Prohibition of Ambush Marketing: curtailment of free-enterprise?

Prohibition of Ambush Marketing: curtailment of free-enterprise?

 

Sponsored Events

Sponsorship is a highly flexible medium providing access to various audiences such as internal staff, business decision makers, government regulators, and consumers, most corporate sponsors seek to communicate with the latter. Companies use sponsorship to fulfill the primary marketing communications objectives of creating brand awareness and enhancing image, although they sometimes explicitly seek and achieve bottom-line sales results. Sponsoring an event simultaneously attracts and provides access to an audience. It differs from conventional advertising in that both message and medium are inextricably linked. The event generates the audience while concurrently sending a message to that audience about the event’s values.Each sponsorship property or vehicle has certain associated images in the consumer’s mind that transfer to the sponsor.[1]

 

Question:

In a case where a company or a group thereof organized/sponsored an event, can non-sponsors promote their product thru usage and/or carrying of a trademark, resulting to the use of competing marks in a corporate-sponsored event?

The answer would be in the negative. Such act would be tantamount to ambush marketing.

 

It has been said that the growth of commercial sponsorship has been perhaps the most striking development in marketing communications over the last two decades[2] As sponsorship’s popularity has increased, so too has competition to secure and protect sponsorship rights.[3]

 

Ambush Marketing, also known as “guerilla marketing or “parasitic marketing” describes any kind of behavior of a party that strives to associate with an event in order to profit from it without making any of its own contribution or sponsorship fees.[4] The act of “ambushing” often involves competitors of the official sponsors and the intention is to increase their own level of public awareness and to link their company image with the attributes ascribes to the sporting event.

In the process, there shall be an active attempt to confuse people as to who is the official sponsor or who are sponsors of an event and who is not.[5]Corporate sponsors see ambush marketing as a threat to the expected value of the sponsorship contract that they have purchased. It also allows the ambusher to ingratiate itself with the consumer beneficially.[6]

An ambush marketer can associate with a major event without large-scale investment in securing rights and thereby fulfill brand awareness and image objectives at low cost which are benefits usually available only to the official sponsor. It also generates goodwill in favor of the ambusher, which is a consumer’s natural reaction to support for an activity of which he or she approves.

As a result, the recollection of sponsors might be reduced,Thus diminishing the goal of awareness development.[7] The Consumer’s failure to develop a correct interpretation of various facets of stimuli during the information processing procedure is described as consumer confusion. In the confusion, there is interfered information processing which impedes the consumer’s ability to select and interpret stimuli.[8]Such confusion is completely undesirable for the sponsors because it puts a huge dent to theirinvestment denying the legitimate sponsor clear recognition for its sponsorship role. The net effect is that the official sponsor may derive considerably less benefit from its involvement.

Ambush marketing measures can be multifaceted and range from the unauthorized use of protected signs or terms of the organizer to creative advertising strategies without any use of protected rights. One of the most common methods in an events ambushing is the use of advertising strategies either directly or indirectly. Direct ambush marketing includes measures whereby the unauthorized company suggests to the public that it is an official sponsor of an event, either by intrusion and/or by association. Indirect ambush measures are more subtle measures undertaken by a company through different forms of association.[9]

The effectiveness of market ambushing is not disputed. Studies of the 1992 Olympic Games[10] showed that many non-sponsors that aired commercials during Olympic broadcasts in the U.S. market created the impression of Olympic involvement.[11] Using association with the event as a success indicator, it was determined that many non-sponsors outperformed the official sponsors in the relevant categories.[12]

 

Legal and Ethical Framework

In many countries, Ambush marketing is labeled as a prohibited marketing activity and is taken seriously. In the U.K., ambush marketing constitutes the crime of unlawful passing off wherein the insignia and identifying features of an event can be protected under the common law if they are well known and enjoy repute to the extent that persons seeing such insignia call the event to mind.  Countries like the USA, France and Germany deem ambush marketing as tantamount to unfair competition.

 

The Philippines does not have a special law to address the dangers of ambush marketing but there are various general laws which may to an extent, provide for a workable solution to the threat or to serve as a basis for sponsors who are prejudiced by ambush marketing.

Examples are the following:

In the Civil Code of the Philippines, there are several pertinent provisions:

The Doctrine of Abuse of Rights found in Articles 19, 20 and 21,Unjust Enrichment of Article 22 and Article 28 which creates a right of action to one who suffers by reason ofUnfair Competition

Articles 19, 20 and 21 of the New Civil Code of the Philippines are “catch-all” provisions, meaning, in case of the absence or insufficiency of laws to apply to a certain situation, the catch-all provisions may be utilized to cater to the exigencies present. Jurisprudence [13]explains: “There is unjust enrichment when a person unjustly retains a benefit to the loss of another, or when a person retains money or property of another against the fundamental principles of justice, equity and good conscience”. And lastly, The “true test” of unfair competition as jurisprudence laid in a case[14]: whether the acts of defendant are such as are calculated to deceive the ordinary buyer making his purchases under the ordinary conditions which prevail in the particular trade to which the controversy relates

Article 110 of Republic Act 7394(Consumer Act of the Philippines)Philippines imposes penalties on “False, Deceptive or Misleading Advertisement” as well as to “unconscionable sales practices in both goods and credit transactions”

Sections 168 and 169.1 of R.A 8293(Intellectual Property Code of the Philippines) refers to Unfair Competition, Rights, Regulation and Remedies as well as False Designations of Origin; False Description or Representation of which pertinent provision provides as prohibition to one that:

xxx Is likely to cause confusion, or to cause mistake, or to deceive as to the affiliation, connection, or association of such person with another person, or as to the origin, sponsorship, or approval of his or her goods, services, or commercial activities by another person; xxx

 

When an ambusher that has not bought specific rights gives the impression that it is involved in an event, the ethics question arises. In such instances, the ambusher deliberately associates with and exploits an event’s spirit without breaching the letter of the law. At that juncture, Ambushers may find solace to the fact that there are schools of thought that are actually in its favor, those which are in pursuance of universal principles regarding fair business practices and its responsibility to further the best interest of its stockholder to justify its acts.

According to Kantian moral theory,[15] which believed that a perfectly rational being must also be perfectly moral because a perfectly rational being subjectively finds it necessary to do what is rationally necessary. Because humans are not absolutely rational considering men partly act by instinct, Kant believed that humans must conform their subjective will with objective rational laws, which relies on universal standards of goodness and the motivation to fulfill one’s duties and obligations. It “maintained that moral action must be motivated by obligation alone” and “that all persons must act not only in accordance with obligation, but for the sake of obligation.”

Contrasting theories, such as the Utilitarian theories, come down in favor of the greatest goodfor the greatest number. Good is usually defined as net benefits that accrue to the parties affected by choice.” Laczniak and Murphy state, “In an organizational context, utilitarianism basically states that a decision concerning corporate conduct is proper if and only if that decision produces the greatest good for the greatest number of individuals.” In a nutshell, such theory creates an impression that an ambusher, in his pursuit of self-interest without contribution is actually engaging in an activity which sabotages the greater good.[16]

Ambushers such as Jerry C. Welsh, former head of worldwide marketing at American Express and a proponent of ambushing, argue that their actions are perfectly legal and ethical within the framework of normal business. He suggests that “there is a weak-minded view that competitors have a moral obligation to step back and allow an official sponsor to reap all the benefits from a special event.”[17]

Despite the hint of ambush marketing being unethical, it is often given a certain sympathy bonus in public for creative marketing measures.[18] For the ambusher, ambush marketing is an important commercial tool and a natural result of free competition. But from a general perspective, ambush marketing is wrong because it threatens the ability to retain top-paying sponsors. Such underpins the fact that the existence of a risk creates a major threat to the viability of sponsorship of events and thus for the holding of events since, many sporting and entertainment events are not economically viable and cannot be staged without the sponsorship. [19]

 

One may even argue that Jurisprudence[20] itself has held that the ordinary purchaser must be thought of as having, and credited with, at least a modicum of intelligence. Meaning, the existence of competitors in a sponsored event should not be considered as a negative element being that man will eventually support a brand which it likes, regardless of its status of sponsor or non-sporsor.

Meenaghan[21] asked whether ambush marketing was an “immoral or illegal” practice, few researchers have actually debated this question. Predictably, event owners and official sponsors have regarded it as immoral, because it threatens their ability to sell events or recoup investments made in these[22]. However, this view offers little practical guidance to prospective sponsors, who cannot assume competitors share their ethical perspective. Instead, sponsors and event owners must seek legal redress if they believe a competitor has encroached on their rights in some way[23]. Given that the courts provide the only remedies available to aggrieved sponsors, it is logical to return to Meenaghan’s question and consider whether, and in what circumstances, ambush marketing is illegal. More detailed analysis of the activities that constitute ambushing could help sponsors reduce the opportunities available to ambushers, and provide greater protection of their investment in an event.

 

Conclusion

Fundamental is the right of expression, which may be applied in marketing methods, but such right is not absolute especially if it shall transgress upon rights which are protected by virtue of laws or contract.

In fair business practice perspective, it is suggested that the sale of one’s property should result in the economic benefit going to the owner or seller. It is logical that one should reap what he sowed. In a similar fashion, the sponsor as buyer should reap the rewards of its investment and be protected in doing so.

Though there are arguments and points that may be raised in attempt to justify Ambush marketing, it such should never prosper. Ambush marketing is basically stealing, and stealing requires no validation because the evil it poses speaks for itself. No matter how wonderfully crafted semantics or brilliantly executed contraventions of existing laws, ethical matters shall still exist.

In closing, It is shown  that confused consumers have less memory of sponsors and are more likely to perceive ambushers and sponsors of other events as official sponsors. The most influential antecedent of consumer confusion is perceived stimuli ambiguity, which in turn is influenced by perceived stimuli overload. Thus, it is the combination of multiple sponsorships and ambusher activities that confuses consumers. Furthermore, it is evidenced in several tests[24] that high levels of confusion negatively impact on the attitude toward the sponsorship and evoke reactant intentions. Ironically, this effect particularly impacts both sponsors and ambushers which were successful in linking their companies or brands to the event. [25]

 


[1]M. Hiestand, “Ambush Marketing Becomes an Olympic Event,” Adweek, 17 November 1987, pp. 2–4.

 

[2] Crimmins J & Horn M (1996). Sponsorship: From management ego trip to marketing success.

Journal of Advertising Research, 36, 11-21

 

[3] Hoek J & Gendall P (2002a). When do ex-sponsors become ambush marketers? International

Journal of Sports Marketing & Sponsorship, 3 (4), 383-402.

 

[4]McKelvey/Grady, Ambush Marketing: The Legal Battleground for SportMarketers, 21 WTR Ent. & Sports Law. 2004, pages 8, 9;

[5]Dalakas, Vassilis, Robert Madrigal, and Rick Burton (2004), “Understanding Ambush Marketing: Implications of Information Processing,” in Sports Marketing and the Psychology of Marketing Communication, eds. Lynn R.Kahle and Chris Riley, Mahwah, NJ: Lawrence Erlbaum Associates, 293–304.

[6] B. Ettorre, “Ambush Marketing: Heading Them Off at the Pass,” Management Review, volume 82, March 1993, p. 5

[7] Cornwell, T. Bettina, Michael S. Humphreys, Angela M. Maguire, Clinton S. Weeks, and Cassandra L. Tellegen

(2006), “Sponsorship-Linked Marketing: The Role of Articulation in Memory,” Journal of Consumer Research, 33

(December), 312–21.

[8] Turnbull, Peter W., Sheena Leek, and Grace Ying (2000), “Customer Confusion: The Mobile Phone Market,” Journal

of Marketing Management, 16 (1–3), 143–63

[9]Curthoys/Kenndall, Ambush Marketing and the Sydney 2000 Games

(Indicia and Images) Protection Act: A retrospective, no.13

[10] Performance Research Inc., Olympic Sponsorship Study (Newport, Rhode Island: Performance Research Inc., 1992)

[11] M. Turner, “Circle the Rings, Ambush Ads Hit,” The Atlanta Journal/ The Atlanta Constitution, 3 March 1992, p. A6

[12] R.L. Flanagan, “A Study of Corporate Sponsors and the Feasibility of an Ambush-Free Olympic Games in Atlanta” (Columbia, South Carolina: University of South Carolina, unpublished dissertation, 1993)

[13] See Ong Yong v. Tiu, G.R. No. 144476, 1 February 2002, 375 SCRA 614

[14]Alhambra Cigar & Cigarette Manufacturing Co v. Mojica, 27  Phil. 266 (1914)

[15] T.L Beauchamp and N.E Bowie, eds., Ethical Theory and Business (Englewood Cliffs, New Jersey: Prentice Hall, 1993), p. 30

[16] G.R. Laczniak and P.E. Murphy, Ethical Marketing Decisions —The Higher Road (Boston: Allyn& Bacon, 1993), p. 30

[17]Bayless (1988), p. B1; and G. Brewer, “Be Like Nike?,” Sales and Marketing Management, volume 145, 11 September 1993, p. 68.

[18] Netzle, Ambush Marketing, Die neue unfaire Marketing-Maßnahme

im Sport, SpuRt 1996, pages 86, 87.

[19]Leone, Luisa,  Academic journal article from The International Sports Law Journal, October 2008 No. 3-4

 

[20] McDonald’s Corp. v. MacJoyFastfood Corp., G.R. No. 1166115, February 2, 2007

 

[21] Meenaghan T (1994). Point of view: Ambush marketing – Immoral or imaginative practice?

Journal of Advertising Research, 34 (3), 77-88.

 

[22] Payne M (1998). Ambush marketing: The undeserved advantage. Psychology and Marketing.

15 (4), 323-331.

 

[23] Hoek J & Gendall P (2002b). Ambush marketing: More than just a commercial irritant?

Entertainment Law, 1 (2), 72-91.

 

[24] Hong, Sung-mook and Sandra Page (1989), “A Psychological

Reactance Scale: Development, Factor Structure and

Reliability,” Psychological Reports, 64 (2), 1323–26.

[25] Mitchell, Vincent-Wayne and Vassilios Papavassiliou (1999), “Marketing Causes and Implications of Consumer Confusion,” Journal of Product & Brand Management, 8 (4), 319–39.

1 Comment

Filed under Uncategorized

One response to “Prohibition of Ambush Marketing: curtailment of free-enterprise?

  1. Pingback: Students’ Take: Contacts viz RA 10173 | Berne Guerrero

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s