Is the end nigh … for comparative advertising?

October, 2013

Comparative advertising is a very powerful tool to differentiate your product from your competitor’s like or similar product. Used correctly, consumers get the benefit of seeing upfront the key differences between two or more products. Used incorrectly and consumers could be easily misled or deceived.

The corporate regulator, ASIC, has taken a greater interest in comparative advertising and is increasingly tightening the rules.

In the latest instance, Woolworths pulled its insurance advertising which compared 109 consumers who had bought comprehensive car insurance from Woolworths in 2012. The ad compared the amount the consumers spent on their previous policy with their premium and claimed that the consumer saved on average $240.

The advertisements included a disclaimer regarding the cover and the benefits.

Despite this, ASIC was concerned that ads were “potentially misleading” because of differences between the two policies and in particular the “agreed value”. Also, ASIC considered the disclaimer was not sufficiently prominent.

Rather than face possible court action, Woolworths withdrew the ads.

Rules around businesses setting their products against their competitors’ are getting tighter and tighter.

More detailed and explanatory information is required in the advertisement and clearer “like-for-like” assessment.

This is not a bad thing from a consumer’s perspective, but from a marketer’s perspective it could spell the end for comparative advertising. It’s difficult to convey in a punchy one line all the details of the comparisons making the use of comparative advertising increasingly challenging and risky.

Key Lessons

Know your audience – Ask yourself, who is your audience – an advertisement in an industry publication might be OK but in a mass market publication it could be considered misleading.

The fine print won’t save you – in other words, you can’t rely on the clarification of the comparisons that you put in the fine print because the important feature is the overall impression given to the consumer. If the big print strongly conveys a certain impression, the fine print is unlikely to save you.

Apples with apples – the comparison needs to be very narrowly defined. It’s not just about apples with apples anymore, it’s closer to “red gala apples grown in Tasmania in 2013” with “red gala apples grown in Tasmania in 2013”.

ASIC is taking an increasing interest in comparative advertising to ensure that the comparison is clearly “like for like”, and any differences must be highlighted. The comparisons must be properly defined, and ensure that the audience understands the key terms of the comparisons. The effectiveness of wordy and information-heavy advertisements is for the marketers to consider, but it looks like the end of comparative advertising may be nigh…

If you’re considering comparative advertising as a strategy or want to talk about any marketing compliance or consumer related issues, contact our corporate and commercial experts today.

Contact Mills Oakley

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Tim Cox | Partner
T: (07) 3228 0442
E: tcox@millsoakley.com.au

 

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