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Impact of consumer goods advertising laws on sales, patronage and demand

Leveraging effective advertising for brand building

Advertising in Nigeria has a rich history, dating back to the mid-19th century when traditional media practices — newspapers, door-to-door marketing, radio, broadcast television, cable, and satellite — were the rave. Today, the media space has evolved, embracing the digital world, to produce a new way of stimulating audiences — digital advertising. This has played a vital role in changing brand narratives, creating product awareness, driving sales, building one-on-one connections, and capturing market shares. As technology advances, we chart new possibilities, explore innovative strategies and create interactive content, with the aim of shaping perceptions and building customer loyalty. Hence, a correlating need has been created for comprehensive legal frameworks that can positively shape the future of advertising.

This article delves into the legal landscape of consumer goods advertising and its influence on consumers and the laws of demand. Understanding this landscape is crucial for businesses to navigate regulations, optimise marketing strategies, and boost sales while meeting consumer demands

Concept of consumer goods advertising
Consumer goods advertising refers to the promotional activities undertaken by businesses to market their products or services to consumers. It utilises various marketing channels and techniques, such as commercials, print, digital marketing, influencer marketing, and direct mail, to build brand awareness, influence consumer behaviour, and drive sales. Companies usually use this tool to achieve a series of goals including creating a distinct image from a myriad of competitors as well as building brand loyalty in their customers.

Legal framework for regulation of consumer goods advertising in Nigeria
Advertising laws do one job and they do it well, they provide guidelines and standards that regulate the creation, use and dissemination of adverts. The enforcement of these regulations helps the Nigerian government safeguard consumers against deceptive adverts, make informed decisions, and promote fair competition in the industry. Below, we have listed some of Nigeria’s most prominent advertising laws for consumer protection.

1. Advertising Regulatory Council of Nigeria Act, 2022
This Act repealed the Advertising Practitioners (Registration, etc.) Act, creating new regulations for the advertising industry in Nigeria. It further established the Advertising Regulatory Council of Nigeria (ARCON), empowering it to create a regulatory framework for the Nigerian advertising and marketing communications industry and all related matters. The Act also sets out guidelines, licensing requirements, and disciplinary measures for individuals and organisations involved in advertising. While it does not focus solely on consumer goods advertising, it reasonably provides the necessary framework for regulating advertising practices across various sectors, including consumer goods.

One of its notable provisions is a ban on using foreign voice-over artists and models in advertisements, except when they have been registered. The legislation primarily aims to promote local content, protect consumers, and ensure compliance with international best practices.

Under the Act, all advertisements must receive approval from the council before publication, empowering ARCON to take legal action against platforms that violate the provision. This is exemplified by the infamous N30 billion lawsuit against META.

These regulations are essential safeguards for fair competition, consumer interests, and fostering trust in the marketplace.

Additionally, section 52 of the Act enables the council to establish the Advertising Arbitration Panel, to resolve disputes related to the ARCON Act, Code of Advertising Practice, and relevant legislations.
The Act also tasks ARCON with regulating online advertisements. Notably, ARCON has recently implemented vetting rates for social media adverts in Nigeria which took effect from May 9, 2023. The rates depend on the turnaround time for approval, with faster approvals incurring higher fees. Non-compliance with the Act may result in sanctions and legal action.

2. The Nigerian Code of Advertising Practice, Sales Promotion & Other Rights/Restrictions on Practice (The Advertising Code)- 6th Edition
The Advertising Code also establishes regulations and guidelines for advertisements in Nigeria. It replaced the 5th edition and aims to address gaps and challenges that have emerged from technological advancement. It dictates the characteristics advertisements must embody, including legality, honesty, truthfulness, and respectfulness. It also advocates aligning with the country’s culture, constitution, and relevant laws. It further addresses prominent issues such as data protection, transfer of personal data, identity disclosure in advertisements, restrictions on alcoholic beverage advertisements, regulations for health and medicine advertisements, and respect for copyright and intellectual property rights.
The Code also authorises ARCON to enforce compliance with various sanctions, including reprimands, warnings, fines, license scope reduction, temporary registration or license suspension, and removal from the practice register.

3. National Agency for Food and Drug Administration and Control (NAFDAC)’s Guidelines and Regulations on advertisement of Regulated products.
NAFDAC is authorised to oversee the advertisement of regulated products, and to fulfil this responsibility, the body has issued various guidelines and regulations, such as the Drug and Related Products Advertisement Regulations 2021, Food Products Advertisement Regulations 2021, Cosmetic Products Advertisement Regulations 2021, and Herbal Medicines and Related Products Advertisement 2021. These regulations outline the requirements for advertising food, drugs, cosmetics, and herbal medicine products in Nigeria. For instance, food products not registered with NAFDAC cannot be advertised. In the instances where adverts are allowed, they have specific rules regarding claims and information disclosure guiding them. Approval from NAFDAC is necessary before producing or airing commercials for registered products, or else they run the risk of sanctions. Hence, brands advertising their products in Nigeria must comply with these regulations.

4. The Standards Organisation of Nigeria (SON) Act, 2015.
In accordance with global standards, the Act provides standards and quality assurance services for all products and services offered in Nigeria. Some products require certification by SON to confirm compliance with the applicable standards and technical regulations before they can be advertised. Advertisements must also procure SON certification where necessary.

5. The Federal Competition and Consumer Protection Act (FCCPA), 2018
The FCCPA ensures consumer protection and competition regulation in Nigeria. The Act is commendable for curtailing the display of advertisement prices in foreign currencies and its prohibition of false representations to consumers.

6. The Nigeria Data Protection Act 2023
This newly enacted legislation governs the processing of personal data in Nigeria. It establishes rules for data controllers and processors, including rules guiding the collection, use and processing of personal data for targeted advertising. The act goes further to protect consent, data accuracy, and security of all personal data. The Act also establishes the Nigeria Data Protection Commission to oversee data protection matters.

Regulatory Bodies
The primary regulatory bodies responsible for advertising in Nigeria and the vetting of advertising concepts are ARCON, Advertising Standards Panel, Advertising Practitioners Investigating Panel (APIP), and Advertising Practitioners Disciplinary Committee (APDC). Additionally, other regulatory bodies such as the National Agency for Food, Drug Administration and Control (NAFDAC), Nigerian Communications Commission (NCC), Central Bank of Nigeria (CBN), the National Broadcasting Commission (NBC), Standard Organization of Nigeria (SON) and Federal Competition and Consumer Protection Commission (FCCPC), also play a role in regulating the advertisement of specific products and services. These bodies govern advertising for various sectors like food, drugs and cosmetics, telecommunication services, financial services, etc.

Impact of legal frameworks on sales, consumer patronage, and demand

The extant legal frameworks have gone a long way in transforming the culture of advertisement practices in Nigeria. One of its notable advantages is the enhanced consumer trust it fosters. Compliance with these frameworks has imbued credibility and reliability in the content being sent to consumers nationwide, compelling positive attitudes and ultimately boosting demand.

Yet another evidential advantage has been its promotion of informed consumer decision-making. The accuracy of the information being provided as a result of compliance has empowered consumers to efficiently assess the suitability and benefits of advertised goods. Such transparency positively impacts sales and overall demand.

Consumer protection is another laudable advantage offered. Acting as a protective mechanism, these regulations ensure advertisers do not mislead or exploit consumers. This protection further builds consumer confidence, increasing patronage and demand for products.

In addition, consumers can now confidently explore advertisement offers, giving required information with the knowledge that the collection, processing and use of such information are legally protected. Ultimately, consumer trust in the system increases, with an assurance that their privacy is respected, and their information is handled responsibly.

Intellectual property rights are also provided for within the legal framework of consumer goods advertising. Trademarks, copyrights, and patents are protected, preventing their unauthorised use in advertisements. This protection encourages innovation and ensures brand development in the consumer goods advertising industry.

Finally, the legal framework promotes fair competition through provisions that create a level playing field for stakeholders. This prevents unfair practices by discouraging deceptive information in adverts. Consequently, businesses find themselves competing based on the merits of their products and services, fostering fair market conditions that drive demand.

The legal framework for consumer goods advertising exerts an indispensable influence on sales, consumer patronage, and demand. These regulations serve as essential safeguards, ensuring fair competition, protecting consumer interests, and fostering trust in the marketplace. Navigating these legal parameters successfully, businesses will find themselves optimising marketing strategies to meet consumer demands, while safeguarding the values of their respective industries. In essence, it is essential to understand that these frameworks are not designed to hinder progress but rather to serve as valuable guidance, ensuring both consumers and businesses experience significant benefits.

Christian Aniukwu is a Partner at Stren & Blan Partners and heads the Firm’s Intellectual Property (IP) Prosecutions and Commercial Services Practice Groups while Ibitola Akanbi is an Associate in the Firm’s Fast-Moving Consumer Goods (FMCG) sector.
Stren & Blan Partners is a full-service commercial Law Firm that provides legal services to diverse local and international Clientele. The Business Counsel is a weekly column by Stren & Blan Partners dedicated to providing thought leadership insight on business and legal matters.
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