Comparative advertising

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Comparative advertising is an advertisement in which a particular product, or service, specifically mentions a competitor by name for the express purpose of showing why the competitor is inferior to the product naming it. Comparative advertising, also referred to as ‘knocking copy’, is loosely defined as advertising where “the advertised brand is explicitly compared with one or more competing brands and the comparison is oblivious to the audience.”[1]

This should not be confused with parody advertisements, where a fictional product is being advertised for the purpose of poking fun at the particular advertisement, nor should it be confused with the use of a coined brand name for the purpose of comparing the product without actually naming an actual competitor. ("Wikipedia tastes better and is less filling than the Encyclopedia Galactica.")

In the United States, the Federal Trade Commission (FTC) defined comparative advertising as “advertisement that compares alternative brands on objectively measurable attributes or price, and identifies the alternative brand by name, illustration or other distinctive information.”[2] This definition was used in the case Gillette Australia Pty Ltd v Energizer Australia Pty Ltd.[3] Similarly, the Law Council of Australia recently suggested that comparative advertising refers to “advertising which include reference to a competitor’s trademark in a way which does not impute proprietorship in the mark to the advertiser.”[4]

Comparative advertisements could be either indirectly or directly comparative, positive or negative, and seeks “to associate or differentiate the two competing brands”.[5] Different countries apply differing views regarding the laws on comparative advertising.

History[edit]

The earliest case concerning comparative advertising dates back to 1910 in United States – Saxlehner v Wagner.[6][7] Prior to the 1970s, comparative advertising was deemed unfeasible due to related risks. For instance, comparative advertising could invite misidentification of products, potential legal issues, and may even win public sympathy for their competitors as victims.

In 1972, the FTC began to encourage advertisers to make comparison with named competitors, with the broad, public welfare objective of creating more informative advertising.[8] The FTC argued that this form of advertising could also stimulate comparison shopping, encourage product improvement and innovation, and foster a positive competitive environment.[9] However, studies have shown that while comparative advertisements had increased since 1960, the relative amount of comparative advertising is still small.[10]

Legal issues[edit]

United Kingdom[edit]

In the UK, most of the use of competitor’s registered trademark in a comparative advertisement was an infringement of the registration up till the end of 1994. However, the laws on comparative advertising were harmonized in 2000. The current rules on comparative advertising are regulated by a series of EU Directives. The Business Protection from Misleading Marketing Regulations 2008 implements provisions of Directive (EC) 2006/114 in the UK.[11]

One of the classic cases of comparative advertising in UK was the O2 v Hutchison case. The European Court of Justice (ECJ) held that there could have been a trademark infringement when a comparative advertiser used the registered trademark for the advertiser’s own goods and services.[12] It was also held that a trademark proprietor could not prevent a competitor’s use of a sign similar or identical to his mark in a comparative advertisement, which satisfies all the conditions of the Comparative Advertising Directive. If the Advocate General's decision in the O2 case were followed by the ECJ, competitors will not be able to use trademark legislation either to prevent a comparative advertisement through an injunction or to charge in respect of its use. Conversely, in British Airways plc v Ryanair Ltd.[13] a lenient approach was adopted by the UK courts. The use of competitors’ trademarks was no longer restricted for businesses competing within an industry, provided that compliance of the conditions set out in the legislation were performed. This meant that businesses are able to use the trademarks of other companies and trade names to distinguish the relative merits of their own products and services over those of their competitors.[14]

United States[edit]

The FTC and the National Advertising Division of the Council of Better Business Bureaus, Inc. (NAD), govern the laws of comparative advertising in the United States including the treatment of comparative advertising claims. FTC stated that comparative advertising could benefit consumers and encourages comparative advertising, provided that the comparisons are “clearly identified, truthful, and non-deceptive”.[15] Although comparative advertising is encouraged, NAD has stated “claims that expressly or implicitly disparage a competing product should be held to the highest level of scrutiny in order to ensure that they are truthful, accurate, and narrowly drawn.”[16] Another major law is the Trademark Lanham Act, which states that one could incur liability when the message of the comparative advertisement is untrue or uncertain, but has the intention to deceive consumers through the implied message conveyed.

Australia[edit]

In Australia, no specific law governs comparative advertising although certain cases regarding this matter have occurred.[17] Comparative advertising that is truthful, and does not lead to confusion is permitted.[18]

Generally, Australian advertisers should make sure that the following are complied when exercising comparative advertising to avoid breaches regarding misleading advertising under Australia Consumer Law:[19]

  1. Product compared should be like products as per HCF Australia Ltd v Switzerland Australia Health Fund Pty Ltd,[20] or else comparison must be made clearly to consumers as per Gillette Australia Pty Ltd v Energizer Australia Pty Ltd;[21]
  2. Test results are presented as it is as per Makita v Black & Decker;[22]
  3. Test used are appropriate and conducted according to industry guidelines as per Duracell Australia Pty Ltd v Union Carbide Australia Ltd;[23] and
  4. Mock up test results truly reflects how is product functioning in real life as per Hoover (Australia) Pty Ltd v Email Ltd.[24][25]

Hong Kong[edit]

The law in Hong Kong regarding comparative advertising is the law that existed in the UK prior to the enactment of the UK Act 1994.[26] Hong Kong has no legislation exclusively intended at limiting false or misleading advertisements. Still, the Trade Descriptions Ordinance (Cap 362) bans the use of false trade descriptions in advertisements. The tort of trade libel also exists to deal with false or misleading advertisements designed to injure the competitor.[27] Consumer Council may have the authority to publish information with a perspective to amending false or misleading advertisements,[28] while the Association of Accredited Advertising Agencies of Hong Kong have the authority to take action against members who organize advertisements that are inaccurate.[29]

Argentina[edit]

In Argentina, there is no specific statute dealing with comparative advertising (so it is not forbidden), but there are clear jurisprudential rules based on unfair competition law. If in some manner an advertisement is proven to be unfair or exceeds ethical standards by hiding the truth or omitting some essential aspect of the comparison, it is probable that an injunction will be granted and that the plaintiff will be able to obtain a final decision declaring the advertising illegal.

Numerous cases follow international precedent in referring to the requirements of the European Union Directive on comparative advertising. By following these criteria, Argentine courts have developed standards very similar to European regulation. It is as if the judges wanted to validate the law created by the Courts with an external source. Similar conclusions reached elsewhere indicate the existence of universally accepted principles that accept that comparing products in commercial advertisements should be lawful.[30]

Brazil[edit]

In Brazil, the "Brazilian Advertising Self-Regulation Code".  allow comparative advertising with certain restrictions. Its primary purpose shall be the clarification or consumer’s protection; it shall have as basic principle the objectiveness of the comparison since subjective data, psychological or emotionally based data does not constitute a valid comparison basis for consumers; the purposed or implemented comparison shall be capable of being supported byevidence; in the case of consumption goods, the comparison shall be made with models manufactured in the same year and no comparison shall be made between products manufactured in different years, unless it is only a reference to show evolution, in which case the evolution shall be clearly demonstrated; there shall be no confusion between the products and competitor’s brands; there shall be no unfair competition, denigration of the product’s image or another company’s product; and there shall be no unreasonable use of the corporate image or goodwill of third parties.

Likewise, the majority of the Brazilian authors is inclined to say that its legitimacy depends to meet certain requirements, which, in general, would be stipulated by Article 3a of Directive 84/450/EEC [31]

In an early Mercosur's rules through Resolution 126/96.

Effectiveness[edit]

Comparative advertising has been increasingly implemented through the years, and the types of comparative advertising range from comparing a single attribute dimension, comparing an attribute unique to the target and absent in the referent and comparisons involving attributes unique to both brands.[32] The contributing factors to the effectiveness of comparative advertising include believability,[33] which refers to the extent a consumer can rely on the information provided in comparative advertisements, the level of involvement,[34] and the convenience in evaluation,[35] provided by spoon feeding the consumer with information that does not require extra effort in recall.[36]

Comparative advertising is generally coupled with negativity, as evidenced by early industry condemnation.[37] Stating reasons such as participation in comparative advertising damaged the honour and credibility of advertising. Studies have suggested that negative information can be stored more effectively,[38] thus generating the impact that any advertisement is purposed for, and more importantly, strong recall.[39] On the contrary, such negativity can either be transferred directly to the brand and the consumer’s impression of the brand, various studies through the years have proven that comparative advertising has been responded to negatively.[40]

Examples[edit]

Comparative advertising has been used effectively by companies like The National Australia Bank (NAB), and its “break up” campaign has made such an impact it has won an award from Cannes, and a substantial increase in its consumer interest.[41] Internationally acclaimed Apple Inc. has effectively utilized its Mac vs PC advertisements as part of its marketing efforts to increase its market share over the years. Such companies prove the academic view that comparative advertising is more successful when used by established brands,[42] justified by the credibility and attention an established brand brings. Other famous examples include L’Oreal SA v Bellure NV[43] and Coca Cola v Pepsi.[44] Comparative advertising has to be executed with caution and deep consideration for the targeted markets as the novelty of the concept affects the effectiveness of the stipulated campaigns.[45]

In the 1980s, during what has been referred to as the cola wars, soft-drink manufacturer Pepsi ran a series of advertisements where people, caught on hidden camera, in a blind taste test, chose Pepsi over rival Coca-Cola.

"Daisy" advertisement

The use of comparative advertising has been well established in political campaigns, where typically one candidate will run ads where the record of the other candidate is displayed, for the purpose of disparaging the other candidate. The most famous of these type ads, which only ran once on TV, consisted of a child picking daisies in a field, while a voice which sounded like Barry Goldwater performed a countdown to zero before the launch of a nuclear weapon which explodes in a mushroom cloud. The ad, "Daisy", was produced by Lyndon B. Johnson's campaign in an attempt to prevent Goldwater from either winning the nomination of his party or being selected.

Another example took place throughout the late 1980s between the bitter rivals Nintendo and Sega. "Genesis does what Nintendon't" immediately became a catchphrase following the release of the Sega Genesis (known as Mega Drive in PAL countries).

A 30-second commercial promoting sustainability,[46] showing soda bottles exploding each time a person makes a drink using his Sodastream machine, was banned in the United Kingdom in 2012.[47][48] Clearcast, the organization that preapproves TV advertising in the U.K., explained that they "thought it was a denigration of the bottled drinks market."[49] The same ad, crafted by Alex Bogusky, ran in the United States, Sweden, Australia, and other countries. An appeal by Sodastream to reverse Clearcast's decision to censor the commercial was rejected.[50][51][52] A similar ad was expected to air during Super Bowl XLVII in February 2013 but was banned by CBS for jabbing at Coke and Pepsi (two of CBS's largest sponsors).[53][54][55]

In 2012, Microsoft's Bing (formerly MSN Search) began to run a campaign about which search engine they prefer as it compared Bing to Google, and that more people preferred Bing over Google. The campaign was titled "Bing It On".

References[edit]

  1. ^ T.E. Barry & R.L. Tremblay, “Comparative advertising: perspectives and issues”, Journal of Advertising, Vol. 4, No. 4, 1975, pp. 15-20.
  2. ^ Federal Trade Commission Commercial Practice Rule 16 CFR §14.15 n 1 (2002)
  3. ^ (2002) 193 ALR 629
  4. ^ P. Armitage in M.A. Murphy, “Legal aspects of comparative advertising and a strategy for its use”, Queensland University of Technology law journal, Vol. 12, 1996, pp. 41-59.
  5. ^ B. Mills, “Comparative advertising: should it be allowed?”, European Intellectual Property Review, Vol. 17, No. 9, 1995, pp. 417-430.
  6. ^ 16 US 375, 30 S.Ct. 298, 54 L.ED 525 (1910)
  7. ^ B. Mills, “Comparative advertising: should it be allowed?”, European Intellectual Property Review, Vol. 17, No. 9, 1995, pp. 417-430.
  8. ^ F. Beard, “Comparative advertising wars: an historical analysis of their causes and consequences”, Journal of Macromarketing, Vol. 30, No. 3, 2010, pp. 270-286.
  9. ^ C.L. Beck-Dudley & T.G. Williams, “Legal and public policy implications for the future of comparative advertising: a look at U-Haul v Jartran”, Journal of Public Policy & Marketing, Vol. 8, No. 1, 1989, pp. 124-142.
  10. ^ D.W. Jackson Jr., S.W. Brown & R.R. Harmon, “Comparative magazine advertisements”, Journal of Advertising Research, Vol. 19, No. 6, 1979, pp.21-26.
  11. ^ M, Peitz & F, Barigozzi, “Comparative Advertising and Competition Policy”, School of Business Administration, Working Paper 19/2004, August 2004.
  12. ^ P. England, “Advocate General says comparative advertising is not a matter of trade mark law”, Journal of Intellectual Property Law & Practice, Vol.3, No. 5, 2008, pp.284-285.
  13. ^ [2001] ETMR 235
  14. ^ “Use of Competitors’ Trade Marks and Comparative Advertising in the United Kingdom and Europe”, Gillhams Solicitors and Lawyers 2008, http://www.gillhams.com/articles/389.cfm, viewed 1 September 2011.
  15. ^ J. E. Villafranco, “Devoted to Intellectual Property Litigation & Enforcement”, Woltens Kluwer Law & Business, Aspen Publishers, Vol. 16, No. 1, 2010, http://www.kelleydrye.com/publications/articles/1335/_res/id=Files/index=0/Villafranco_Law%20of%20Comparative%20Advertising%20in%20the%20US_010210.pdf, viewed 2 September 2011.
  16. ^ Sherwin-Williams Company, Report # 3988 ( NAD/CARU Case Reports December 2002), citing AT&T Broadband, Report # 3914 ( NAD/CARU Case Reports June 2002).
  17. ^ Murphy, Matthew Anthony. "Legal aspects of comparative advertising and a strategy for its use." Queensland University of Technology Law Journal 12 (1996): 41-59. LegalTrac. Web. 2 Sep. 2011.
  18. ^ Lieberman, Guidebook to Australian Trade Marks Law and Practice (2nd ed) (Sydney CCH, Australia, 1985) p.75
  19. ^ Advertising and selling, Commonwealth of Australia, 2011.
  20. ^ [1988] ATPR 40-846
  21. ^ [2002] FCAFC 223
  22. ^ [1995] ATPR 41-030
  23. ^ [1988] ATPR 40-918
  24. ^ [1991] ATPR 41-149
  25. ^ B. Clarke, B. Sweeney & Mark Bender, Marketing and The Law, 4th edn, LexisNexis Butterworths, New South Wales, 2011.
  26. ^ Pendleton, Garland and Margolis, The Law of Intellectual and Industrial Property in Hong Kong (Hong Kong: Butterworths, 1994) pp 210-240.
  27. ^ Ratcliffe v Evans [1892] 2 QB 524
  28. ^ Consumer Council Ordinance, Cap 216, ss 4(1)(a) and 5(2)(d).
  29. ^ Tackaberry, Paul. "Comparative advertising in Hong Kong: denigration and competition." Asia Pacific Law Review 5.1 (1996): 77. LegalTrac. Web. 2 Sep. 2011.
  30. ^ Palazzi, Pablo. "Comparative Advertising in Argentine Law" Fordham Intellectual Property, Media & Entertainment Law Journal, Vol. 22, No. 659, 2012. http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2122583
  31. ^ DURIGAN, P. L. Publicidade comparativa: informação persuasiva e concorrência. pg. 248 http://www.paulo.durigan.com.br/artigos/publicidadecomparativa.pdf
  32. ^ S. Zhang, F.R. Kardes & M.L Cronley, “Comparative Advertising: Effects of Structural Alignability on Target Brand Evaluations”, Journal of Consumer Psychology, Vol. 12, No. 4, 2002, pp. 303-311.
  33. ^ T.E Barry & R.L Tremblay, “Comparative Advertising: Perspectives and Issues”, Journal of Advertising, Vol. 4, No. 4, 1975, pp. 15-20.
  34. ^ I. Soscia, S. Girolamo & B. Busacca, “The Effect of Comparative Advertising on Consumer Perceptions: Similarity or Differentiation?”, Journal of Business and Psychology, Vol. 25, No. 1, 2009, pp. 109-118.
  35. ^ K.E. James & P.J. Hensel, “Negative Advertising: The Malicious Strain of Comparative Advertising”, Journal of Advertising, Vol. 20, No. 2, 1991, pp. 53-69.
  36. ^ A. Chattopadhyay, “When Does Comparative Advertising Influence Brand Attitude? The Role of Delay and Market Position”, Psychology & Marketing, Vol. 15, No. 5, 1998, pp. 461-475.
  37. ^ F. Beard, “Comparative Advertising Wars: An Historical Analysis of Their Causes and Consequences”, Journal of Macromarketing, Vol. 30, No. 3, 2010, pp. 270-286.
  38. ^ A.B. Sorescu & B.D. Gelb, “ Negative Comparative Advertising: Evidence Favoring Fine-Tuning”, Journal of Advertising, Vol. 29, No. 4, 2000, pp. 25-40.
  39. ^ C.W. Nye, M.S. Roth & T.A. Shimp, “Comparative Advertising in Markets Where Brands and Comparative Advertising are Novel”, Journal of International Business Studies, Vol. 39, 2008, pp. 851-863.
  40. ^ F. Beard, “Comparative Advertising Wars: An Historical Analysis of Their Causes and Consequences”, Journal of Macromarketing, Vol. 30, No. 3, 2010, pp. 270-286.
  41. ^ ArtsHub ,“Breakup Campaign Wins Cannes Lions”, http://www.artshub.com.au/au/news-article/news/arts/breakup-campaign-wins-cannes-lions-184492, viewed 30 August 2011.
  42. ^ C.W. Nye, M.S. Roth & T.A. Shimp, “Comparative Advertising in Markets Where Brands and Comparative Advertising are Novel”, Journal of International Business Studies, Vol. 39, 2008, pp. 851-863.
  43. ^ [2010] R.P.C. 23.
  44. ^ R.D. Petty & P.M. Spink, “Comparative advertising law in the European Community: Will the proposed directive harmonize across the Atlantic?”, Journal of Public Policy & Marketing, Vol.14, Issue 2, 1995, pp. 310-317.
  45. ^ C.W. Nye, M.S. Roth & T.A. Shimp, “Comparative Advertising in Markets Where Brands and Comparative Advertising are Novel”, Journal of International Business Studies, Vol. 39, 2008, pp. 851-863.
  46. ^ Petrecca, Laura (11 January 2013). "Pepsi, Bud join forces to make Super Bowl splash". USA Today. Retrieved 25 January 2013. "SodaStream will have a humorous commercial that promotes sustainability and takes a jab at conventional bottle and can soft-drink marketers." 
  47. ^ Rocco, Matthew (9 January 2013). "U.K.-Banned SodaStream Ad Will Air During Super Bowl". Fox Business. Retrieved 25 January 2013. 
  48. ^ Parekh, Rupal (26 November 2012). "SodaStream Campaign by Alex Bogusky Gets Yanked in the U.K.". Advertising Age. Retrieved 25 January 2013. 
  49. ^ Thomas, Charlie (23 November 2012). "Sodastream Advert Pulled From I'm A Celebrity Slot For 'Denigrating Bottled Drinks'". The Huffington Post. Retrieved 25 January 2013. 
  50. ^ Sweney, Mark (28 November 2012). "SodaStream 'black' TV ad protests regulator's ban on original campaign". The Guardian. Retrieved 26 January 2013. "SodaStream's campaign, which in the end frame hints to viewers that the censored ad is available to watch on YouTube, is aiming to put pressure on regulators who are currently assessing an appeal by the company over its original TV ad onscreen, which is due to be decided on 3 December." 
  51. ^ Vinjamuri, David (27 November 2012). "SodaStream Scores Another PR Break: Bogusky's Ad Rejected In The UK". Forbes. Retrieved 26 January 2013. "But that’s hardly the kind of denigration that deserves censorship." 
  52. ^ Hall, Emma (4 December 2012). "SodaStream Seeks Legal Advice After Failed Appeal on U.K. Ad". Advertising Age. Retrieved 26 January 2013. 
  53. ^ Burns, Will (31 January 2013). "CBS Bans SodaStream Ad. Where's The Outrage?". Forbes. Retrieved 1 February 2013. 
  54. ^ Horovitz, Bruce (15 January 2013). "Ad legend bashes Coke, Pepsi in Super Bowl return". USA Today. Retrieved 25 January 2013. 
  55. ^ Stampler, Laura (4 December 2012). "That Awesome Banned SodaStream Commercial Is Going To Be A Super Bowl Ad". Business Insider. Retrieved 25 January 2013.