Comparative advertising, in the eyes of consumers, is more than just a branded contest in public. Although amusing, it can actually help individuals make better purchasing judgments.
The stakes are bigger for advertising. A good comparative advertising campaign can level the playing field for smaller firms while proclaiming superiority over others. However, the strategy requires dexterity. A bad action can cost a company clients, reputation, and possibly a legal struggle. Here are some things you should know if you’re thinking about running a comparative advertising campaign and the laws.
What is Comparative Advertising?
Comparative advertising, in a nutshell, is the act of contrasting one or more brands. The primary purpose of comparative commercials is to communicate value, which is frequently accomplished by demonstrating how one brand outperforms a competitor brand or other brands as a whole.
You’ve undoubtedly seen comparisons in advertising your entire life. Remember those early-2000s Mac vs. PC commercials? “The cool, calm, collected guy in a hoodie” embodied Mac, while “the nerdy, awkward guy in the suit” personified PC.
Is Comparative Advertising Legal?
Consumers and even other brands sue brands all the time. So, before you design a video to mock your competition, you want to know if comparative advertising is legal.
The short answer is “yes,” as long as your statements can be proven and are not misleading or deceptive to customers. The extended response, on the other hand, includes some particular suggestions for comparing yourself to the competition. What you say about yourself, what you say about them, and where you say it all have an impact on whether your competitor can sue you.
According to Lenny Samuels in a blog article for Bergman Singerman LLC, the FTC divides comparative advertising into two categories:
- “Superiority” assertions assert, expressly or implicitly, that the promoted product is better than all others in the marketplace or better than a competitor’s product.
- “Parity” claims to compare a product to others on the market and assert that it is as excellent as the competitors.
If you make any comparative claims about another brand, you are subject to varying degrees of legislation. Comparative advertising disputes are controlled by state laws that prohibit misleading advertising and deceptive business activities. The Lanham Act governs comparative advertising disputes at the federal level.
According to Samuels, in order to seek legal recourse under the Lanham Act, a company must demonstrate: a false or misleading statement of fact about a product or service; such statement either deceived or had the potential to deceive a substantial segment of potential consumers; the deception is material because it is likely to influence the consumer’s purchasing decision; the product is in interstate commerce; and the plaintiff has been or is likely to be injured as a result of the product.
If you’re unsure if you or your competitor has a Lanham Act case, consult with your legal department. However, the argument remains: comparative advertising is unquestionably permissible. That doesn’t mean you shouldn’t utilize it.
Should You Use Comparative Advertising?
You have every right to trash-speak your opponent as long as you can walk the walk. Should you, however? For many brands, comparative advertising is dangerous.
To begin, comparative advertising is akin to picking a quarrel. Even if it’s implied, you’re publicly addressing another company and saying, “We’re better than you.” So, if you decide to employ the method, be prepared for reprisal. And the last thing most businesses want to do is expose themselves to assault.
Second, you risk coming across as a bully. Consumers are accustomed to seeing negativity in political advertisements, but not nearly as frequently in product or service advertisements. When one political candidate criticizes another, they say to themselves, “Par for the course.” On the other side, when a brand attacks a competitor for no reason, people may wonder, “Was that really necessary?”
Examples of Comparative Advertising
After learning about the benefits and drawbacks of comparative advertising, examine some real-life examples to better comprehend the concept. It can also help you understand how comparative advertising works in practice.
#1. Popeyes
Popeyes, an American fast-food company, capitalized on this by foregoing television advertising in favor of creating a comparative advertisement, which helped them obtain an unexpected and massively successful spicy chicken business.
They stopped selling and refilled its stocks following the Twitter war for its chicken sandwich. When they returned, they abandoned TV marketing in favor of digital marketing, i.e., comparative advertising. They recognized their competitor’s tactics and significantly increased their Sunday sales. They implemented next-generation AI-powered social analytics, which enabled them to constantly analyze their results in real time.
#2. Adidas
Adidas, a German multinational sportswear firm, is the only significant sports apparel brand that outperforms Nike. How did they manage it? They began experimenting with comparative marketing and soon produced a video advertisement depicting a runner wearing Nike shoes in the desert. Runners are well known that running on such terrains is difficult. The cameraman was able to keep up with the runner while carrying the heavy camera because he was wearing Adidas shoes.
#3. Sprint
Sprint, Verizon’s main competitor, approached the actor in 2016 and convinced him to switch to their service in order to participate in comparative advertising. So Sprint included a Verizon actor who has worked for the latter for 16 years in marketing and promotion. They aimed their message to the audience, stating that if a Verizon actor can move to Sprint, why can’t you? What is preventing you from making the change? According to the cellular operator, there is a % difference in coverage. Sprint was positioned as a better-qualified rival than Verizon as a result of such a comment.
#4. Bounty
Without mentioning their opponent, Bounty demonstrated the advantages of utilizing their brand’s paper towels over generic brand towels. Instead of convincing potential purchasers of the superiority of the product, they used comparative advertising, claiming that the common brand did not wipe up messes as well as the Bounty towels. In this manner, they claimed to supply superior items rather than standard ones that do not clear up the issue.
#5. Sealy Cocoon Mattress
Casper, a pioneer in the mattress industry, is worth about $1 billion and was named one of the finest online mattresses in 2014. Sealy, its immediate competitor, used comparative advertising to suggest that its opponent is only a competitor where consumers buy items because of the name-brand hype.
They used SERPs to target Casper’s demographic by running a paid ad with the tagline – Don’t believe the hype, shop Cocoon and save hundreds. When the buyer clicks on the advertisement, they learn that Sealy provides good and affordable mattresses that provide a peaceful sleep. The comparative advertising increased the value of Sealy and helped it become a trusted brand in the mattress business.
#6. Kroger
Kroger made waves at the end of 2020 when it took the ninth rank on the list of top eCommerce companies by sales for the first time. The secret to their success was the use of comparative newspaper advertisements against their competition, Publix.
The advertisement displayed two recipes of the same length but with different prices. Kroger targeted the audience by claiming that they offer lower-priced servings to increase savings as well as other bonuses that customers cannot find at Publix. This resulted in an unexpected increase in sales, with 60 million US households purchasing goods from Kroger.
After reviewing the comparative advertising of the organizations described above, it is critical to comprehend and employ the term – comparative. While following the comparative advertising approach, avoid making false or misleading assertions that can stymie marketing efforts. Though many countries are opposed to it, understanding and favorably implementing comparative marketing methods might rescue a company from the law.
Read Also: RECRUITMENT MARKETING: What It Is, Examples & Why It is Important
Comparative Advertising Laws
We’ll look at comparative advertising laws from three different countries, as well as the explicit language they use to clarify what advertisers may and cannot do.
Comparative Advertising Laws in the United States
The Federal Trade Commission (FTC) of the United States safeguards customers from being duped, misled, or manipulated by firms. It also shields businesses from unfair business practices and the activities of competitors.
“Comparative advertising, when truthful and nondeceptive, is a source of important information to consumers and assists them in making rational purchase decisions,” the FTC stated in its ruling on comparative advertising. Comparative advertising promotes product improvement and innovation, which can lead to lower market prices.”
In summary, the FTC promotes comparative advertising because it benefits consumers by providing a comprehensive view of product choices. What they will not tolerate is advertising that disparages competitors and is dishonest in order to persuade consumers to choose one company over another. Companies that believe they are being discredited can use the FTC ruling to submit claims.
Australia Laws of Comparative Advertising
According to the Australian Competition and Consumer Commission, “Businesses may use comparative advertising to directly promote the superiority of their products over another.” Businesses must observe general advertising best practices, such as avoiding being dishonest or misleading in an attempt to encourage consumers to conduct business with them, in order to comply with US law.
Comparative Advertising Laws in Hong Kong
There is no explicit legislation in Hong Kong to limit comparative advertising. Nonetheless, the Trade Descriptions Ordinance outlaws false trade descriptions and misleading or incomplete information advertisements, and the Hong Kong Association of Accredited Advertising Agencies has the ability to investigate violations.
Overall, regardless of where you live, it’s critical to grasp comparative advertising laws and regulations so you don’t end yourself in the middle of a lawsuit.
Pros and Cons of Comparative Advertising
The truth of using comparative advertising is up to your specific business objectives.
Assume you have a major industry competitor with a large market share. In that instance, comparative advertising might be advantageous because it informs your target market that there are other solutions available. Comparative advertising can also assist fledgling businesses to build brand awareness.
However, if you can’t back up your claims of superiority and your commercials come off as more berating than comparative, you risk losing business. Overall, as previously said, the decision to use comparative advertising is determined by your objectives.
We’ve produced a list of comparative advertising benefits and cons to assist you make an informed decision about whether to utilize the tactic.
Pros
#1. Clearly stated product emphasis.
Comparative advertising focuses on a particular product or characteristic that distinguishes you from the competition. You’re saying, ‘Hey, look how useful this is in resolving your pain spots.’
Even if you don’t persuade your audience, they will be aware of the product’s direct characteristics, benefits, and features.
#2. You will increase the visibility of your company.
Comparative marketing can help you create exposure for your company, particularly if you’re new to the sector or a small organization competing with a larger one.
Mentioning their name exposes you to their market share as well as an altogether new audience that may be ready to switch to your product or service.
#3. You will earn new followers and customers.
Comparative advertising can help you get new followers and clients, especially when distributed broadly and put in high-volume consumer traffic places.
Many firms in the United States, for example, develop amusing comparative advertising to publish during the Super Bowl because they know the event has a large audience. Over 208 million people tuned in alone in 2022.
#4. You will educate customers on what is important.
You are telling consumers about the variables they should consider when making purchasing decisions by using comparative ads, which focus on a specific feature or experience that comes with a product or service.
You’re showing people ‘look at the benefits of this product’ rather than depending solely on the brand name to determine value.
Cons
#1. You may lose your credibility and appear untrustworthy to your audience.
Assume your adverts violate your country’s comparative advertising guidelines and are openly critical of your competitors. In that instance, your advertisements may have a detrimental impact on your intended audience.
Furthermore, even if you follow the law, some individuals simply do not like advertisements that set two companies against each other. It’s best to first understand your target demographic, which only about 40% of marketers do, yet it’s a critical step in creating successful commercials.
#2. It has the potential to cause brand name confusion.
Comparative advertisements can raise brand recognition while potentially causing misunderstanding.
Mentions of many competitors in the same ad can confuse consumers about which company delivers the characteristics they desire or which firm is the greatest alternative to satisfy their demands.
#3. You may face legal consequences.
As previously stated, several countries have laws in place to protect consumers and other businesses from comparative advertising.
You must create your ad with extreme care and attention to detail, or you may risk legal action from your competitors. If you’re a well-known brand, publications will almost certainly cover it, which can harm your reputation.
Conclusion
If you decide to utilize it as part of your company’s marketing plan, keep in mind comparative advertising laws in your nation, make sure you’re delivering value to the consumer, and make sure you’re not merely insulting your competition and claiming superiority.
If done correctly, you can expect to increase brand awareness, boost revenue, and potentially capture a larger proportion of your sector’s market share and establish yourself as an industry leader.
- COMPARATIVE ADVANTAGE: Definition, Examples, Law & Difference
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- Sustainable Competitive Advantage: Simple Steps to Gain a Sustainable Competitive Advantage
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