Should Your Ads Mention Your Competitors By Name?

Taco Bell's recent attack on McDonald's breakfast offerings could be a template for your next marketing campaign.
April 21, 2014

Taco Bell’s latest TV commercial names arch-rival McDonald’s Egg McMuffin before even mentioning the new breakfast menu items the fast-food giant is rolling out itself. A Taco Bell spokesperson described the campaign as “disruptive marketing” and said the spots, which also include testimonials from several people named Ronald McDonald, help the company separate itself from the breakfast fast-food pack.

So if the big guns are naming names, should your own company call out competitors and their products in your advertising? Maybe so. Similar disruptive advertising has become standard in the hotly competitive market for cellphone subscribers. Car insurance company ads also mention competitors, directly or indirectly, as do ads from car makers themselves.

Who's Naming Names?

Comparative advertising has a lengthy history, according to University of Oklahoma advertising professor Fred Beard. Examples date back at least a century, and the tactic got a boost in the 1970s when the Federal Trade Commission began encouraging advertisers to name competitors rather than comparing products to “Brand X.” Beard said regulators felt consumers benefited from knowing exactly what advertisers were matching themselves up against.

According to a study Beard made of ads that aired in 2012, about half of all network TV commercials employed some form of comparative advertising, though only 5 percent named their competitors in direct comparative ads. More commonly, ads employed implied comparative advertising, in which specific rivals aren't named.

But it's direct comparative ads that excel at drawing attention. The power of a combative ad to pull eyeballs means slogans from these types of ad campaigns sometimes become cultural touchpoints, such as Wendy’s “Where’s the beef?” critique of competing fast-food chains.

They also allow lesser-known brands and new entrants to tap into the recognition owned by the brand targeted by the comparison. When Melville, New York, ad agency The EGC Group was helping introduce a new steakhouse into a New York City market already well-populated with entrenched competitors, the company designed an ad that compared its client, Rothman’s, with the iconic Smith & Wollensky chain of steakhouses. “The strategy was to latch onto this brand equity they have and invite users to experience it themselves and see which is better,” explains Nicole Larrauri, a managing partner at EGC Group.

This sort of advertising can work if a company can point to actual advantages it has over its competitor. Comparative ads are good at communicating specific pieces of information in ways people will notice and recall later. “They get attention,” Beard says. “They generate interest, and people remember them.”

The Downside of Comparison Ads

But comparative advertising carries risks. There's the potential downside of spending money to run ads that name a rival product. “That’s the number-one concern of professionals,” Beard says. “Don’t give aid and comfort to the enemy.”

There's also the potential for igniting a war of words fought with salvos of attack and counter-attack ads. Beard says ad wars erupt fairly often in response to comparative ad campaigns. But almost always, he says, participants regret it.

That's especially true if the fight winds up in court as in 2001, when Pizza Hut took a false-advertising lawsuit sparked by the Papa John's “better ingredients” campaign all the way to the U.S. Supreme Court. The justices declined to hear the case, which has enabled Papa John’s to continue its comparative campaign to the present.

Other times, in the frenzy of battle, dueling companies reveal information about each other and themselves that they’d rather consumers not know, such as Papa John's and Pizza Hut's counter-charges that their competitors were using watered-down sauce and old dough. “Companies often wind up doing substantial damage to each other and their entire product category,” Beard notes.

Another risk is that one-sided critiques will turn consumers off. “In our culture, we have a preference for fair play,” Beard says. “People will respond negatively to what they perceive as an unfair and excessively mean-spirited attack.”

First Steps

To advertise comparisons effectively, business owners should carefully evaluate what they’re trying to do and say. “You’d better have a very compelling objective you want to accomplish," Beard says, "that overrides the fact that you're letting people know you have a competitor and what their name is.”

Often, comparative ads are designed with David versus Goliath scenarios, such as the new steakhouse entering another steak restaurant’s turf. Because you're attempting to take market share from an established company, this limits the potential damage that comes with giving free exposure to a rival. For instance, there's little chance anyone viewing the Taco Bell ads won't already know that McDonald’s sells Egg McMuffins for breakfast.

However, Beard cautions, Goliaths should never attack Davids. “Not only are you establishing them as a legitimate competitor," he says, "but you're creating brand awareness for somebody who’s already your market inferior.”

Comparative advertisers also need to be very sure about the validity of the claims they make or risk a lawsuit. In addition to the cost of defending a claim, it's possible to lose in court and be held financially liable. This happened in 1981, when U-Haul sued Jartran over comparison ads Jatran was airing and won a $40 million judgment.

One ways to avoid legal ramifications is to make your claims so fuzzy that no legal verdict is likely because it's not clear how to measure the claim. This is what EGC Group did with its Rothman steakhouse ad campaign that claimed Rothman’s crabmeat was “crabbier” than that of its rivals. “We worked very closely with counsel to be sure we weren’t making a wild claim that we couldn’t substantiate,” Larrauri says.

Perhaps because of the potential peril, Beard says research shows that local advertisers employ fewer comparative ads than national advertisers. But, he notes, small businesses should probably use comparative ads more often, in part, because they're small and therefore have less to lose by naming an already well-known competitor.

Larrauri said the Rothman’s steakhouse campaign provoked no advertising or legal response from its target, and the new steakhouse opened to a great start and is still going strong six years later. Early indications show that Taco Bell’s comparison is also working, she notes, according to EGC’s measurement of social media reaction to the campaign.

“The amount of tweets that Taco Bell received as a result of this [ad campaign] is tremendous,” says Larrauri, whose firm often monitors companies' ad campaigns. “At a time when people were all talking about [Malaysia Airlines] Flight 370, this was a dominating conversation, not just in the marketing world, but everywhere. So they got the attention they wanted.”

A Look Ahead

Despite its success, comparative advertising has increased only slightly in the past three or four decades, Beard says, and he doesn’t see any big changes coming soon. Larrauri disagrees, noting that the way social media leads to active conversation and comparisons of product offerings and companies could mean comparisons will become more common in advertising, as well as in social media campaigns.

“More brands are going to be doing comparative advertising,” she believes. “And if I were McDonald’s, I’d be retweeting every tweet from a customer who’s tried Taco Bell’s breakfast and hasn’t been happy.”

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