Comparative Advertising: A Promotional Pitfall

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Comparative Advertising: A Promotional Pitfall

Jun 07, 2019

Pepperdine Student Grace Kruse

"Hello, I'm Mac. And I'm PC." Hopefully these words bring to mind some of the 66 commercials Apple made from 2006 to 2009, to compare Macs to PCs. As people often do, they used a comparative advertising strategy to show they had a superior product. Since the commercials ran for such an extended period of time, they were clearly successful. However, comparative advertising is not necessarily the trick to recall, positive attitudes toward a product, purchase intentions, and purchase behavior. Along with varying responses from consumers, the legal precautions required when bringing another brand into an advertisement, could be more trouble than the potential gains from a campaign.

According to the Business Dictionary, comparative advertising is defined as a "promotional technique in which an advertiser claims the superiority of its product over competing product(s) by direct or indirect comparison". Amusing examples include, Mac and PC, BMW and Audi, Mercedes and Jaguar, and more. Despite the entertainment brought by these campaigns, they seem unethical. The success of advertising is almost always, as Nobel Prize winner, Daniel Kahneman describes, fast, system 1 thinking. It's based off your intuition, not actual fact. Your slow, methodical, very lazy, system 2 brain only engages when it absolutely necessary. Hearing an advertisement on the radio on the way to work while trying to avoid traffic, is not one of the times it engages, leaving you wide open to logical errors. Comparative advertising brings to light the flaws of a competitor to make your brand seem more appealing, and can be seen as both a framing and anchoring bias. If a consumer is unaware of a brand, hearing all the flaws of one, compared to all of the benefits of another, watching a television commercial, they will be more likely have to be under the impression that one brand is far superior than the one it is being compared to.

Since feelings are not protected under the first amendment, companies are more than welcome and are actually encouraged, to compare their product to someone else's in an advertisement, to provide consumers with the most information possible before buying a product. The Federal Trade Commission has stated that,

"the use of truthful comparative advertising should not be restrained by broadcasters or self regulation entities...when truthful and non deceptive, [it] is a source of important information to consumers and assists them in making rational purchase decisions. Comparative advertising encourages product improvement and innovation, and can lead to lower prices in the marketplace".

However, just because something is legal, does not mean you should participate. There are plenty of legal precautions that must be taken. The Harvard Business Review, realizes that it is quite difficult to do comparative advertising correctly. They say that "every comparative advertiser should be ready to go to court. Once your competitor files suit, you can do little to stop the process".

Geico has done a good job with their comparative advertising slogan, "fifteen minutes could save you fifteen percent on car insurance". They are clearly saying that their product is easier and cheaper than other insurance companies, but are not lying about their product because of the key word "could". The Trademark Law Revision Act of 1988, created a legal precedent for misrepresentation of a brand to protect disparaging ads of brand or product saying, legal action can be taken when "commercial advertising or promotion, misrepresents the nature, characteristics, qualities, or geographic origin" of a product. The biggest problem is overstating qualities of their product. In California v., the Superior Court of California found that their "compare at" price was not actually based on a competitor's price, but a formula comparison. They also found that the products that they were comparing them to, were not identical, but only similar. The word "compare' caused the problem because they were not comparable. They had to pull the advertisements because they were misleading, which wasted the time and money that they originally put into them.

Deception is easy enough for an advertiser to notice when creating a campaign. Puffery which is defined as "relying on exaggerations, opinions, and superlatives, with little or no credible evidence to support its vague claims. Puffery may be tolerated to an extent so long as it does not amount to misrepresentation", walks a fine line. When Red Bull said, "Red Bull gives you wings" a lawsuit was filed. Giving you wings was considered puffery and not an issue. No reasonable person would have expected wings to appear after drinking a Red Bull. However, performance enhancements were insinuated such as concentration and reaction speeds without scientific support, which caused the $13,000,000 class action lawsuit.

Deceptive advertising is not the only legal issue in comparative advertising. Defamation, a form deceptive advertising, will also cause major problems. In order for a case to go to court for defamation, someone must publish a false, public, statement of fact, that has caused injury. Defamation does not mean that Apple made Windows feel bad in their ads, a false statement must be present. If they had falsely stated that a PC needed the equivalent of a digital hazmat suit to protect it from viruses, and it did not need a strong firewall to protect it, and caused consumers not to buy their product, then they could have sued for defamation. However, it was not false enough for them to sue for defamation. The other requirement that must be filled in court, is it being considered actual malice. According to New York Times Co. v. Sullivan 1964, actual malice is "knowledge that [a statement] was false or [made] with reckless disregard of whether it was false or not". The difference here is that it is stated about someone or something else. In the deceptive advertising example above, they were only meant to make a company sound better than they were, not to discredit a different company. In 2010, state senator, Rick Bertrand filed a lawsuit against the Iowa Democratic Party for creating an ad that said that he put profits over children's health because he worked for a company that made a dangerous child sleeping drug. His company did not sell it, which is reckless disregard for the truth, and sued for damages where he was awarded $231,000. For the Iowa Democratic Party, they lost not only the time it cost to create the ad, but a substantial amount of money paid to Bertrand, instead of using it for their own campaign.

Risk of a lawsuit does not stop companies from creating comparative advertisements. However, are they effective and worth the risk associated with them? When a company creates an advertisement, they are trying to achieveawareness, desire, recognition, preference, repeat purchase, and/or loyalty among consumers. Once an objective is achieved, business goals like a greater market share, more units sold, and higher profit margin, can also be reached. Comparative advertising could create a way for a company to reach their goals and also reduce sales for competitors, which is a win-win for the company. Although it seems logical that sales would increase more than most advertising, that is not the necessarily how it works.

In a study created by Cornelia Pechmann and Gabriel Esteban, they found that consumers perceptions about comparative advertising changed depending on the pre-purchase involvement, strength of the statement, and objective the company was trying to achieve. In terms of purchase intent, the level of involvement in a purchase and strength of the argument dramatically shifted perceptions. For low involvement purchases, direct comparison changed perceptions substantially, but strength of the message was almost irrelevant. However, when it came to moderate involvement, a weak argument brought down the effectiveness of direct comparison whereas a strong argument increased purchase intent significantly from 3.87 to 5.68. In a high involvement purchase, weak comparative ads decreased purchase intent, but only a slight increase with a strong message. The only time comparative advertising increases purchase intent enough to deal with the risk associated with it, is when it is a strong message was produced for a moderate involvement product. If Apple's goal with the "I am a Mac" campaign was to increase purchase intent, then that strategy would work since computers are considered moderate to high involvement purchases.

Comparative advertising can have a positive effect on consumers when increased purchase intent is the objective in question. However, perception of brand attitude often decreases. The same study saw that low involvement purchases had a slight increase when using a comparative ad campaign. Moderate involvement saw a slight increase with a strong message, whereas high involvement saw a decrease in perception of brand attitude when using direct comparison advertising strategy. Comparative advertising should be considered, but there is only a certain time and place for it and the objectives must always be considered when choosing strategies and tactics.

Low and moderate involvement product categories are the best to choose when using a comparative strategy. When people are researching a product (also known as a high-involvement product) they are likely to find the exaggeration in the products and lack of differentiation. Trust is crucial to building a brand and any type of deception, will break trust created. When consumers detect any form of deceit, they will start to develop a negative view of the brand and they will have to work on redeveloping trust in their customers instead of working to sell the product or service.

Trying to differentiate a certain product or service against something similar is not a sustainable advantage. Gene Koprowski said in an article forBrandweekthat "Negative/comparative advertising should be a tactic, not a strategy. You shouldn't have to focus on comparative… It's like walking around on one leg. It can become about competitive share of voice, of who spends the most. If you can't find a competitive advantage, you shouldn't be in the marketplace".If a company has enough money to participate in an ad war and the lawsuits that follow, they have enough money to create a better research and development team to create a product, with a strong unique selling benefit.Consumers are not consistently fooled by the extreme nature of comparative advertising. There is a logical part of the brain that will eventually start to question the validity of the claims if someone is always saying that other product are worse than theirs. The product needs to be able to speak for itself.

Bruce Kushnick, president of New Networks Inc. said that "watching the commercials where AT&T and MCI square off is the same as looking at a car wreck--you slow down to see the mess. But you don't really pay attention to what's going on". They are entertaining, but they are not effective and do not achieve objectives. They are strange brand awareness commercials. You know the name of both companies, but not entirely sure why. If the goal is to create a burst of recognition, then comparative advertising might be the most effective tactic, one time, but not permanently. You start to be known as the complaining brand, which consumers do not want to be associated with and will have fewer sales. Daniel Kahneman says that "when in a good mood, people become more intuitive and more creative but also less vigilant" and therefore are more likely to make a purchase. Complaining makes you more critical which is not a particularly helpful in sales.

Comparative advertising can be wildly successful as seen with Apple's "Get a Mac" campaign, but it is also associated with excessive risk both monetarily and in perceptions created by consumers. Deceit and defamation are two legal aspects that will cause either ending a campaign early, or lawsuits with large payouts to consumers or other companies. If a brand image is being "hurt" by an advertisement, they are far more likely to take action against the initial brand legally. It is also hard to gain consumer trust and reach marketing objectives because the outcome causes such varied reactions from consumers and does not work as a sustainable strategy for a business. A better strategy would be to spend the time and effort on making a superior product and producing an advertising message that authentically and sustainably represents the brand.

Grace Kruse is a student in Jon Pfeiffer's media law class at Pepperdine University. The class covers copyright and social media. Grace is aIntegrated Marketing Communications and Multimedia Design major.

Pfeiffer Law Corp is an entertainment law firm based in Santa Monica, California.

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