the

bust in the early 2000s. But despite this cycle, advertising executives see the glimmer of

an upturn. The industry has hunkered down and established itself as an effective market

force even in these difficult times. Proof: the increasing number of media outlets fuelled

by advertising. In just the past year, there have been four new TV channels, 10 new FM

stations and three new magazines. "Despite everything, the advertising pie has grown

bigger and this has helped the growth of the media,"

This is a far cry from the days when, not too long ago, placing an advertisement meant

either bringing out notices through commission agents or giving donations to publishers.

There are about 20 active advertising agencies, although more than 60 agencies are

registered with the government. Nepali professionalism is catching up with international

trends and standards. Unlike in the past, when clients dictated their positioning and

content to ad agencies, the trend now is to leave it up to promotion professionals. All the

producer has to do is brief the advertiser about the product and give general guidelines.

Nepal's consumer-led growth in urban areas has shown a massive impact in the industry,

and manufacturers have seen sales soar as a result of a successful campaign

as more and more products in the same segment come out in the market, competition has

got stiffer and this is reflected in the advertising. The instant noodle market is a prime

example, as there are more than 50 brands, out of which 10 are heavy advertisers.

Increasingly, they are relying on the expertise of the ad industry to make their noodles

stand out from the rest.

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Advertisers say their Nepali clients are now much more demanding of quality and content

in their ads, as they have seen what a successful advertising campaign can do. Some 60

percent of the annual Rs 200 billion ad pie in Nepal goes to radio and TV, while the rest

goes to newspapers and magazines. This share of the electronic media is growing and

will dominate even more of the market, according to trade experts. The ban on cigarettes

and liquor on radio and TV has been the savior of the print media.

Another fast-growing segment of the ad market is billboards. Signage technology has

advanced and new flex hoardings have nearly wiped out the unattractive, labor-intensive

painted signs. Advertising agencies say 15 percent of the annual ad expenditure is now

going to billboards. Some media houses see this as a threat, and have even formed a

cartel to pressurize the government into restricting or banning billboards. But the Valley's

municipalities derive so much revenue from them that a ban is unlikely.

Advertising has become an integral part of any business for building brand loyalty and

promotion of any product and service. So this industry has been growing by 19 percent

annually for the last few years Advancement in the printing technology, expansion of TV

and radio networks and the entry of the new generation of internationally trained and

creative manpower has enhanced the quality of advertisements and its segment size. In

the first six months of the current fiscal year, the industry witnessed a growth of 15

percent compared to the same period last year. As of 2009, the size of the business was

worth Rs 3.5 billion. The size has already surpassed Rs 4.5 billion mark as of now. Print

media still remains the biggest advertising platform, accounting for more than 30 percent

of the total advertisement. However, television media is also catching up with the print

media. As of 2009, televisions got advertisements worth Rs 900 million. Growth of FM

radios in Nepal over the last decade has been one of the success stories of the Nepali

media. And, this expansion has also increased the pie of advertisements going to radios.

AAN statistics show that advertisements worth Rs 650 million went to the radio segment.

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In million Rs

Media 2004 2005 2006 2007 2008 2009/10 2010/11

Print 520 600 850 950 1150 1280 2015

TV 360 480 600 500 900 700 865

Radio 200 250 300 450 650 720 750

DTA * * * * * * 40

Others 920 870 750 800 800 850 650

Total 2000 2200 2500 2990 3500 3550 4320

Table 1: Nepali Advertisement Market (In Million)

In percentage

Media 2004 2005 2006 2007 2008 2009/10 2010/11

Print 26 27 34 36 33 36 47

TV 18 22 24 18 25 20 20

Radio 10 11 12 17 19 21 17

DTA * * * * * * 1

Others 46 40 30 29 23 23 15

Total 100 100 100 100 100 100 100

Table 2: Nepali Advertisement Market (In Percentage)

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2004 2005 2006 2007 2008 2009/10

2010/110

500

1000

1500

2000

2500

3000

3500

4000

4500

5000

printTVradioDTAOtherstotal

Fig 2: Nepali Advertisement market (In Million)

Note:

Due to load shedding TV revenue had been decreased for the year 2009/10

Others are inclusive of Billboard, Posters, Banners, Wall Paints, events etc.

Digital Theater Advertising (DTA)

Due to strict government regulation the business volume in others categories are

decreased

2.4 ADVERTISING REGULATION IN NEPAL

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There is no specific law relating to advertising in Nepal. Advertising is affected by the

relevant constitutional provisions, governmental administrative regulation and self-

regulation of the industry itself. As advertising is directly related with the media, to see

the legal provision in the country, it is necessary to observe the provision on press

provided that by the constitution. The constitution of the kingdom of Nepal-1990 has the

provision in the Article12, which says all citizens have freedom of opinion and

expression. Likewise, Article 13 provided the Press and Publication Rights to all the

citizens and has guaranteed pre censorship in any of the written matters shall not be

allowed unless it undermines the sovereignty and integrity of the Kingdom of Nepal, or

which may jeopardize the harmonious relations subsisting among the people of various

castes, tribes or communities; or any act of sedition, defamation, contempt of court or

incitement to an offence; or on any act against which may be contrary to decent public

morality and behavior.

The provisions in the constitutions even though does not have clear provision for

advertising, it has enough room that can be interpreted by the lawyers which also relates

to advertising. Likewise, all the advertising agencies to work within the country have to

be registered as service industry at Cottage and Small Scale Industries Department,

Commerce Department. It is regulated by Company Act 1958 and Cottage and Small

Scale Industry Act 1963. The National Broadcasting Act 1992 has regulated radio

broadcasting media for advertising in radio through its Section 14 and 15. Section-14 has

scheduled specifically provided for access to radio broadcasting time for advertising but

it also has the provision for banning advertising of goods related to tobacco or alcohol

drinks on the ground of public health. Section-15 of the Broadcasting Act have the

provision that cannot be advertised which bring hatred to the political parties, obscene

materials, remove the elected government using the agitating force, bring incitement and

fear among the citizens, speaking against the non-aligned character of Nepal.

The Defamation and Libel Act- 2016 in Section 6 has the provision for punishment if

published any materials which have libelous character. Likewise, Nepal’s Copyright Act

24

-2022 have clearly mentioned advertising through any media to audience, about the

creative work showing the writing belongs to others is a punishable act. There is also law

that would require the Press Registrar to make information available on circulation etc. to

advertisers upon payment of a certain fee; this could help advertisers to make media

decisions, depending on of course the reliability of the information so provided. There are

also laws governing general business such as Contract Act 2056 and Patent and Trade

Mark Act 2020, where advertisers would have to abide by. Also the laws that affect

commercial broadcasting also affect advertising and so do laws relating printing and

packaging, where they exist.

Advertising is also affected by Consumer Protection Act 2054 which states information

on the product and service can be provided to the consumers. The information must be

truthful on the quality of the product and service. Likewise, the Children Act 2048 also

has the provision that the children should not be posed negatively in the media. In

accordance to the Medicine Act, Nepal Medical Council (NMC) has framed a Code of

Conduct to regulate advertising. The Code of NMC says it is unethical to solicit patients

“directly or indirectly by a physician, by groups of physicians or by institutions

organizations”. Also self-advertisement of the physician is incompatible to the principles

and is allowed to use 18×14 inch size signboard and write their names.

Also Nepal Bar Association has framed a Code of Conduct for Lawyers in 2051. It says

that for the commercial purpose advertising on the legal firm must not be done.

Advertising are also regulated through the Directives on Advertising of the government

owned media. Gorkhapatra Corporation Advertising Directive-2053 (amended 2057);

Radio Nepal Advertising Directive-2060 and Nepal Television Commercial Directive-

2059 (amended 2061) also have the legal base on the types of advertisings that could be

published by those government media. The government has banned the advertisements

related to alcohol and tobacco products in the electronic media since 2055 BS. However,

the advertisement of alcohol and tobacco have picked up in the newspapers and in the

hoarding boards of the capital and other parts of the city.

25

The Code of Conduct for the Journalist also affects the advertising, the Journalist Code of

Conduct 2003 has clear provision for advertising in Section-4, sub-section 12 stating

“Not to present advertising in the form of news” Other lesser media like hoardings,

leaflets, and mobile media are also used and are governed by laws related to print and

electronic. The management of hoarding board and banners and posters and wall painting

in the public area is now handled by the concerned municipality.

After the introduction of Industrial Act 2049, the government changed the rules of

spending on advertisement expenditure under the Industrial enterprises Act 2049; any

industry incurring advertising expenditure can deduct up to 5 per cent of the gross

income. Even though advertising in Nepal lack Advertising Act and regulations, but other

laws related to mass media, consumers act, copyright act, defamation and libel, contract

act etc. affects the advertisements published in the media

2.5 ADVERTISING ASSOCIATION OF NEPAL (AAN)

Advertising Association of Nepal (AAN) is an umbrella organization of advertising

agencies and other media related professional organization. It was registered in the year

1990 A.D. under Non-governmental Organization Registration Act of Nepal as

Advertising Agencies Association of Nepal. It emerged into its present set-up in the year

2006 A.D., after amendment in the constitution. Currently, all professionally managed

advertising agencies of the country are members of this Association. AAN represents in

different media related committees formed by Government of Nepal like Press Council,

Audit Bureau of Circulation (ABC), Federation of Nepalese Chambers of Commerce and

Industry (FNCCI) etc. Advertising Association of Nepal (AAN) is also member of Asian

Federation of Advertising Associations (AFAA), Malaysia. It also had good business and

professional relations with all the media of the country. Its full-fledged secretariat is

capable of executing any type of tasks in relations to advertisement and media.

The prime purpose of Association is to protect rights, promote mutual cooperation, and

enhance professional ethics of the advertising fraternity. It also aims to develop

26

understanding between all the stakeholders like Government, Media Houses, Advertisers,

Consumers and Society. The members of Executive Committee of association are elected

for the period of two years by General Assembly. This association has two types of

member: General Member and Associate Member. Executive Committee consists of

President, Immediate Past President, Vice President, General Secretary, Secretary,

Treasurer, Joint Treasurer and twelve members. Executive Committee is answerable to

General Assembly. Every year General Assembly takes place. Executive Committee

needs to report annual activities and financial transactions. Plan & program and budget of

Advertising Association of Nepal needs to be approved by Annual General Meeting.  

2.5.1 PROPOSAL OF AAN

As the advertising market was and is increasing after the liberalization of economy, need

of separate advertising policy was the demand of the time. During the period AAN

(Advertising Association of Nepal) suggested 11 point proposal for national policy on

advertisement business in 1999 AD. Finally, separate advertising policy appeared in

2001. Under the Long-term Policy of Information and Communication-2001, the

government introduced Long-term Policy for Advertising. This is first nationwide

advertising policy introduced by the HMG. The Long-term Policy for Advertising is

divided into two sections. The first part deals with the aim and objective and second deals

with policy and programs. The aim and objective of the policy-2001 is to develop

advertising business as national industry, and to manage and enhance national economy.

It also aims for impartial and free press and identify advertising as the main source of

revenue. Likewise, the final aim is to make advertisement affective through inspection of

use of language, style and cultural aspect.

The entry of multinational advertising agencies will have to provide 20 per cent domestic

share compulsory and use of Nepali labor and creation for its development.

There is also program to set up an independent body to monitor the electronic media

(audio-visual), digital media, foreign advertisement, and also establish impartial,

representative, free censor board. Registration of newly advertising agency would be

27

based on the uniform criteria through the recommendation of recognized advertising

association. Set up advertisement subject in the academic curriculum from school and in

the training institute and also adopt nationalistic approach in advertisement production

through standardization of the language for advertisement, which should uphold Nepali

character. It has also divided advertisement into commercial and social responsible. The

policy deals for the legal management of advertisements of product through trade mark

and copyright; also it promotes advertising through internet.

The policy is negative towards exaggerated advertisement of the product that directly

affects the health of the consumers like foodstuffs, medicines and liquors etc., for

publication and broadcasting these advertisements needs consent from the authority and

also re-evaluate the ban on alcohol and tobacco in electronic media according to World

Health Organization (WHO) standard. It has clearly stated that any publication and

broadcasting media should not exceed advertisements to 40 per cent of total contents of

the publication and broadcasting. The policy also states that any industry or firm,

organization should spend 5 per cent of the total profit in advertisement

2.6 COMTEMPORARY ISSUES OF NEPALI ADVERTISING

Nepalese advertising industry is currently facing many problems or issues. Such issues

need to be resolved as soon as possible so that the industry can grow more and contribute

to country’s economic development. Some of the most important issues that need quick

review are as follows:

Need of granting commission to advertising agencies

The trend of granting commission to advertising agencies in accordance to the sale of

product has already been started in India. If the same trend is supplied here in Nepal,

it will definitely sharpen the creative age of Nepalese advertisement agencies

Size of economy

28

The size of economy also plays a vital role. Clients in India have a budget not less

than IRS 250 million to IRs 300 million for an average brand. They even spend up to

Indian Rs. 10 million on one TVC. Here the average clients have a budget of

approximately Rs 8 million, which is insufficient to produce a good advertisement.

The abundance of dubbed advertisements in Nepal is due to the lack of budget.

Lack of Advertising Act

Some advertisements published in the newspapers are deceptive; especially

educational institute’s guarantees for excellence on computer hardware in a much

stipulated period, also some advertorials guarantees to make people perfect in English

language in a month, which is totally false. Also use of children in advertisements has

proliferated to advertise the product of noodles, chocolates, biscuits, oil etc.

especially for the edible product, without thinking of the psychological aspect of

children. Also use of women in the advertisement with the traditional concept of

domination is shown ad. Likewise the use of sensational terms are found in the

products; like ‘a friend in hard times’, ‘there is no better way to relax’,. These kinds

of advertisements are the commonly used in the Nepali media; also use of ad meant to

broadcast in television is used for the radio, what it portrays to the listeners, it is

matter of research. This kind of ad will bring no impact to the listeners or rather

mislead them and is entirely contrary to the system of choosing media. So, it is

necessary to check the advertisements published and broadcasted in present day

through regulation or be self-regulated. No one is there to monitor in this kind of

issue, this is why censor board is needed

Unhealthy competition

29

The principal problem facing the advertising industry is that it is disorganized and

unfair competition between agencies has killed the market rate. Unhealthy

competition among advertisement agencies is hitting the industry most. Due to such

unhealthy competition, a majority of agencies, even the renowned ones, are focusing

on cost cutting measures rather than creativity. This is killing effective

communication—an essence of a good campaign.

Need of separate regulating body

Production and distribution of Nepali feature films and advertisements are both

governed by the same Cinema Act and Regulation 2026. It should be noted that a

feature film is two-hour affair and costs millions to make whereas the production cost

of a minute-long advertisement is relatively very low. The two genres should not be

governed by the same Act and regulations. There are difficulties in censorship and

other procedures. The charge for ad films should be decreased to encourage ad films

as they cost less in comparison to feature films. Thus, the government should be

decreased the government tax for ad films. The government should also amend the ad

film censorship regulation according to the global trend.

Low licensing fee

The licensing fee is so low that it hardly restricts channels from airing ever increasing

foreign commercials. It is one of the major problems that the Nepali advertisement

industry has been facing. The license fee is Rs 50,000 for channels airing

commercials and Rs 25,000 for those without commercials. The license fee fixed by

Nepal is very low when compared to fee imposed by Indian government on foreign

channels. The Indian government charges license fee of Rs 4 million from Nepali

channels to broadcast in its territory. This has barred Nepali channels from reaching

audiences in India.

30

Scarcity of skilled human resources

A major problem is the lack of skilled human resource. Firstly our youths are

unaware of the opportunities in advertising. They either want to work in banks or in

the multinational companies. So the industry is not getting smart and creative Nepali

people even if we pay salary and other benefits on a par with these institutions. We

also don’t have schools or institutions where we can enhance our creativity. An

advertising agency has to hire a freshman. It takes at least a year for that person to

learn everything. But when he is ready, another agency takes away that person. Even

though the agency hires the best person in their company, clients do not have

confidence in them. They insist on hiring a foreigner for creative concepts. Thus the

money that could have spent in our country goes outside. Mostly, this money goes to

India.

Lack of Government efforts

Lack of regulation and code of conduct and ethics from the government side is adding

to the woes. The government is yet to give the status of industry to advertising sector.

Due to this fact, the sector is bereft of many facilities from the government till now.

The government should register foreign channels according to international norms

and ban the foreign advertisements in them. Domestic advertising agencies would

benefit and local ads depicting Nepali culture, tradition and resources would be

encouraged, if the government makes it mandatory for foreign channels to air clean

feed. The government should provide tax relief to advertising agencies purchasing

tools and machinery and equipment like high tech cameras and computers.

Government should also make it mandatory for every multinational company to

invest their 10 percent budget on advertisement in Nepal.

Oversupply of services

31

An oversupply of service providers is also taking its toll. An Advertising company

can be registered at the Office of the Company Registrar in Kathmandu for Rs 5,000

and by fulfilling the ‘basic criteria’ of having two rooms and a computer. These small

and unheard of agencies who just about meet the minimum criteria are accused of

having misutilized agency commissions, ruining the quality of advertisements and

attracting middle class clients as they cut rates and offer immediate discounts. This is

a major bone of contention between the capital intensive established agencies and the

recently established small agencies

System of clean feed

Clean feed is a content filtering system, which can be used to block foreign

commercials aired through foreign channels from reaching Nepali audiences. Foreign

channels like HBO and Star Movies have clean feed system.

Multinational companies will be compelled to invest in Nepali advertisement

agencies to promote their products and services in Nepal, if we have clean feed

system. This will definitely generate more jobs and increase the stature of Nepali

advertisement industry. Every year a huge amount of money is flowing out of Nepal

through foreign channels. According to Nepal Cable TV Association, approximately

Rs 25 million is going out of Nepal every year through subscription of foreign

television channels.

No categorization of advertising agencies

Every agency has the same basic tag of ‘Advertising Agency’. It is high time that to

differentiate. When an agency helps to sell the products of the clients, they position

them. Every product has its own positioning. Similarly ad agencies must be

differentiated or, let’s say, positioned. Some would like to call themselves as strategy

and design company. Others see themselves as a creative agency.

2.7 AD AND MEDIA EXPO 2011

32

The striking reality of Nepal Advertising Industry that knocks everyone’s mind is

massive annual turnover of 4.3 billion with 10 to 15 percent rise every year. As the

industry is booming in its every fact, more creative people are bursting into the scene and

more people are prone towards advertising sector. The industry is sure to rocket as one of

the chief catalyst for county’s revenue and generate the employment. Though the

turnover is a matter to keep an eye on and have some smile in the faces, there is still a

void in the industry. The major concern all it takes is to fill this void by establishing

advertisement culture and behavior among the producer and its stakeholders. Advertising

Association of Nepal (AAN) has marched forward to fill void with the intention of Nepal

Ad & Media Expo 2011 for the first time.

Nepal Ad & Media Expo possess and in fact it conjures all the hitherto of advertising and

media activities under a single roof. It’s a review of industry trends which help to pave a

new avenue in the development of the sector. Moreover, the Expo infuses the knowledge

of advertising and the showcase the culture that has to be established in the Nepalese

advertising milieu. The main objective of this Expo was to put a spot light on the

importance of Media & advertising literacy, its history and status on the present scenario

of business world. The three- day Expo, was envisioned to enable the advertising and

media industry, including advertisers, media owners and consumers to interact and

interface in a single platform to further consolidate the roots of the industry.

The Expo benefitted entire advertising circle (Ad Agency, advertiser, media, customer &

government) by identifying new prospect and primarily producer who were not used to

advertising, layman who were not accustomed with the traits of advertising and novices

who could improvise and pose themselves as better players of the industry in the future.

Best part was, the Expo left a trace of advertising trends among every visitor as its bids

farewell to everyone. The stage was set with thousand from the millions learning the

traits of the industry and the advertising behavior.

The AD & Media Expo 2011 provided learning opportunities through workshops on

topics such as marketing, branding, account management, media selection, technology

33

and much more. The event featured special interactive areas where advertising agencies

would display all aspects of advertising and branding, history of Nepalese media &

advertising industry. The Expo showcased innovative strategies, cutting- edge techniques

and latest marketing tools and the visitors will be in position to get dynamic networking

opportunities with real industry players and obtain crucial information. The visitors got

an excellent opportunity to meet and directly interact with leading industry suppliers,

source product and information, discuss business needs, find new markets, set products

and demonstrate. Exhibition gallery to show evolution of Ad & Media in Nepal was

another attractive aspect of Expo.

The event explored all new business potential attractive, high, notch service providers,

manufacturers, media houses, advertising agencies, suppliers and corporate house.

Moreover, the event brought the manufacturers, service providers, and decision makers

from diverse sections of the industry together to aim to constructively reshape the future

of our media industry and advertising industry in Nepal.

To sum up, the Ad & Media Expo reserves immense potentials to acts as a robust to add a

whole new dimension to the growth of Nepal media and advertising industry. Those shut

down behind their doors get unnoticed of what went in front of them and those who open

their doors and indulge will set out hour for a new dawn and “say yes to advertising”

CHAPTER III

34

ADVERTISING AGENCY OF NEPAL

3.1 INTRODUCTION TO ADVERTISING AGENCY

An advertising agency is a firm that specializes in the creation, design and placement of

advertisements, and in the planning and execution of promotional campaigns for products

and services of their client. An advertising agency or ad agency is a service business

dedicated to creating, planning and handling advertising (and sometimes other forms of

promotion) for their clients. An ad agency is independent from the client and provides an

outside point of view to the effort of selling the client’s products or services. An agency

can also handle overall marketing and branding strategies and sales promotions for its

clients

The advertising agency has evolved to provide the specialized knowledge, skills and

experience needed to produce effective advertising campaigns. It provides a quality range

of service greater than any single advertiser could afford or would need to employ.

Getting the best out of advertising is a highly skilled job. It requires the inputs of experts

in many different fields like writers, artists, photographers, designers, television

production crews and many others. Even the biggest advertisers cannot afford to employ

all these experts. Almost all advertising is therefore arranged through an advertising

agency which provides the necessary skill to turn the message into a memorable and

effective advertisement. Agencies may be hired to produce single ads or, more

commonly, ongoing series of related ads, called an advertising campaign.

The Association of Advertising Agencies of America (AAAA) defines advertising

agency as “An independent business organization composed of creative and business

people who develop, prepare and place advertising media for sellers seeking to find

customers for their goods and services.”

3.2 HISTORY OF ADVERTISING AGENCY IN NEPAL

35

The commercial potential of advertising in a growing number of publications and

broadcasting media was recognized as early as 1960 AD when the first advertising

agency- Nepal Advertisers was set up. However, Nepal Advertisers was effectively

limited to running a press clipping service. Three years later, another agency- Nepali

Printing and Advertising was set up and it began handling ads for some major clients

such as Janakpur Cigarette Factory, Royal Nepal Airlines Corporation and Nepal Bank

Limited. Another agency was set up in 1965 AD, Kishor Advertisers which is still in

business. The advertisers willing to place ads, the media and advertising agencies are the

three main players that make up the advertising business in Nepal. The advertisers spend

more money to communicate with their markets, and use advertising agencies to place

their advertisements in the media of their choice.

The advertising agencies in Nepal perform a number of functions. They keep track of the

rapid changes taking place in Media, monitor and measure reading habits of people,

advises the advertiser on the suitability of media, write copy or produce videos and audio

clips, and simplify and monitor accounting and expenses. Media grants the agencies

discounts for the work they do for their clients, so the advertisers benefit from the use of

advertising agencies’ services. In 1998 AD, advertising agencies had provided 85 percent

of the advertisements that had appeared in Kantipur Daily, the turnover from Kantipur’s

ad were about Rs. 115 million. By deducing 15 percent of the turnover, what is left is Rs.

97.75 million of which the agencies theoretically earns 15 percent commission, which

adds up to Rs. 14.66 million. Thus what is evident is that there is something for everyone

in Nepali advertising. The advertiser is able to get the message out and both the media

and the advertising agencies would benefit from it.

3.3 TYPES OF ADVERTISING AGENCIES

36

Ad agencies come in all sizes, from small one- or two-person shops to large multi-

national, multi-agency conglomerates.

Full Service Agencies

A full service ad agency is one that provides a range of marketing services. A full

services agency provides services that are directly related to advertising such as

copywriting, artwork, production of ads, media planning etc. It also provides such

services in respect of pricing, distribution, packaging, product design etc.

Modular agencies

A modular agency is a full service agency that sells its services on a piece meal basis.

Thus an advertiser may commission an agency’s creative department to develop an ad

campaign while obtaining other agency services elsewhere. Or, an advertiser may hire

an agencies media department to plan and execute a program for advertising that

another agency has developed. Fees are charged for actual work undertaken.

In House agencies

Those companies, which prefer to have closer control over advertising, have their

own in-house agency. This type is owned completely by the advertiser. It performs

almost all functions that an outside advertising agency would perform and that’s why

some people refer to it as full-service advertising department of the advertiser.

However, the difference between an in-house agency and an advertising department is

that the in-house agency can undertake to serve several other clients, if the owner so

desires, but an advertising department solely undertakes that work of its owner and

not of outside clients. In-house agency not only provides control over advertising

schedule and costs, but also offers convenience for its owner, because it is just

available in the same building as that of the head office of advertiser.

Creative Boutiques

37

These are shop agencies that provides only creative functions and not full-service.

The specialized creative functions include copy writing, artwork and production of

ads, they charge a fee or percentage of full service agencies, and as such most of them

convert into a full service agency or merge with other agencies to provide a wide

range of services.

The Specialists Agency

There are some agencies who undertake advertising work only in certain areas. There

are agencies that specialize only in financial services or only in publicity or only in

point-of-purchase material etc.

3.4 FUNCTIONS OF ADVRETISING AGENCIES

The functions performed by advertising agencies depend on its nature and size. The basic

function performed by a typical advertising agency can be categorized into3Ps: planning,

preparing and placing advertising.

Planning

The planning function includes researching the consumer, product and market to

identify their characteristics. On the basis of the market research information the

agency prepares creative strategy, media plan and advertising budget. The creative

strategy, media plan and budget are sent to the advertiser for approval. The agency

prepares several advertising concepts and tests them among the potential customers.

The successful concepts are selected for development.

Preparing

38

The preparing function includes writing, designing and producing the advertisement.

This is the technical aspect of advertising that involves the combined efforts of many

experts such as copywriter, art director, layout specialists, artists, producers etc.

Placing

This function includes contracting media time and space, delivering the advertising

materials in the appropriate forms to the media, checking and verifying insertions,

billing clients and paying the media.

3.5 SERVICES PROVIDED BY ADVERTISING AGENCIES

Besides performing the three major tasks, advertising agencies also serve the advertiser,

the media and the society.

Client related services

The existence of advertising agencies has made it possible for many firms to

eliminate their advertising department, thus reducing heavy financial and

administrative burden. An advertising agency performs various functions that directly

and indirectly benefit the advertiser. The agencies provide expert services to the client

in creating, developing, producing, and releasing creative and innovative

advertisement more economically than the advertising department. It also provides

pre development research services and post-campaign evaluation services to the

client. Advertising agencies through their accumulated experience in the market are

able to advise the client in product development, marketing services and marketing

intelligence. Advertising agencies sometimes undertake independent studies on media

effectiveness and make them available to important clients.

Media related services

39

The media world basically survives on the income from advertisements. Newspapers,

magazines, TV channels, radio stations and other media depend on advertising

agencies to provide continuous revenue from the advertisements. Some agencies buy

the media time and space in blocks and pay the media in advance. Thus, advertising

agencies greatly reduce the financial risks of media owners. The agencies perform as

marketers of time and space for media. The agencies provide expert services in the

form of media scheduling so that the commercials spots are optimally utilized.

Society related services

An advertising agency provides employment to a large number of artists, technicians

and other support manpower in the society. Advertising agencies also provide jobs

and revenue to other facilitating service providers by outsourcing production related

jobs. It provides education and entertainment to the masses through creative,

innovative and entertaining advertisements. Advertisements also educate people on

social issues and problems. The consumers are able to exercise their freedom of

choice mainly on account of the advertisements.

3.6 ORGANISATION OF AN ADVERTISING AGENCY

40

The organization structure of advertising agency varies according to its size and types of

functions handled. Most of the advertising agencies are organized in terms of the various

functions handled. The head of an advertising agency may have different titles such as a

General Manager, Chief Account Executive or a Managing Director. A typical

advertising agency is organized into four important departments: marketing services,

creative services, account services and administrative services. The organization structure

of a full-service advertising agency is as follow:

Fig 3: Organization of Advertising Agencies

3.7 TYPICAL WORK FLOW IN ADVRTISING AGENCY

General Manager

Marketing

Service

Department

Media

Research

Other Services

Creative

Service

Department

Art Director

Copywriting

Production

Traffic

Account

Service

Department

Account

Executives

Administrative

Service

Department

General

Administration

Financial

Administration

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STAGE WORK PERFORMED AT STAGE

Briefing Stage Briefing from the client

Internal briefing to the creative and media

Any research briefing if required

Creation Stage Ad campaign and media plan development

Internal review and finalization

Presentation to client and approvals

Any pre-testing if required

Production Stage Budget and estimate approvals

Production of film, press ads, collaterals

Media Scheduling and media booking

All release approvals for creative & media

Post Production Stage Material dispatch to media

Media release monitoring

Any post-testing if required

Billing and collection

3.8 PROFILE OF MAJOR ADVERTISING MEDIUMS

42

MEDIUM ADVANTAGES LIMITATIONS

Newspaper

s

Flexibility; timeliness; good local

market coverage; broad acceptance;

high believability.

Short life; poor reproduction

quality; small pass along

audience.

Television Combines sight, sound and motion;

appealing to the senses; high attention;

high reach.

High absolute cost, high clutter,

fleeting exposure, less audience

selectivity

Direct mail Audience selectivity, flexibility, no ad

competition within the same medium,

personalization.

Relatively high cost, junk mail

image.

Radio Mass use, high geographical and

demographic selectivity; low cost.

Audio presentation only; lowers

attention than television; non

standardized rate structure;

fleeting exposure.

Magazines High geographical and demographic

selectivity; credibility and prestige;

high quality reproduction, long life;

good pass-along readership.

Long ad purchase lead time; some

waste circulation; no guarantee of

position.

Outdoor Flexibility; high repeat exposure; low

cost; low competition.

Limited audience selectivity;

creative limitation.

Brochures Flexibility; full control; can dramatize

message.

Overproduction could lead to run

away costs.

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CHAPTER IV

WELCOME ADVERTISING & MARKETING PVT LTD

4.1 BRIEF INTRODUCTION OF COMPANY

Welcome Advertising and Marketing P. Ltd (in short Welcome) is a leading professional

agency in the field of communication management. It has started its operation from 1989

AD. Throughout the history, Welcome have remained a strong, stable company. It has

always believed in the rock solid principle of honesty, customer service and offering a

variety of services to best fit the client’s specific needs. This spirit of hard work, integrity

and professionalism has remained a guiding principle of Welcome. Welcome strives to

deliver ideas with emotional power that connect in a deeper, more relevant way to

accelerate brand potential. Their offering spans the full spectrum of integrated

capabilities, from traditional to digital, both consumers and professional

“Change is the only permanent thing in today’s dynamic world. And, only those who are

agile enough to align with the dynamics of change become successful.” This is the prime

premise upon which Welcome is built upon. Accredited with various national and

international accolades and awards, Welcome is ranked amongst Top 5 agencies of the

country. Their assignment with wide array of well-established clients has helped them to

establish as a reliable leader in the interactive service sector. Their designing always

revolves around customer's need and behavior. Welcome believes that they doesn’t create

brand in fact they discover them by gaining insight into a company, its audience and of

course a gamut of cultural influences that surround them .Innovation has been at the core

of the Welcome Advertising since its inception. Welcome’s quality system emphasizes

on a team oriented, time sensitive and project scope management approach.

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4.2 PROFILE OF COMPANY

45

Name Welcome Advertising & Marketing P. Ltd

Founded 1989 AD

Managing Director Mr. Nirmal Raj Poudel

Industry Advertising and Marketing

Type Privately held

Company size 40 full time employees ( many are in contract

basis)

Address Old Baneshwor, Bhimsengola,

Kathmandu, Nepal

Tel: +977-1-4494842, 4116227

E-mail: inquiry@welcomeadnepal.com

Web: www.welcomeadnepal.com

4.2.1 VISION

To establish ourselves as a strong and stable leader of Nepali advertising world.

4.2.2 MISSION

To enable our customers to keep pace with ever-changing business environment and

to help them grow and prosper.

4.2.3 ETHICS

We value ad budget as investment not expenses. Our relentless commitment to

quality symbolizes a continuous effort to optimize processes, enhance performance

and upgrade quality as an integral part of everything we do. We ensure that the

solution we provide will not only act as a motivator for the further growth of our

client but also be a reward to remain ahead.

4.2.4 WORKING CULTURE

The solution we provide is based on the audience insights and prevailing market

trend. Our creation incorporates both functional and emotional appeal. Each plan of

Welcome is customized to the marketing needs of each individual client, audience

and market. Our approach in the most cost effective way to create superior service

experience that delivers value to business and customer alike. We are the best choice

to ensure linguistically and technically accurate communication solution.

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4.3 ORGANISATIONAL STRUCTURE

This section presents the detailed description of the various departments and personnel

working under the three main departments of the Welcome Advertising agency:

Fig 5: organization structure of Welcome Advertising & Marketing P. Ltd

1. Creative department

The creative department is the people who create the actual ads and form the core of an

advertising agency. The creative department is headed by the creative director who

directs and supervises the whole creative process. The creative function is the most

important function and the creative people are the most important assets of an advertising

agency. They are directly involved in the development and production of advertisements.

The quality of advertisements depends on a combined effort of the people working in this

department with effective support of other department. The various functions undertaken

under this department are as follow:

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• Administration

• Account

• Billing Section

• Account Executive

• Media Planner

• Market Research

• Outdoor

• Event Management

• Public Relation

• Post Production

• Graphics

• Copy

Creative Marketing Finance

Managing Director

Post production

The post production function involves preparing the final material for the print or

broadcast. This function includes typesetting, selection of illustration, photography

and artwork in print advertising. In TV commercial, it includes filming, editing and

preparing the final broadcast copy.

Graphics

The graphic function is carried out by the graphic designer of the agency. Graphic

design is a form of visual communication using text and/or images to present

information, or promote a message. The art of graphic design embraces a range of

cognitive skills and crafts including typography, image development and page layout.

There are varying degrees of graphic design. Graphic designer involvement may

range from verbally communicated ideas, to visual rough drafts, to final production

Copy

Copywriting involves providing words, which are read or heard in advertisements.

This may include slogans or jingles or detailed text for catalogues, brochures, leaflets

and journals. Copywriting also takes the form of script for television and film

commercial advertisement. A copywriter is a person who writes text, or copy, for

clients that's intended to persuade a reader to buy a product or service or otherwise

take action.

2. Marketing department

. The major functions performed under this department are as follows:

Outdoor

Welcome also provides various outdoor functions for their clients like hoarding

board, billboard, pamphlet, leaflet and flex designing.

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Account executive

In advertising ‘The account’ is the client. The business of each client with the agency

is referred to as an account. Account executives represent their ad agency to their

clients. They must know the client’s objectives and priorities as well as competency

and limitations of the advertising agencies. The chief role of account executive is to

extract the best possible work from the other departments of the agency and to

motivate guides and coordinate the activities so that deadlines are met and the client’s

expectations will become a reality. They spend a lot of time keeping the client

updated on the progress and are in daily touch with clients.

Media planner

They are responsible for the planning and placement of advertising time and space.

The media planner develops the media plan like where to place the advertisements so

that they will be seen by right target audience or to recommend media and media

vehicles that in the agency's opinion best fulfill the client's marketing and advertising

objectives. Media planners have access to up-to-date information about each

advertising medium. This includes the relationship and circulation figures for

newspapers and magazines, viewing figures for different times of the day, listening

audience figure for commercial radio stations etc. Once a media plan has been

approved by a client, it must then be purchased. For Nepali newspaper rate for

advertisements see annexure 1.

Public relations

Public relations (PR) include a variety of programs to promote or protect a company’s

image or individual products. The best PR department performs the functions like

press relations, product publicity, corporate communication, lobbying and counseling.

Though Welcome is trying to provide this service to their client but it has not been so

effective due to lack of personnel to look after each clients.

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Market research

The research division in an advertising agency conducts various types of advertising

tests and researches. The research includes concept testing, copy testing, conducting

tracking studies and measuring advertising effectiveness. Welcome undertakes the

research as per the request of the clients. Nepal still lacks the private companies who

does research in various things like consumer buying behavior, their changing taste n

preferences which could be very helpful for the manufacturer. So Welcome is

publishing Nepal’s first monthly corporate Magazines called CEO in which its most

of the content are research based articles useful for all corporate persons.

Event management

Event management means planning, organizing and executing live events which

could include a brand/product launch, press conference, corporate meetings and

conferences, special corporate hospitality event (concerts, award ceremonies, film

premiers and fashion shows). Welcome has been organizing business events since its

establishment.

3. Finance department

Finance department within Welcome is responsible for following functions:

Administration

This function involves the day to day administration of the agency, procurement and

human resource management including hiring people, training, and placements and

outsourcing jobs.

Account and billing section

This function involves financial planning, account keeping, sending bill to clients and

paying facilitating institutions for their services.

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4.4 WORKFLOW IN WELCOME

The first and foremost thing required for an advertising agency in order to work is client.

Without a client, an advertising agency would not be able to survive. Either client may

come in contact with the agency through their personal relations or the marketing

personnel have to fetch them by themselves. So if they don’t have any personal relations

then the workflow in agency starts with pitching. The step by step workflow process of

Welcome Advertising & Marketing P. Ltd is explained as follows:

Firstly, the marketing personnel of the Welcome visit many organizations for

pitching. Pitching here means approaching the various organizations and giving

presentations to them about our own company so that they become familiar with

Welcome. The presentations include all the detail information of Welcome like its

introduction, vision, mission, organization structure, services, achievements etc. For

pitching see annexure 2.

If the client is positive about our pitching then they ask us to make a campaign for

them. This campaign includes overall 4Ps of the company, slogan, logo, positioning

of the product, identifying target audience on the basis of various factors, media

selection etc. See annexure 3.

Sometimes the client asks second phase of presentation also in which more detail

information regarding the campaign is required.

If the client liked this presentation then they will call for meeting. It is called client

briefing. Where client provides over all explanation about them, their product and

their marketing or advertising objectives.

After this meeting the agreement is signed between both the parties. All the cost

procedure is finished here.

The marketing personnel takes that brief and translate it to creative brief.

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According to creative brief, the creative department personnel translate it into creative

content or creative ideas. Here actual ads are made. If it is jingle based then jingle is

made, if it is TVC storyboard is made (for storyboard see annexure 4). The creative

director and copywriter works on a concept and design for commercials, print

advertisements, and any other advertising medium

This job is then formally introduced to the client who either approves or disapproves

the advertisement. If the rough concepts of ad is passed by client.

Then we can go for media planning. If it is TVC then we further have more steps like

model selection, Chroma (where video shoot of only model is done in white

background), post production (where the white background of that video shoot is

changed into different scenes according to the requirement and audio recording is

matched with video etc.), final approval and then only media planning is done.

In media planning overall plan of media is done. If it is print advertisement then at

which day, which newspaper or magazines, in which page of that newspaper is

decided. If it is TV advertisement then which day, which time, which program is

decided. For media planning see annexure 5.

After this media plan is approved by client, the advertisement is placed to air in the

media.

Feedback of the effectiveness of that advertisement is measured if client requests it

for.

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4.5 ACHIEVEMENTS OF WELCOME

Advertising association of Nepal (AAN) has been conducting award ceremony named

“Crity Awards” in order to honor the hard work of individuals working in this industry.

Since last few years Welcome Advertising & Marketing P. Ltd has been winning awards

in various categories continuously.

Year (B.S.) Category Advertisement

2061 Best Art Director Wild Candy

2062 Best Jingle

Best Jingle Maker

Jumbo Battery

Campino Chocoman

2063 Best Television Commercial

Best Radio Spot

Best Jingle Maker

Best Jingle

Shalimar Cement

Hp Milky

Jumbo Battery

Active Pearl Shampoo

2064 Most Popular TVC of the Year

Best Jingle Recordist

Jagdamba Steels

Welcome Tea

2067 Best Art Director

Best Recordist

Popular TVC Ad

Rk Jewellery

Rk Jewellery

Jagdamba Steels

2068 Best Creative Agency

Most Popular TVC

Best TVC Editor

Best TVC Script Writer

Jagdamba Steels

Pepsodent

Shalimar Paints

2060* Merit Certificate from Abby Mumbai A South Asian Accreditation

for Wild Candy

4.6 MAJOR CLIENTS

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MNC Clients National Clients

4.7 MEMORABLE ADVERTISEMENTS

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Welcome has created some of the most memorable advertising in Nepal.

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4.8 SWOT ANALYSIS OF WELCOME

SWOT is a strategic management tool. It is an acronym for: Strengths, Weaknesses,

Opportunities and Threats. A SWOT analysis is a process to identify where you are

strong and vulnerable and where you should defend and attack. The analysis can be

performed on a product, on a service, a company or even on an individual. Done

properly, SWOT will give you the big picture of the most important factors that influence

survival and prosperity as well as a plan to act on

SWOT analyses evaluate the strengths, weaknesses, opportunities and threats of a

business operation. A SWOT analysis of the advertising industry would address these

four criteria, and provide management of advertising agencies a better understanding of

their industry, both in terms of shortcomings and areas of excellence. Although a SWOT

analysis can be commissioned for the advertising industry as a whole, a SWOT analysis

could also be commissioned to evaluate a single advertising agency, one marketing

campaign or even a line of commercials within a campaign.

The SWOT Analysis conducted on Welcome Advertising & Marketing P. Ltd is as

follow:

Strengths

A well acclaimed name in the field of Nepali advertising industry from 21 years.

Ranked among top five agencies in Nepal

Honored by various national & international awards & accolades.

Equipped with a pool of dynamic personnel with acute sense of creativity,

marketing and loyalty.

Better media relations at all level.

Till now more than 400 jingles and more than 250 TV advertisements have been

successfully created

Nepal’s first advertising agency to correlate with International Network (IN),

located in Belgium, France

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Nepal’s only advertising agency with own in-house production facility for making

TV ads

Continuously able to generate average profit of Rs Ten crores yearly.

Weakness

Lack of proper infrastructure like secure file cabinet, good rest room, sufficient

desktop computers etc.

No any training and workshops for marketing and creative personnel.

Copy paste practice from old advertisements while making new advertisements of

the same brand.

Lack of unity among the employees.

Opportunities

The industry is growing so agency also have opportunity to grow

Diversifying to new business like wedding planning and CEO magazines

Open market mechanism

Advertising is emerging as a bright and promising profession opening up

unprecedented opportunities for those aspiring to build career in it.

Advancement in the printing technology, expansion of TV and radio networks and

the entry of the new generation of internationally trained and creative manpower

Foreign collaboration are entering in market and trend of specialized agency is

developing

Internet and mobile phone growing as media

Threats

Political instability

Disorganized and Unhealthy competition

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Load shedding problems

Lack of effective copyright law in advertising.

Mushrooming advertising agencies at an exponential rate

Lack of skilled human resource

CHAPTER V

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CONCLUSION & RECOMMENDATION

5.1 CONCLUSION

In today’s world which is fast moving & dynamic, people’s wants, need and desires are

changing; it’s very important to know them and give them what they want. This is the

main objective of advertising where ad agency plays major role in market research,

making of creative, launching it in the market, taking the feedback of consumer and

making any product famous and acceptable among consumers. Ad agencies are playing

an important role in shaping present and future of not just selected brand but of entire

company. There is no one sure fire best way to advertise your product or service. It is

important to explore the various advertising media and select those which will most

effectively convey your message to your customers in a cost-efficient manner.

Nepal’s advertisement industry has been about bringing a modern perspective to the

industry, modernizing and matching up with the multinational ad agencies established in

the country. We will in time prove that the local creative people are more effective than

the multinational ones. If we look at the scenario of television industry 15 years back and

now, we have more creative people and more capacity to produce more creative heads

today as compared to that time. Previously, there used to be more foreigners running the

media houses. And if we are able to change the misconception of people that advertising

is just a donation, then we will be able to do well. Advertisement is a brand in itself and

we should leave no stones unturned to promote it.

The industry has grown a lot in the last decade and it is still growing. It’s Rs 4.3 billion

industry now. But there’s still the lack of trained, educated professionals in this field. It

makes a huge difference in the output, especially in a creative field. The new generation,

it seems, is more comfortable to work in the banks, the way the old generation preferred

government jobs to private ones. In advertising, as is the case with any other creative

sector, people who don’t want a nine-to-five job are more interested. And those who want

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to explore their talent join this industry. But now it seems a larger number of young

people are interested in the advertisement profession which is also one of our

achievements.

Advertising is a growing industry that offers great scope for creative people. Each year

new markets open up and communication channels become more sophisticated, reaching

out to many more people, through different media. Competition for many jobs will be

keen because the glamour of the advertising and public relations services industry

traditionally attracts many more jobseekers than there are job openings. On the other

hand, employment growth may be tempered by the increased use of more efficient non-

print media advertising, such as Internet or radio, which could replace some workers.

Employment also may be adversely affected if legislation, aimed at protecting public

health and safety, further restricts advertising for specific products such as alcoholic

beverages and tobacco.

The advertisement volume is not enough for the media industry here. Media channels are

brought into operation without having studied the feasibility of the television industry in

Nepal. The advertisement industry hasn’t been able to provide enough back up for media.

We know that Indian channels have a greater viewership then the Nepali channels. In that

sense we’re not capable enough to provide proper television content to the Nepali

viewers. But talking from another perspective, though slowly, we’re developing our

contents, so that in a few years’ time it will replace the foreign channels. It is a continued

process and it can be seen happening.

Our advertising industry has very much capacity to grow. There is enough room to grow,

if we see the advertising agencies they have enough infrastructures to grow but it all

depends on the overall trade or the economy. Overall economy has to grow in order to

promote the growth of the advertising industry. If the political affairs settle down within

the coming 5-6 months then it becomes quite possible. There’s always room for continual

growth. The advent of new technologies, new thinking and new ideas has also assisted

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the advertising sector to grow vibrantly. We should always remember that advertising is

an investment in the future of our business.

5.2 RECOMMENDATION

Advertising stakeholders complain that lack of policy, absence of regulatory mechanism

and lack of skilled manpower is hindering its growth. The industry is suffering a serious

lack of policies, laws and a regulatory body. Lack of a regulatory body has adverse

consequences on the industry, as this allows some advertising agencies to indulge in

unethical price wars and heavy discounts. Therefore there is a dire need for a regular

framework which brings all advertising professionals under one framework and

systemizes advertising procedures. Besides policies and regulatory mechanism, the

government should also develop and implement ‘clean feed’ system which is very

essential for the growth of domestic advertising industry.

In Nepal almost all active advertising agencies are associated with AAN, and their

number is 178. However, the number of registered agencies is over 300. An Advertising

company can be registered at the Office of the Company Registrar in Kathmandu for Rs

5,000 and by fulfilling the ‘basic criteria’ of having two rooms and a computer. These

small and unheard of agencies who just about meet the minimum criteria are accused of

having misutilized agency commissions, ruining the quality of advertisements and

attracting middle class clients as they cut rates and offer immediate discounts. This is a

major bone of contention between the capital intensive established agencies and the

recently established small agencies. AAN is in the process of forming a committee to

resolve this problem. But for this problem government should also actively take some

actions. The government should immediately stop distributing licenses in a haphazard

manner. Licenses should only be issued based on market need.

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International Advertisers spend a lot of resources in research especially audience research

or communication research.They have real data about the media. Realistic data is one

thing that is lacking in the industry. Talking about television, at this time we don’t have

the mechanism to see what is being watched. However we have one research organisation

AC Neilson who undertakes such activities but still one is not sufficient. It is high time

that we differentiate or categorize ad agencies of Nepal as there is no categorization of

advertising agencies here. The categories should include full-fledged advertising

agencies, buying and selling agencies, creative agencies and release agencies.

Advertising agencies can opt to be under these categories and then only the grade system

can be applied and a system of taxation be put in place accordingly

The country should adopt new forms of advertising such as social networking and digital

advertising, involving cell phones and internet, to meet the needs of the current

generation. AAN needs to introduce novel programs that encourage the industry to adopt

new technology. Otherwise, we may lag behind. As we know there is no academic

institution to train people in advertising, besides the regular brief training packages

provided by the Advertising Association of Nepal. We also don’t have any university that

has separate course or faculty related to advertising sector in their curriculum. They do

provide marketing subject but in marketing we only get general idea of advertising. So, in

the marketing department, we manage with the products of private colleges. But there are

very few trained professionals in the creative department. So government or private

universities should start thinking about developing advertising as a separate stream or

specialization in their curriculum.

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