Comparative Advertising 101: 10 Tips for Digital Marketers

Companies may want to engage in comparative advertising, claiming that their products and services are better than their competitors based upon price or other measurable characteristics. Digital marketers often reference the names of competitors to gain an SEO advantage and garner clicks or other actions.

However, doing so can make marketers vulnerable to challenges by a competitor.

Here are a couple of examples:

· “X Company's pizza beat Y Company's in a national taste test, 2 to 1.” „

· “Unlike X-brand yogurt, new Y-brand yogurt never contains artificial flavors.”

While the topic of recent Federal Trade Commission (FTC) regulation of rating, review, and placement websites are not the subject of this article, 10 general comparative advertising considerations for digital marketers are covered below.

Tip 1: Be Able to Substantiate Express and Implied Representations

The general golden rule is that — absent an express or implied reference to a certain level of support, and absent other evidence indicating what consumer expectations would be — advertisers must possess a “reasonable basis” for express and implied claims. What constitutes a reasonable basis depends upon a number of factors including, but not limited to, appropriate tests, research, studies, and other relevant evidence.

This is particularly true if an advertisement refers to a specific competitor. Claims should be supported by independent, head-to-head testing in consumer relevant conditions so that product performance is properly measured.

If there is no specific mention of the product being compared, advertisers should generally possess support for the claim with respect to approximately 85 percent of the applicable market.

Tip 2: Tailor Claims to the Underlying Support Before Disseminating Them

Comparative advertising is permissible if representations are truthful and not expressly or impliedly deceptive. Advertisers must be certain to tailor the claims to the underlying support, first, before disseminating them.

For example: If Company A has reliable testing to show that their eye drops ease dryness better than the competition but does not help with redness, the company should only advertise that their eye drops provide better relief from eye dryness but should not make claims that they offer better eye drops, generally. And the evidence that is intended to substantiate such claims must be possessed by the company prior to the dissemination of any express or implied claims.

Tip 3: Make Sure Comparisons Are to Current Products

Advertisers should ensure that they are comparing current product categories. A claim that was previously true may, over time, become inaccurate. For example, competitor changes in manufacturing or a product formulation. Also, ensure that all evidence relied upon to substantiate representations is current.

Tip 4: Compare “Like” Products

Advertisers should avoid apples-to-oranges comparisons. If this is not possible, the material differences between the products being compared must be clearly, conspicuously, and prominently disclosed.

Tip 5: Do Not Distort Differences Between Product Characteristics

Doing so exposes an advertiser to competitor challenges, as well as regulatory inquiries by, without limitation, the FTC and the National Advertising Division of the Council of Better Business Bureaus (NAD).

Tip 6: How to Challenge a Comparative Advertising Claim

An advertiser can challenge a competitor’s comparative advertising claims via sending the competitor a cease-and-desist letter, informing the appropriate regulatory agency, or initiating an NAD proceeding.

Tip 7: Informing the Appropriate Regulatory Authority

Before an advertiser decides to contact a regulatory agency about a competitor’s comparative advertising claims, it must ensure that its side of the street is compliant. An advertiser should also consider whether to keep its identity as a challenger confidential. A competitor may be able to obtain a copy of the complaint through a Freedom of Information Act request or under applicable state law.

There is no assurance that action will be taken. The existence of consumer harm and consumer complaints, or an issue that falls under the regulator’s enforcement priorities, rather than a simple dispute between competitors, will make it more likely to draw the ire of a regulator.

Tip 8: Consider NAD Proceedings

The NAD is a less expensive and faster alternative to litigation for resolving comparative advertising disputes. The NAD reviews national advertisements and does so much like the FTC evaluates deceptive or misleading advertising claims. Advertisers must possess a reasonable basis for all express and implied representations. In terms of comparative claims, specifically, the NAD requires that comparisons are acceptable provided that they are accurate. Both sides submit briefs. There is no discovery. Complying with NAD’s decision is optional but not doing so can result in a referral to a state attorney general or the FTC.

Tip 9: Know the Laws That Apply to Comparative Advertising

Comparative advertising is regulated through federal, state, and local laws, as well as self-regulatory codes of conduct, including the FTC Act and Section 43(a) of the Lanham Act. The Food and Drug Administration also possesses the authority to regulate certain types of advertising claims made to industry-specific products.

Tip 10: Familiarize Yourself With the Lanham Act

The Lanham Act provides a cause of action to recover damages from a competitor’s false and misleading representations. To recover monetary damages under the Lanham Act, a plaintiff must prove — without limitation — actual consumer confusion, that the claim was material to customers, and that it caused actual damages. An advertiser can also pursue injunctive relief to obtain a court order that requires a competitor to immediately do or not do something, including ceasing the conduct in question.

Richard B. Newman is an advertising practices attorney at Hinch Newman LLP. He can be reached via email at rnewman@hinchnewman.com.

Informational purposes only. Not legal advice. May be considered attorney advertising.