20,679 physicians say Lucky Strike [cigarettes] are less irritating. It’s hard to imagine that a claim from a 1930s Lucky Strike ad survived today’s regulatory and class-action environment. Someone would take a shot at the ad: a competitor brand, the Federal Trade Commission (FTC), or consumers.
But maybe we haven’t evolved all that much. Here is another number: advertising claim substantiation fails nearly three out of four times. This one is true. Looking at 68 consumer perception surveys deployed by brands and their challengers from 2006 to 2011, 71% were deemed unreliable by the National Advertising Division (NAD) of the Council of Better Business Bureaus, which offers alternative dispute resolution for advertisers.
The FTC advertising standard, which dates back to its 1984 Policy Statement Regarding Advertising Substantiation, requires that “… advertisers and ad agencies have a reasonable basis for advertising claims before they are disseminated.” Even seemingly “reasonable,” scientifically vetted surveys may find themselves subject to challenge in today’s litigious environment. With that said, advertisers have had some success striking back. Take the 2014 decision by a federal judge in California, who denied a motion for class action certification against Maybelline. The cosmetics maker was under fire for advertising that its SuperStay lipcolor and foundation products lasted 24 hours. But when Maybelline’s surveying showed that only a small percentage of buyers expected a full 24 hours, coupled with other consumer satisfaction data points, the injuries were determined to be minimal.
The only way to proceed through the legal minefield is to embrace the fact that five out of five people who view, hear or read your advertising claim derived from research evidence will question it. But, will they question it enough to take action?
The Way I See It:
- In a time when consumers don’t have the time or patience for telephone or in-person advertiser surveys, Internet surveys are ruling the roost. Their relative affordability also make them popular. But know that these are seen as weak and flimsy by those in the legal community. Prepare accordingly.
- If you’re considering crafting a survey in order to leverage the results for advertising campaigns, do you have a partner with the business intelligence acumen and marketing research savvy to get it done right? If not, and you also lack in-house resources, you’re risking a lot by winging it.
- No industry is free from the scrutiny of the FTC or consumers, from cable providers to laundry fabric softener manufacturers and paint companies.
- Consider more than the direct costs of a losing class action or regulatory infraction. Refunding consumers and dropping product lines all together could still pale in comparison to the PR blow. The mainstream media loves these stories. Coupled with a slow news cycle and social media backlash, things could get complicated.
The Way the Industry Sees It
I sat down with Hal Poret, one of the top market researchers in the country who frequently appears regularly before the National Advertising Division and in litigations, to talk about the evolving role of survey evidence in advertising claim substantiation.
Americans have trouble even believing newscasters these days. Why should they believe advertisers – even when claims are rooted in completely legitimate surveys?
While nothing can assure the trustworthiness of all advertising, Americans can place some confidence in the existence of a system within which competitors regularly challenge each other’s advertising and surveys at the NAD and in the courts. Advertisers in competitive fields know that their advertising and claim substantiation is very likely to face strong scrutiny from competitors and, therefore, from NAD and courts, and that if their claims are not justified they potentially face negative publicity as well as the cost and burden of having to change product packaging or advertising they have invested in. More idealistically, advertisers also have an inherent incentive to be accurate in their advertising in order to avoid disgruntled, disappointed customers and to avoid costly legal proceedings.
Have Americans become more class-action-happy these days? What about competitors – are they more aggressive against their competition? If so, why?
I’m not sure if Americans have become more class-action happy, but attorneys have certainly found more and more opportunities to bring class actions based on allegations of misleading advertising. Over the past few years, I have seen an increasing trend of class action plaintiffs and defendants doing surveys to assess consumer understanding of advertising, as well as materiality and reliance for the purposes of class certification and the substance of disputes. I do also believe competitors are more aggressive against their competition, likely because of how competitive the marketplace has become under difficult economic conditions. It’s increasingly important to consumers to get the best deal on the best products and this makes it critical for advertisers to ensure that their competition is not getting an edge by promising misleading benefits or advantages.
What are the most common errors you see when advertisers make survey evidence-based claims that don’t pass muster?
The most common error I see is that advertisers’ claims are not carefully tailored to match the way the survey was conducted and the way the questions were asked. A survey that might otherwise be acceptable can fail to constitute valid substantiation if the claim does not properly match the survey. Another common error is the presentation of products to consumers in surveys in a way that does not reliably simulate the use of such products under realistic conditions. For instance, it can be challenging to have taste tests cover the reality of actual consumer experience when people consume products in a variety of ways or with a variety of condiments, additives, or other variables. Other errors I commonly see involve making overbroad claims that appear to apply to a line or family of products when the actual survey only covered a particular product, and errors that lead to an overly broad, overly narrow, or non-representative survey universe that may not be reliably projectable to the overall population of consumers.
How are the companies creatively using surveys to better connect with consumers – and what can others learn from them?
Companies are increasingly making creative use of surveys in ways that get consumers to engage with the companies’ products and advertising. Online surveys often offer tools that allow respondents to interact with advertising and products while being asked questions, such as tools that allow the respondent to rotate and manipulate the product image or to click on various sections of an ad or website to see animations or interact in other ways. Companies are also using surveys to investigate new ways to advertise in more effective ways. For instance, the FX Network website offers consumers who want to watch FX shows online the option to watch shows without commercial interruption if they initially participate in a 60-second interactive ad in which they click to view portions of the advertising that are of most interest or to click to watch videos or see other content within the advertising.
What is the most interesting object in your office?
Probably the courtroom sketch artist depiction of me on the witness stand discussing my iPhone and iPad surveys in the Apple v. Samsung trial. My family discovered that I had been drawn by a courtroom sketch artist and purchased a print for me. It is an entertaining reminder of my limited taste of fleeting, low-level celebrity. I keep that along with other interesting products and advertising I have had the opportunity to test, as one of the most satisfying parts of doing survey research is constantly being exposed to and learning about new industries and product categories.