AT&T and Verizon are not friends right now. The reason why? This commercial:
As you can tell from the commercial, Verizon has taken a shot at AT&T’s spotty 3G coverage by playing off of the iPhone’s ubiquitous phrase, “There’s an app for that.” The iPhone is of course only available to AT&T subscribers.
So that hurts. The holiday season is fast approaching, and nobody wants to lose market share now. The commercial highlighted a significant problem for iPhone users though, and it’s a problem that hasn’t exactly been a complete mystery in the past. If you don’t live in a major city, your 3G coverage is probably going to be spotty if you are an AT&T/iPhone user.
How should AT&T have responded? Well, they probably should have just waited it out and continued to highlight in their advertising what makes the iPhone the most desirable smart phone available. That’s not what they decided to do, and it’s a decision that could haunt them.
AT&T decided instead to sue Verizon claiming that the commercial misleads consumers into thinking that they won’t get AT&T wireless service in large parts of the country.
Why is this probably a mistake? There’s a number of reasons. First of all, filing a lawsuit tends to bring more attention to the issue. A lot of people are looking at smart phones as holiday gifts, and if they do a little bit of research they’ll likely stumble upon this issue. It’s even more likely now that a lawsuit is involved. Do a Google search for “at&t coverage” and see what comes up. About half of the results are about the AT&T and Verizon dispute.
Another reason to avoid filing a lawsuit is that you could lose and suffer the consequences. In this case, the consequence of losing is belittling your brand image. AT&T claims that the ads mislead consumers into thinking they won’t get AT&T wireless service in large parts of the country, and that might be true. However, the ad makes it very clear that the map comparisons are for 3G coverage. Some people may not understand that there are levels of service beneath 3G available in those areas of the country, so perhaps they are the ones AT&T believes are being mislead. Even if the ads are ruled to be misleading, they definitely do not lie.
This brings to light a third reason to avoid lawsuits (at least in this situation). Perhaps you win the lawsuit. Punishment for false advertising often is to run corrective advertising. Can you imagine what the corrective advertising might say? Here’s my shot at it:
Verizon recently ran a series of ads that may have been misleading to the public. We claimed in these ads that Verizon’s 3G network had better national coverage than AT&T’s. While this is true, it may have lead you to believe that AT&T does not have coverage in large areas of the country. AT&T does have better national coverage than our ads might have let you to believe. It’s just not all 3G coverage, like ours.
Even if AT&T wins the lawsuit, it doesn’t change the fact that their 3G coverage is inferior to Verizon’s. The added attention brought on by the lawsuit also doesn’t help the growing perception that maybe something is wrong with AT&T’s service or coverage that needs to be inspected by the consumer before purchasing a smart phone.
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While writing this blog post I crossed an adage.com article about the same topic. Here’s what they had to say about when is the right time to go for the lawsuit:
When should you sue on a competitive claim?
There really are just two instances that call for the courts, according to Marc Hausman, CEO of Strategic Communications Group. One occurs when a larger player faces a serious competitive threat from an innovative but smaller, less well-financed rival. A suit can stop the latter fast in its track because it doesn’t have the deep pockets to defend itself. Legal action is also warranted when a company wants to call attention to an issue so important that litigation is the only venue that can attract any real mind share.
Legal recourse could also be an option when a brand has to defend its reputation, and wants to make a statement that sends a message not only to customers, but vendors, regulators, and the government, said Scott Sobel, president of Media and Communications Strategies. But avoid suing on an issue that could potentially call attention to your weakness, as AT&T did.
Also be careful not to file a frivolous suit, Mr. Sobel said. “Suing for the sake of suing is a bad idea; it sends a message that you’re litigious, petty and you don’t have the consumers’ interests in mind.”
————————————————————————————————————————- The Dream Factory Blog is managed by Matt Ruecker. To ask Matt any questions about what you’ve read here, please send him an email at media@dreamfactoryproductions.com.
