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 individuals 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 Nepals 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. Thats 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.

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.

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 companys 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.

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 nonpersonal presentation and promotion of ideas, goods or services by an identified sponsor.

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.

Mission

Money Measuremen Advertisin

Message Media

Fig 1: 5ms of Advertising

1. Mission 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.

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

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 Advertising has become one of the strongest tools in todays marketing. There is no controversy in the power of advertising in contributing to the firms 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 firms 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 brands 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 firms 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 firms products. 6. Counter rumors: Advertising is a very important tool in countering damaging rumors about the firms 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

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.

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3. Reduce risks: Consumers normally undertake financial, physical, psychological and social risks when they buy a product. Advertisements help the consumer to 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 peoples 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.

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2.2 HISTORY OF NEPALI ADVERTISING

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 mediums 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

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only printed envelopes, tickets and government papers and didnt contribute in making the history of advertisement printing. 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 Sharmas 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 20point advices. Printing by the private sector started with Kantipur Publication Private Limiteds 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 Kantipurs 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 cant find any authentic history.

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Todays 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 Televisions 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 dont 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 cant 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 Radio

360 200

480 250

600 300

500 450

900 650

700 720

865 750

DTA Others

* 920

* 870

* 750

* 800

* 800

* 850

40 650

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 TV 18

26

27 22

34 24

36 18

33 25

36 20

47 20

Radio

10

11

12

17

19

21

17

DTA

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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5000 4500 4000 3500 print 3000 2500 2000 1500 1000 500 0 2004 2005 2006 2007 2008 2009/10 2010/11 TV radio DTA Others total

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

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2.4 ADVERTISING REGULATION IN NEPAL

There is no specific law relating to advertising in Nepal. Advertising is affected by the relevant constitutional provisions, governmental administrative regulation and selfregulation 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.

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The Defamation and Libel Act- 2016 in Section 6 has the provision for punishment if published any materials which have libelous character. Likewise, Nepals Copyright Act -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 1814 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 Directive2059 (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,

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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.

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.

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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 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

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(audio-visual), digital media, foreign advertisement, and also establish impartial, representative, free censor board. Registration of newly advertising agency would be 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 countrys 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

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Size of economy

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 institutes 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

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Unhealthy competition

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 communicationan 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.

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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 dont 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.

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Oversupply of services

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, lets say, positioned. Some would like to call themselves as strategy and design company. Others see themselves as a creative agency.

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2.7 AD AND MEDIA EXPO 2011

The striking reality of Nepal Advertising Industry that knocks everyones 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 countys 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. Its 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.

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The AD & Media Expo 2011 provided learning opportunities through workshops on topics such as marketing, branding, account management, media selection, technology 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

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CHAPTER III 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 clients 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.

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3.2

HISTORY OF ADVERTISING AGENCY IN NEPAL

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 Kantipurs 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.

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3.3

TYPES OF ADVERTISING AGENCIES

Ad agencies come in all sizes, from small one- or two-person shops to large multinational, 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 agencys 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 thats 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.

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Creative Boutiques

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.

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Preparing

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.

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Media related services

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.

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3.6 ORGANISATION OF AN ADVERTISING AGENCY

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:

General Manager

Marketing Service Department

Creative Service Department

Account Service Department

Administrative Service Department

Media

Art Director

Account Executives

General Administration

Research

Copywriting Financial Administration

Other Services

Production

Traffic

Fig 3: Organization of Advertising Agencies

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3.7 TYPICAL WORK FLOW IN ADVRTISING AGENCY

STAGE Briefing Stage

WORK PERFORMED AT 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

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3.8 PROFILE OF MAJOR ADVERTISING MEDIUMS

MEDIUM Newspapers Flexibility;

ADVANTAGES timeliness; good

LIMITATIONS local Short life; poor reproduction pass along

market coverage; broad acceptance; quality; high believability. Television audience.

small

Combines sight, sound and motion; High absolute cost, high clutter, appealing to the senses; high attention; fleeting exposure, less audience high reach. selectivity Relatively high cost, junk mail image.

Direct mail

Audience selectivity, flexibility, no ad competition within the same medium, personalization.

Radio

Mass use, high geographical and Audio presentation only; lowers demographic selectivity; low cost. attention than television; non standardized rate structure;

fleeting exposure. Magazines High geographical and demographic Long ad purchase lead time; some selectivity; credibility and prestige; waste circulation; no guarantee of high quality reproduction, long life; position. good pass-along readership. Outdoor Flexibility; high repeat exposure; low Limited cost; low competition. Brochures audience selectivity;

creative limitation.

Flexibility; full control; can dramatize Overproduction could lead to run message. 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 clients 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 todays 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 doesnt 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. Welcomes quality system emphasizes on a team oriented, time sensitive and project scope management approach.

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4.2 PROFILE OF COMPANY

Name

Welcome Advertising & Marketing P. Ltd 1989 AD

Founded Mr. Nirmal Raj Poudel Managing Director Advertising and Marketing Industry Privately held Type 40 full time employees ( many are in contract Company size basis) Old Baneshwor, Bhimsengola, Address Kathmandu, Nepal Tel: +977-1-4494842, 4116227 E-mail: inquiry@welcomeadnepal.com Web: www.welcomeadnepal.com

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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:

Managing Director

Creative

Marketing

Finance

Post Production Graphics Copy

Account Executive Media Planner Market Research Outdoor Event Management Public Relation

Administration Account Billing Section

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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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 clients 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 clients 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 companys 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 Nepals 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 dont 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.) 2061 2062 2063 2064 2067 2068 2060* Category Best Art Director Best Jingle Best Jingle Maker Best Television Commercial Best Radio Spot Best Jingle Maker Best Jingle Most Popular TVC of the Year Best Jingle Recordist Best Art Director Best Recordist Popular TVC Ad Best Creative Agency Most Popular TVC Best TVC Editor Best TVC Script Writer Jagdamba Steels Pepsodent Shalimar Paints Advertisement Wild Candy Jumbo Battery Campino Chocoman Shalimar Cement Hp Milky Jumbo Battery Active Pearl Shampoo Jagdamba Steels Welcome Tea Rk Jewellery Rk Jewellery Jagdamba Steels

Merit Certificate from Abby Mumbai

A South Asian Accreditation for Wild Candy

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4.6 MAJOR CLIENTS

MNC Clients National Clients

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4.7 MEMORABLE ADVERTISEMENTS

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

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Nepals first advertising agency to correlate with International Network (IN), located in Belgium, France Nepals 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

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 Threats Political instability Disorganized and Unhealthy competition Load shedding problems Lack of effective copyright law in advertising. Mushrooming advertising agencies at an exponential rate Lack of skilled human resource

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CHAPTER V CONCLUSION & RECOMMENDATION

5.1 CONCLUSION
In todays world which is fast moving & dynamic, peoples wants, need and desires are changing; its 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. Nepals 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. Its Rs 4.3 billion industry now. But theres 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

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sector, people who dont want a nine-to-five job are more interested. And those who want 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 nonprint 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 hasnt 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 were not capable enough to provide proper television content to the Nepali viewers. But talking from another perspective, though slowly, were 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. Theres 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 dont 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 dont 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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