Desperate Measures

July 20, 2006 (LBO) – Top multinationals like Unilever have pulled out imported advertising on local television stations, after all foreign commercials were slapped with a one million rupee tax. With effect from July, all broadcasts of foreign television commercials are taxed at one million rupees a year, per ad, per language of broadcast and per station it is broadcast on.

A single brand advertised on an average of five local stations in three languages for example, would spend 15 million rupees to advertise the brand.

The controversial tax however, which has sparked uproar in advertising and media circles for it to be amended or withdrawn, is payable by the television station.

“We have suspended all advertising of imported commercials on local stations like most companies have, until there is some clarity or response from the government,” Surith Perera, Marketing Manager of Unilever Sri Lanka, said Thursday.

“What will happen is that we reduce our spend on television for just larger brands on main stations, and direct spend to print, radio and more direct marketing and point of sale activation.”

About 35 percent of Unilever’s total ad spend