Sunday, November 22, 2009

Ethical and Legal Aspects of Comparative Advertising


The last section of our course deals with advertising ethics. When it comes to making claims, advertisers historically have gone overboard. In advertising parlance, we call this “puffery,” which refers to the exaggerated claims advertisers make for their products and services. Some scholars refer to advertising as “the permissible lie.” The New York Times reports this story regarding how advertisers are now suing one another over claims made in their ads; the issue is that an advertiser may lose market share as a result of a particular claim made by a competitor. Consumers have learned to accept that advertisers overstate their claims, even though to some this may seem unethical. Advertisers have the opportunity to take their issue to the Better Business Bureau’s National Advertising Division, or they can directly sue the competitor to either get the offending ad withdrawn or for compensatory damages when they can prove market share has been affected, and of course that the claim is unsubstantiated.

When it comes to comparative advertising, the FTC has actually encouraged advertisers to directly compare the attributes of their product or service against a competitor's. The government passed a regulation back in 1978 to that effect, and as a result we’ve seen over the years campaigns like the Pepsi Challenge, among others.

The Times reports that a number of brands are going after competitors--Campbell and Progresso to name one--and that this is a response to a weak economy.  In other words, no one can afford to lose market share.  Read the article and look at the accompanying video to consider whether you think comparative claims are an ethic issue or a legal issue?

6 comments:

kdpiper said...

I believe this is certainly a ethical debate; when I read the Pontifical Council's article on Ethical Advertising, it said one of the principles advertisers should follow is truthfulness. While I did not agree with everything I read in the article, this is one aspect with which I certainly agreed. Advertisers have a responsibility to consumers to provide honest information that is backed by fact such as the case with the Dove and Pantene dispute as well as the UPS and FedEx dispute. These were not substantiated claims. However, I am not quite sure what to think about the AT&T and Verizon case. As long as Verizon states in its commericals that it is comparing 3G networks as opposed to regular phone service, I do not believe AT&T has much of a case. AT&T claims that the ads are "misleading" because of all the white space, but I believe this is a subjective claim. I think that advertisers are becoming almost too sensitive, as Othmer claims at the end of the article. They are losing site of the consumers and seemingly becoming unaware that consumers are turned off by petty arguments.

Sara Hayward said...

I think that comparative claims are a legal issue. Companies have always competed, that is why we continue to get bigger and better products. If the claims they make in their advertisements are false, then that is an ethical issue that should be taken up by the consumers, not the competition. I think that comparing two products and making yours seem more appealing is the basis of advertising. If a company makes a claim against another's product and it is false, then that is a legal issue. Just comparing your product is what makes consumers want your product. I think that when a company makes a claim about their own product that is false, then that is an ethical issue.

Tim said...

Comparative advertising does seem to bring up ethical issues since the company being discredited has no chance to rebuttal until producing commercial in response. the At&t v. Verizon commercial doesn't seem too out of control but Subway and Dominos have taken it to a higher level. in a Domino's commercial Domino's employees are eating in a "Sub-Mart." This, i feel only degrades subway even further. the store is similar, poster on the walls, and the overall set up of the establishment, not to mention the sub-mart employees uniforms. Verizon at least has the decency to put at&t's name out there but Domino's doesn't say it directly.

http://www.youtube.com/watch?v=FFrkTu5S5S8

Chris Loker said...

I find it interesting, at least in regards to Verizon vs. AT&T, that AT&T has recently started to air ads that essentially make the same claim about service that Verizon does. That is; both companies say they have the best service in the United States. However, AT&T does NOT say anything about Verizon in opposition. This grabbed my attention because it seems to inadvertently add validity to Verizon's claim that they are better because Verizon made a measurable comparison between two brands rather than just claiming that they were the best; anyone can be the best if they ignore the competition.

Tim said...

AT&T has recently started airing commercials, with Luke Wilson as the spokesman, explicitly comparing themselves with verizon. I just started seeing these commercials recently following last tuesdays class. Today I saw a second version of the commercial. The first commercial compared the two companies on a chart, AT&T was obviously depicted better. The second commercial emphasized how Verzion's minutes are lost because of the lack of a roll-over feature.
A third commercial I found recently while searching for the others was one comparing AT&T and Verizon showed how AT&T phones are capable of multi-tasking while Verizon phones can't. AT&T seems to be striking back twice as hard after letting Verizon bash them for so long. AT&T has a even other commercials on Youtube bashing Verizon which haven;t been aired on television yet

http://www.youtube.com/watch?v=4YP839_EF_0

http://www.youtube.com/watch?v=IioSntkD8lE

http://www.youtube.com/watch?v=NbLyEmhXlkQ

Casey said...

On the one hand, companies should be much more concerned with the satisfaction of their consumers rather than a petty argument with a competitor. But on the other hand, a company’s reputation depends on how consumers view their product, which is dependent upon competitor’s claims in advertisements. To me it seems like a reasonable concern if advertisers are misleading their consumers. But, if advertisers are already required by law to provide a reasonable factual basis for their commercials, why have so many problems arisen? This leads to the many discussions regarding advertising ethics. During this time in particular though, since we are in a recession, overall spending is down to being with. Advertisers may be becoming more aggressive because they must fight harder for customers. No matter what the economic situation though, advertisers should remain ethical regarding the information they give out in their commercials.