Advertisements that sound ‘too good to be true’ multiply during holiday season and the NAD is here to help.
Advertisements that sound too good to be true seem to be in great supply during holiday season. You know, the time of year when the cash register typically sings an expanding song, even in this stressed economy. This is also the time of year when the numbers of “dieters” and new gym memberships appear to be at an all-time high. Typically this means in the early part of a new year, or the months leading up to it, the airwaves and net-waves (so-to-speak) are often filled with aggressive commercials and inducements for product purchase. So what can your company do to level the playing field?
The Low Barrier to Entry
Since this industry has a low barrier to entry, all types of companies can enter the business. Simply said, anyone can call a contract manufacturer to private label a line of vitamins, minerals and other products defined as dietary supplements. But to be fair, the same is essentially true for over-the-counter (OTC) products as well as those that have made the “switch” from prescription to OTC.
So how does this relate to research? Whether it is library-based, petri dish-based or even a human interventional clinical trial, it is the research and what is uncovered that helps drive innovation, new product creation, sales channels and much more. In the world of dietary supplements in particular, more research is needed in the area of claim substantiation. More specifically, companies need to invest more in human interventional trials designed to determine if a product has an effect (ergogenic for example) in order to support marketing platforms. As I’ve mentioned many times before, having sponsored research on a finished product also helps yield a layer of product protection known as intellectual property (IP). Unfortunately, this information is lost on many companies.
If yours is an ethical company that follows regulations and has the product and ingredient-specific substantiation for your claims and marketing plans, what can you do to help level the playing field against the hucksters?
First of all, make sure you have an in-house legal department or a firm that you deal with on a regular basis. You need these parties to settle disputes and complaints, especially with competitors that have stepped over the line. This can get expensive, however. Consider that costs could potentially run more than $50,000 per month for legal support and that does not account for potential findings against a company and any monetary value that may be associated with that. Another resource that is available is the National Advertising Division of the Better Business Bureau (NAD-BBB).
The NAD allows any consumer (individual) or company to apply for a challenge. The NAD, for a small fee (between $2500 and $6000) will coordinate an advertising/marketing challenge while working with both companies (the company bringing the challenge and the defender). The NAD challenge allows for vetting out whether a national advertisement is truthful and/or not misleading in terms of the claims made.
When a challenge is initiated, the NAD, its lawyers and research experts perform a complete review of both the challenged ads as well as any material brought by the challenger. After reviewing the challenge and materials, the NAD will notify the company being challenged about the concerns, and specifically spell out the issues at hand, allowing the challenged company time to reply. The reply to the NAD inquiry is key—your key for demonstrating substantiation for the claims made. This is a case where having product-specific research rather than only third-party research becomes very important (and should be another impetus for companies to sponsor human interventional trials on their finished products). At this point, the challenged company will review the NAD query, decide whether to respond, and with its own resources compile a dossier for NAD review.
Once NAD receives the answers to its query, a final decision is made. The NAD decision may say that the advertising or parts of it are not substantiated. The NAD will make concrete recommendations to the company for how to improve or better adhere to regulations for product advertisements. The NAD then makes the case and the results public on its website (www.nadreview.org).
Weeding Out the Bad Apples
Using the NAD is one way to weed out some of the bad apples, as NAD’s unresolved cases seem to get an expedited review and action by the FTC. Using NAD could also serve as a low-cost alternative for researching the truthfulness of marketing claims. The recommendations NAD provides to a challenged company are also helpful in terms of remaining compliant with the rules that govern the category.
One service that the NAD may want to offer in the future is pre-market review. In this way, companies could seek the advice of NAD before they go to market. They could submit marketing campaigns as well as studies and other materials in support of claim(s) to see if it holds up when viewed under the legal and scientific microscope. In summary, the NAD has proven that its process is fair and expedient (unlike a legal court case), so using it as a resource could be of great benefit to your company.