Ad Wars: Comparative Advertising or Disparagement?

Legendary adman Leo Burnett once said, "Good advertising does not just circulate information. It penetrates the public mind with desires and belief." The essence of advertising is not merely about conveying information. It's about making a product so beloved that it becomes an indispensable part of one's life. 

The advertising industry has evolved over the years. As the competition intensifies, companies have had to get creative to stand out.

That's where comparative advertising comes into play. It's a strategy that involves comparing your product or service to that of a competitor. It's a risky game because there's a thin line between this and unfair competition. A competitive advertising strategy would likely result in advertising wars between competitors.

What is Comparative Advertising?

In today's dynamic market, companies use many advertising techniques to catch their consumer's attention. Some find a unique angle, while others enlist celebrities to endorse their products.

Some even use their competitor's trademarks and directly compare their products. This is known as comparative advertising.

The comparative advertisement approach highlights the superiority of one's own product or service. This is done by pointing out specific competitive differences and advantages.

Competitors in the advertising industry go to great lengths to win the "eyeball wars." 

Comparative claims aim to capture consumers' attention and convince them that their brand is superior to the competition. Think of the famous ad wars between rivals like Pepsi and Coca-Cola or Audi and BMW.

But, in their quest to outshine their rivals, some companies disparage their competitors' trademarks.

What is disparagement?

In advertising, disparagement refers to making derogatory or damaging statements about a competitor's product, service, or brand. It often involves undermining the quality, features, or reputation of the competitor's offering. This is usually done with the intent of gaining a competitive edge.

Such advertising aims to corner market share by resorting to false claims. It also relies on destroying the credibility of another business or brand. The objective is to tarnish the image of a competitor's product or service. This helps in diverting consumers to one's own offerings.

This practice is often considered unethical. To prevent this and ensure fair play and honest practices, Section 43(a)(1)(B) of the Lanham Act was enacted. This is also known as the Trademarks Act of 1946.

According to this Act, comparative advertisements must meet specific criteria to be disparaging. These are:

1. They must be commercial speech.
2. They must be made by a defendant who is in commercial competition with the plaintiff.
3. They must be made to influence consumers to buy the defendant's goods or services.
4. They must be disseminated sufficiently to the relevant purchasing public to qualify as advertising or promotion within that industry.

The US Federal Trade Commission (FTC) monitors these cases. The FTC is the central advertising standards authority. It regulates advertising in all industrial or commercial matters.

The difference between comparative advertising and disparagement

Comparative advertising and disparagement may seem similar in some ways. But they have distinct differences as well:

Comparative Advertising:

• It directly compares a company's product or service and a competitor's.
• The goal is to highlight the advantages or unique features of one's product.
• It can be an effective and legal marketing strategy. But only when conducted within established guidelines and without making false claims.

Disparagement:

• Disparagement focuses on negative statements. These are often aimed at tarnishing a competitor's product, service, or brand.
• The intention is to damage the competitor's reputation or market standing.
• Disparagement is typically considered unethical and can lead to legal consequences. It can also violate other laws, such as the Consumer Protection Act. This is especially true if it includes false or misleading statements.

Case study: Pizza Hut v. Papa John's

The advertisement war between competitors Pizza Hut and Papa John's is an example of a comparative advertising campaign vs disparagement.

In this case, Pizza Hut took legal action against Papa John's. It claimed that the tagline in Papa John's advertising, "Better Ingredients. Better Pizza," amounted to product disparagement and violated Section 43 of the Lanham Act.

Papa John's argued that they claimed to have better ingredients because they use fresh sauce and filtered water. They said this gave their pizza a distinctive character compared to Pizza Hut's remanufactured sauce and tap water. Pizza Hut didn't contest these facts. However, they argued that it made no significant difference in the quality of the pizza dough.

The lawyers representing Papa John's contended that their statement "Better Ingredients. Better Pizza" was a statement of belief or opinion, not a statement of fact.

The court stated that such exaggerated, boastful statements or general claims of superiority are too vague to be considered factual. They don't typically lead to legal action.

Ultimately, the court ruled that Papa John's advertisement, "Better Ingredients. Better Pizza," on its own, was not an objectifiable statement of fact. It said that consumers could not justifiably make rational purchase decisions based on it. Thus, it didn't constitute false advertising or a misleading statement of fact.

In this case, the court also clarified the concept of non-actionable "puffery." Non-actionable puffery can take at least two forms:

1. It can be an exaggerated, blustering, and boasting statement on which no reasonable buyer would rely.
2. It can be a general claim of superiority over comparable products that is so vague that it amounts to nothing more than an expression of opinion.

This case is a valuable lesson in toeing the fine line between disparagement and fair competition in advertising. It's a world where competitors are always at risk of being sued. But it doesn't stop them from directly or indirectly comparing their products with their rivals. All in their quest to win the advertising battle.

Advertising: a tool or a weapon?

Advertising allows businesses to engage with their customers across media and geographies. In particular, comparative advertising is a powerful tool. It will enable companies to showcase their products in a competitive light. It also helps establish a brand and protects you from potential trademark infringement.

However, businesses sometimes get carried away. They end up crossing the line between comparative advertising and disparagement.

Competition is fierce in advertising, but honesty and fairness should always be at the heart of any marketing strategy. Unfair trade practices may give you an unfair advantage and bring in a few customers right now. But it will also tarnish your credibility in the long run.

After all, it's not only about selling products. It's about creating a brand that customers believe in and can't live without.