A strategy often used by competing brands is comparative advertising. With numerous cases brought in the Federal Court of Australia each year and the potential for considerable pecuniary penalties, businesses should approach this strategy with caution.
What is comparative marketing?
Comparative advertising is, as its name suggests, an advertisement that compares a product or service with the equivalent offering of a competitor. This is usually done to highlight limitations of the competing offering and demonstrate the promoted offering’s superiority.
Businesses may draw comparison with the competing offering:
- directly – by referring to, or displaying the offering e.g. use of images of a rival product; and/or
- indirectly or by implication – that a product or service is the best available on the market, which implies that the competing product is inferior e.g. their product is ‘the best’, ‘the fastest’ or ‘number one’.
This type of advertisement can be found on most advertising mediums, including in print, online, television and publicly displayed on billboards.
What are the risks associated with using comparative marketing strategies?
The main risks associated with this strategy include:
- infringement of brand intellectual property (IP) – direct comparisons such as side-by-side product images that include competitor logos and/or packaging designs may infringe copyright;
- engaging in misleading and deceptive conduct or making false statements about products or services prohibited under the Australian Consumer Law (ACL) – comparisons that do not use genuine competing products, provide inaccurate information and/or exaggerate differences have the potential to mislead and deceive consumers or be found to be a false statement; and/or
- breaching industry advertising standards – there are a number of industry codes that prescribe advertising standards, such as the Australian Association of National Advertisers Code of Ethics (AANA Code of Ethics) – the full list of applicable codes can be found at this link. Ad Standards enforce these codes and may refer non-compliant advertisements to government agencies to be taken down.
Notably, the Trade Mark Act 1995 (Cth) provides that trade marks may be used for the purposes of comparative advertising and will not infringe the rights of a registered trade mark owner.
How can businesses legally adopt comparative marketing?
Comparative advertising is permissible provided that:
- comparisons do not reproduce copyright protected aspects of packaging or branding used by a competing product or service offering;
- the comparison uses a genuine competing offering e.g. comparing apples with apples;
- representations made in the advertisements are accurate, reasonable and can be substantiated e.g. with respect to price, features and/or quality; and
- advertisement content meets industry advertising standards.
What can businesses do to counter comparative marketing?
Businesses should actively monitor competitor advertising and immediately address any concerning conduct, such as copyright infringement, breach of the ACL and/or violation of industry codes of conduct.
This post was co-authored by Joanne Lim (Seasonal Clerk), Valiant Warzecha, Jessie Buchan and Melinda Upton.