NEW TRENDS IN ADVERTISING: ENVIRONMENTALLY FRIENDLY MARKETING AND AMBUSH MARKETING

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1 SPECIAL SECTION NEW TRENDS IN ADVERTISING: ENVIRONMENTALLY FRIENDLY MARKETING AND AMBUSH MARKETING by Dr. Ewa Skrzydło Tefelska This material was prepared in cooperation with: Marketing is a domain in which innovations and the market are almost always ahead of legal regulations. The most recent examples in support of this statement are environmentally friendly marketing and ambush marketing. How to use the newest trends or protect oneself against acts of unfair competition in compliance with the provisions of law?

2 part. I How to honestly promote environmentally friendly activity The growth of clients social awareness and involvement in the environmental protection encourage companies to promote activities and products contributing to greater care for the environment. Unfortunately, however, this may lead to many abuses. How can they be avoided? The 2008 research carried out by the Economist Intelligence Unit proves that shares in enterprises which develop in accordance with sustainable growth assumptions achieve in a three-year perspective a higher average growth rate than shares in companies which do not attach much importance to the preservation of the natural and social environment. In the opinion of Collette Chandler, an independent consultant specializing in the promotion of environmentally friendly measures, the market of products and services corresponding to the new values followed by consumers is now estimated at USD 230 billion globally. By 2015 its value is expected to grow to USD 845 billion. It is therefore not a surprise that more and more companies are becoming involved in actions emphasizing an environmentally friendly aspect of their activities and of the products and services offered on the market. Credibility and authenticity of communication play a particular role in this process. It is owing to effective communication that companies are able to gain additional involvement of their personnel, attract valuable employees and win respect of their clients and investors. Many of these measures are, however, of a very opportunist nature. They are designed to attract people s attention and enhance the company s image or brand, and have little to do with real efforts for the benefit of the environment. The problem is so serious that it has already been given its own name (green washing) and has become the subject of the first regulations aimed at preventing the abuse of the good will of consumers and market environment. Regulations concerning environmentally friendly marketing in the EU European Union law does not contain any detailed regulations concerning environmentally friendly marketing. This area is regulated by general provisions applicable to advertising communication, and in many cases also by detailed regulations applicable to certain sectors of the economy or business operation areas, says Felix Hofer, a lawyer from the law office Hofer Lösch Torricelli specializing in legal advice on environmentally friendly marketing. General provisions regulate the basic rules governing the marketing communication. They state that an advertisement cannot be misleading or provide false information. It must contain detailed information on components which are not neutral to health or the environment. It cannot promote any conduct which are detrimental. Detailed provisions regulate such areas as the scope of information to be placed on packaging of food and other products of organic origin, as well as in car advertisements. They additionally sanction the rules governing the turnover of certain groups of commodities, for example household goods. Many issues related to marketing in a broad sense, including environmentally friendly campaigns, are regulated in detail in the legal systems of the UE member states. In Scandinavian countries, for 15 years now detailed legal guidelines have been in place, regulating marketing communication for honesty and well-balanced messages, as well as in terms of Listopad 2009 Harvard Business Review Polska 119

3 SPECIAL SECTION overall effect on consumers. The general collection of rules of the ICC Consolidated Code of Advertising & Marketing not only regulate environmentally friendly marketing activities but also define the rules of informing consumers about products throughout their life cycle, i.e. from the production stage to degradation. A similar model has been adopted by Great Britain. Its law does not contain any regulations concerning environmentally friendly marketing. Any and all activities within this scope, starting from the message placed on product packaging, through literature, advertisements, PR activities, telemarketing actions or information and advertisements placed in the electronic media are based on collections of recommendations from institutions exercising supervision over the observance of standards in advertisements, says Brinsley Dresden of the law office Lewis Silkin LLP, specializing in legal advice in the field of environmentally friendly marketing. These are first of all the following two organizations: Committee of Advertising Practice (CAP), creator of the British Code of Advertising Sales Promotion and Direct Marketing, and Broadcast Committee of Advertising Practice, editor of the Television Advertising Standard Code and Radio Advertising Standard Code. The environmentally friendly communication was also regulated by one of quality standards (ISO 14021). According to the accepted standards and regulations, the content of advertisements broadcast in Great Britain must comply with the law, cannot be misleading or contain any wording which may be erroneously construed. It cannot encourage activities which excessively interfere with the natural environment. This means that advertising communication must provide precise information on environmental aspects of the offer, be fully consistent with the truth, and leave no doubts as to interpretation. The scope of information provided must cover the entire life cycle of the product and be updated as the scope of available knowledge broadens. It cannot suggest any unrealistic benefits for the environment, overestimate a favorable effect on the environment or boast of introducing properties which render the product environmentally friendly, if such properties were already available earlier but were emphasized. An advertising communication cannot make consumers believe that the product is environmentally friendly, if in fact its effect is negative (even in spite of the producer s efforts to the contrary). Furthermore, such product cannot be promoted as a product free from harmful substances, if the entire product group does not contain such components, and cannot boast of the absence of harmful substances, if their removal resulted from the implementation of general recommendations and was not an act of good will on the part of the company. It cannot contain information which is unverifiable without access to data which are difficult to access. In order to avoid legal doubts, if any, the advertisers must keep a set of documents testifying to environmental effects, including test results and data in support of compliance with the standards or norms applicable in the period when the products were available on the market. They should have data at their disposal which would justify the marketing communications referring to the environmental effect of the product. In practical terms this means that advertisers should avoid using excessively categorical phrases in their campaigns ( the best in the sector, the most effective worldwide ), avoid using scientific language and incomprehensible terms, and see to it that 120 Harvard Business Review Polska Listopad 2009

4 NEW TRENDS IN ADVERTISING all the expressions contained in the advertisement are used with full awareness. Equally detailed regulations, arising most of all from the regulations set down by a branch organization, Autorité de Régulation Professionnelle de la Publicité, are in place in France. They are based on several fundamental principles. Sincerity of communication. Advertisement cannot be misleading as to the measures taken by the company or properties of the products sold thereby. The advertiser must prove that the communication is true, and in case of invoking the results of scientific research, indicate the source and method of drawing conclusions. This means that it cannot present cars as products which are neutral to the environment because in fact the fumes emitted thereby undoubtedly contaminate the environment. Proportional nature of communication. The information content cannot be misleading by overestimating the properties or favorable effects of the products which in fact are at best neutral to the environment. Clarity of communication. The entire communication must be understandable to the average consumer. Honest nature of communication. The advertiser cannot boast of measures which in fact are standard in the sector or are imposed by law. Honest use of trademarks, images and sounds. Graphic elements, pictures and sounds used in advertisements cannot erroneously suggest a neutral effect on the environment. Well-balanced language. Terminology used in advertisements cannot suggest, or describe with exaggeration and inconsistently with the facts, a favorable effect of products or services on the environment. Liability for the communication. Advertisers are obligated to avoid using in advertisements any statements or images that would promote conduct which is unfavorable for the environment. For example, car advertisements should not contain any photographs presenting cars Restrictions concerning environmentally friendly communication are not just a limitation, as they enhance the creativity of the authors who strengthen the persuasive effect with humoristic elements. off-roads, i.e. in a forest, on a beach or at the seashore. In the opinion of Michel Béjot of the law office Bernhard Hertz Béjot, such restrictions are not just a limitation, as they enhance the creativity of the authors who strengthen the persuasive effect with humoristic elements. The number and complexity of regulations also enhance the creation of coherent campaigns, using a variety of communication methods. Examples of such activities on the Polish market are the campaigns of such companies as Mercedes Benz or RWE. Mercedes Benz was one of the first global concerns which (as early as more than ten years ago) commenced to emphasize the environmentally friendly and pro-social aspect of their products. One can find elements of this communication in today s advertisements placed in the press and on the Internet websites, as well as in PR activities promoting the environmentally friendly car driving. For over a year now, RWE Polska has been promoting activities aimed at enhancing the energy effectiveness of enterprises and the economical use of energy resources by individual consumers. As part of its campaign the company distributes, for example, a freeof-charge guide on how to reduce energy consumption, and a set of handy labels reminding people, for instance, that they should switch off the devices which are not currently used. Future of regulations regarding environmentally friendly marketing Environmentally friendly marketing is developing rapidly and one can expect that in the years to come we will witness many new regulations aimed at developing coherent rules of promotion with the use of this type of communication. A lot may change in this respect owing to the Swedish presidency in the EU which is just coming to an end. Sweden has considerable ambitions in the scope of creating environmentally friendly attitudes and has a coherent and extensive set of regulations in this field, including also rules governing the promotion of environmentally friendly activities. * * * Environmentally friendly marketing is only one of the domains in which the authors creativity come as a surprise to market regulators. A similar situation takes place as regards so-called ambush marketing, i.e. measures aimed at using huge mass events to promote brands and products of companies which are not sponsors of such events. The methods of preventing the infringement of interests of the companies supporting huge sports events and other mass events are described in the second part of the article entitled New trends in advertising: environmentally friendly marketing and ambush marketing. Listopad 2009 Harvard Business Review Polska 121

5 part. II How to protect sponsor s interest from abuse In the last twenty five years, over 400 cases were noted where mass events have been used for advertising brands and products without paying license fees to the organizers of such events. How can such practices be prevented? directly breach the rights of the organizers or sponsors of the event but uses the event as a pretext for the ambusher s own marketing purposes. Such actions include marketing by intrusion and marketing by association. Marketing by intrusion happens when the non-sponsor uses the gathering of a large audience for its own marketing purposes, for example it uses advertising balloons flying over the event s venue or distributes advertising gadgets to the fans entering the stadium. When the company which is not the sponsor of the event prepares a campaign targeting the specific group of consumers, it uses marketing by association. A specific example of indirect ambush marketing is also the use of the event as a pretext for organizing a parallel event. We are often dealing with such type of actions when big open air concerts are organized and pre-and postconcert events take place. One of the first gestures made by Usain Bolt after he has finished his fantastic 100 meter race at the Beijing Summer Olympics was to triumphantly show his sprint shoes made by Puma, a competitor to Adidas, which was the official sponsor of the Chinese Olympic Games. This is one of the most recent and memorable examples of ambush marketing, a strategy which consists in advertising a brand at mass events without paying license fees to the organizers of such events. According to scientists from the Centre for the International Business of Sport of the University of Coventry, in the last 25 years alone, hence since the Olympic Games in Los Angeles when the new era in sports sponsorship began, over 400 events of breach of promotion rules at mass events were noted. Boundless creativity The invention of those who prepare such campaigns is increasing from year to year. At the Winter Olympics in Lillehammer, the advertising slogan of the American Express was: So if you re traveling to Norway, you ll need a passport but you don t need a Visa. (the English word visa is also the name of a competitor, the official sponsor of the event). And a sprinter, Linford Christie, appeared at the press conference in contact lenses with the Puma logo (Puma is a competitor to Reebok, which was the official sponsor of the Atlanta Games). These are only two of the most spectacular techniques of free advertising at mass events. According to Søren Pietzcker, partner from the law firm of Heuking Kühn Lüer Wojtek, and Duncan Grehan from the law firm of Duncan Grehan & Partners, the lawyers specializing in intellectual ownership protection, such actions can be classified into two categories: direct and indirect techniques of brand marketing at events. Direct ambush marketing is an intentional use of symbols and trademarks associated with the mass event so as to give the consumers the wrong impression as to the actual sponsors of the event. Indirect ambush marketing consists in adjusting the message to the nature of the event in the manner which does not International regulations Marketing actions which can be deemed a breach of the interests of the exclusive sponsors of the events are so common that for years attempts have been made to regulate this issue. Companies operating in Poland, which is to co-host the 2012 European Football Championship, have, by the force of events, been drawn into the discussion. In the European Union the interest of sponsors of mass events is protected primarily by the implementation of the Unfair Commercial Practices Directive of 2005 into the legal systems of EU members. The directive lists 27 various examples of practices which breach the interests of entrepreneurs. They include actions aimed, i.a., at creating the false impression of the product authorization by organizations or pretending to be a sponsor of a sporting event. It is supplemented by regulations on the protection of trademarks, hence also the names of sporting events. Unfortunately, in the opinion of many lawyers, the Polish trademark and unfair 122 Harvard Business Review Polska Listopad 2009

6 NEW TRENDS IN ADVERTISING Unfortunately, in the opinion of many lawyers, the Polish trademark and unfair competition law does not make it possible to effectively combat ambush marketing. competition law does not make it possible to effectively combat ambush marketing. Therefore, potential sponsors of mass events should try to regulate such issues in detail in their agreements with the organizers and to jointly promote the awareness of the role of sponsors in the organization of such type of events. In order to effectively protect sponsors rights and make it possible for other entrepreneurs to identify which forms of advertising are legal, the Unfair Competition Act will probably have to be amended and extended by a definition of ambush marketing as unfair competition. It is possible that a special purpose act aimed at protecting the event from such actions will have to be established. Such acts were established for example by the Australian government (Sydney Olympic Games in 2000) and the British government (London Olympic Games in 2012). As announced by Tomasz Zahorski, the National Coordinator for Intellectual Property in EURO 2012.PL, when signing the agreement on organization of the 2012 European Football Championship, Poland undertook to strengthen the guarantee for the protection of intellectual property and the interest of sponsors of the event. The Ministry of Sport is developing a package of amendments to the acts which are to meet the challenge. The overriding purpose of civil servants is to establish regulations which would be universal and coherent enough to regulate the sponsorship issues for the purposes of all sporting events, not only international ones, organized in Poland, Dr Ewa Skrzydło-Tefelska, partner at the law firm of Sołtysiński Kawecki & Szlęzak Cooperation: Antoni Bielewicz, editor at Harvard Business Review Polska The material was prepared on the basis of the speeches given at the conference New Trends and Strategies: Environmentally Friendly Marketing and Ambush Marketing organized by the law firm of Sołtysiński Kawecki & Szlęzak and Global Advertising Lawyers Alliance. Listopad 2009 Harvard Business Review Polska 123