• NAD Recommends Changes to Advertisement Highlighting One “True but Not Typical” Customer Experience
  • August 9, 2012 | Authors: Barry Benjamin; Tywanda Harris Lord
  • Law Firms: Kilpatrick Townsend & Stockton LLP - New York Office ; Kilpatrick Townsend & Stockton LLP - Atlanta Office
  • The National Advertising Division (“NAD”) recently addressed the issue of whether an advertiser can highlight a customer case study, or a “one time experience” of a customer, in advertising its product. The NAD was asked by IBM Corporation to review certain comparative advertising claims made by its competitor Oracle Corporation. IBM argued that the following claims made by Oracle in its advertising were misleading:   

    • "Exadata 20x Faster ... Replaces IBM Again”
    • “Giant European Retailer Moves Databases from IBM Power to Exadata ... Runs 20 Times Faster”

    Oracle responded by arguing that its advertisement was true, represented a customer case study, and that the sophisticated target audience would understand that the claims were based on the experience of only one customer.

    The NAD disagreed. It concluded that without additional qualifying information, and considering the context of the entire advertisement, one reasonable interpretation of the challenged advertisement was that all Exadata systems consistently perform 20 times faster than all IBM Power systems. The NAD also stated that even if consumers understood that the challenged claims were based on the experience of one specific customer, the advertisement would be problematic. This is because the use of a “case study” is no different than a consumer testimonial, and Oracle failed to demonstrate that the experience of the one customer - the “European Retailer” referenced in the challenged ad - is an experience that consumers can generally expect to achieve, as required by the Federal Trade Commission’s Endorsement Guides.

    As indicated in the FTC’s Endorsement Guides, advertisers must make it clear that (a) either the experience highlighted in the advertisement could be achieved by customers generally, or (b) that the experience highlighted is specifically NOT typical of the experience other customers may have with the advertiser’s product. The NAD thus concluded that the advertising should be changed because, where an advertiser uses a one-time scenario that is not “typical” in its advertising, the claim is considered false unless significant clear disclaimers are included. 

    For more information on this decision, visit http://www.ascreviews.org/2012/07/nad-finds-oracle-took-necessary-action-in-discontinuing-comparative-performance-claims-for-exadata-oracle-to-appeal-nad-decision/.