Holmes Report Blog

The Holmes Report blog focuses on news and issues of interest to public relations professionals. Our main site can be found at www.holmesreport.com.

Wednesday, June 21, 2006

The Negative Consequences of Negative Advertising: Years ago, when Perrier was reeling for claims that its source was contaminated with benzene, I got a call from a reporter at one of the big national newspapers—either the Times or the Journal, I don’t recall—who wanted to know why the other bottled water companies weren’t using their advertising to capitalize on the market leader’s misfortune. I said I didn’t think it would be particularly smart for a bottled water company to run ads questioning the purity and safety of bottled water.

Now along comes a report from John Zhang, a Wharton marketing professor, who warns that using ads to attack your competitors is usually counterproductive. “Instead of pulling consumers to an advertiser, [combative ads] may just make people indifferent to all offerings in a product category. And that, in turn, can lead to lower profits for everyone as businesses cut prices to lure these buyers.”

Negative ads work well in politics because it’s a zero-sum game. If you and your rival start out with 50 percent of the overall vote and attack each other relentlessly for six months, you can win by driving down your opponent’s share of the vote to 20 percent, even if he drives down your share to 21 percent. But the same approach in the market for products and services would mean significant losses for both parties.

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