- Posted by DLA Piper Retail Thera-IP Team
- On 27 November 2018
To get an edge over competitors, businesses often resort to aggressive marketing and advertising strategies to promote their products. While these campaigns are usually creative, amusing to consumers and highly effective for attracting publicity, they can have unforeseen consequences, such as agitating a competitor into taking action against the aggressor.
In this series (this is the first of three posts), we consider various ‘marketing warfare’ strategies that are commonly used by businesses, the risks of employing these strategies, and what can be done to combat the practices. In this post, we consider ambush marketing.
What is ambush marketing?
Ambush marketing is a promotional tactic that is designed to associate a business or brand (the ambushing business) with a particular event, attract the attention of attendees at an event or an existing advertising campaign, to the detriment of another business (the ambushed business). This is most commonly seen in the context of major sporting events where businesses try to capitalise on the reputation and popularity of that event without paying for official sponsorship.
There are two categories of ambush marketing:
- Direct – where ambushing businesses directly breach the rights of ambushed businesses, such as:
- unauthorised use of ambushed business or event-related intellectual property;
- making representations that they are the official sponsor of an event; and/or
- piggy-backing off, or hijacking an ambushed business’s advertising campaign (e.g. buying a billboard advertisement adjacent to an existing billboard advertisement to add to or ridicule the ambushed business’s advertisement).
- Indirect – where ambushing businesses use indirect means to create the impression that they are the sponsor of an event, or otherwise attract publicity, such as:
- supplying free products to persons attending or participating in an event;
- purchasing advertising space at the event venue, surrounding areas or near an ambushed business’s advertisement; and/or
- purchasing advertising time around relays of the event broadcast.
In some instances, official event sponsors may themselves use ambush marketing tactics (whether intended or not) if their promotional activities move beyond those permitted under their sponsorship agreement, particularly when this encroaches on the authorised activities of another official sponsor.
What are the risks associated with using ambush marketing strategies?
In response to ambush marketing strategies, ambushed businesses or event organisers may take action for:
- infringement of intellectual property rights, such as registered trade marks and copyright;
- breach of the Australian Consumer Law for making false, misleading and/or deceptive representations about sponsorship or the nature of the ambushed campaign; and/or
- breach of ‘major event’ legislation that prohibits unauthorised advertising and/or the making of representations about sponsorship, affiliation or approval of the event organiser, in the vicinity of an event.
Depending on the conduct and its timing with respect to an event, remedies may include injunctions that prevent the ambush marketing from occurring, damages and financial penalties under ‘major event’ legislation.
Ambushed businesses may also bring proceedings against event organisers or vendors of advertising services (e.g. billboard owners) for breach of contract if obligations to prevent ambush marketing are not upheld.
How can businesses strike a balance with their marketing practices?
With an awareness of the above risks and subject to the extent of ‘major event’ legislation, businesses are not prohibited from:
- using allusion or thematic association with an event or existing advertising campaign;
- providing event participants, such as athletes, with free products prior to events where the ambushing business cannot control its use (although this may be subject to other restrictions, i.e. athlete contracts); and/or
- strategically purchasing advertising.
Conversely, businesses may also make a strategic choice that penalties under ‘major event’ legislation for unauthorised advertising are worth the publicity.
What can businesses do to counter ambush marketing?
Ambush marketing diminishes the value derived from advertising spend (e.g. sponsorship or purchased advertising), particularly if the ambushing business is a direct competitor of the ambushed business.
As a result, businesses can do the following to ensure they get maximum value out of their advertising spend:
- actively monitor both their, and their competitor’s, advertising to ensure that ambushing does not occur;
- promptly address concerning conduct, such as making contact with the ambushing business and taking steps to assert rights, if necessary;
- in the case of sponsorship, ensure that:
- sponsorship agreements include and clearly articulate:
- the extent of permissible promotional activities by the sponsor;
- the event organiser’s obligations to prevent ambush marketing generally and specifically at the event venue and surrounding areas by participants and patrons;
- what is considered a reasonable standard for monitoring and enforcement of these obligations;
- penalties for event organisers if they fall below this standard; and
- a first right of refusal to purchase broadcast advertising during the event, or require advertising time to be controlled and allocated by the event organiser itself, and the requirement for corresponding clauses in broadcast agreements; and
- sponsors complete due diligence exercises with respect to their events and sponsorship rights (i.e. if any existing sponsorship arrangements would conflict with sponsor’s rights, such as venue naming rights or ‘pourage’ agreements).
- sponsorship agreements include and clearly articulate:
This post was co-authored by Alexandra de Zwart, Valiant Warzecha, Jessie Buchan and Melinda Upton.