IBM vs. Oracle, NAD intervenes, again

For Immediate Release
Contact: Linda Bean
212.705.0129

NAD Determines Oracle Acted Properly in Discontinuing Performance Claim Couched in ‘Contest’ Language

New York, NY – Nov. 20, 2012 – The National Advertising Division has determined that Oracle Corporation took necessary action in discontinuing advertising that stated its Exadata server is “5x Faster Than IBM … Or you win $10,000,000.”

The claim, which appeared in print advertising in the Wall Street Journal and other major newspapers, was challenged before NAD by International Business Machines Corporation.

NAD is an investigative unit of the advertising industry system of self-regulation and is administered by the Council of Better Business Bureaus.

As an initial matter, NAD considered whether or not Oracle’s advertisement conveyed a comparative performance claim – or whether the advertisement simply described a contest.

In an NAD proceeding, the advertiser is obligated to support all reasonable interpretations of its advertising claims, not just the message it intended to convey. In the absence of reliable consumer perception evidence, NAD uses its judgment to determine what implied messages, if any, are conveyed by an advertisement.

Here, NAD found that, even accounting for a sophisticated target audience, a consumer would be reasonable to take away the message that all Oracle Exadata systems run five times as fast as all IBM’s Power computer products. NAD noted in its decision that the fact that the claim was made in the context of a contest announcement did not excuse the advertiser from its obligation to provide substantiation.

The advertiser did not provide any speed performance tests, examples of comparative system speed superiority or any other data to substantiate the message that its Exadata computer systems run data warehouses five times as fast as IBM Power computer systems.

Accordingly, NAD determined that the advertiser’s decision to permanently discontinue this advertisement was necessary and appropriate. Further, to the extent that Oracle reserves the right to publish similar advertisements in the future, NAD cautioned that such performance claims require evidentiary support whether or not the claims are couched in a contest announcement.

Oracle, in its advertiser’s statement, said it disagreed with NAD’s findings, but would take “NAD’s concerns into account should it disseminate similar advertising in the future.”

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NAD’s inquiry was conducted under NAD/CARU/NARB Procedures for the Voluntary Self-Regulation of National Advertising. Details of the initial inquiry, NAD’s decision, and the advertiser’s response will be included in the next NAD/CARU Case Report.

About Advertising Industry Self-Regulation: The Advertising Self-Regulatory Council establishes the policies and procedures for advertising industry self-regulation, including the National Advertising Division (NAD), Children’s Advertising Review Unit (CARU), National Advertising Review Board (NARB), Electronic Retailing Self-Regulation Program (ERSP) and Online Interest-Based Advertising Accountability Program (Accountability Program.) The self-regulatory system is administered by the Council of Better Business Bureaus.

Self-regulation is good for consumers. The self-regulatory system monitors the marketplace, holds advertisers responsible for their claims and practices and tracks emerging issues and trends. Self-regulation is good for advertisers. Rigorous review serves to encourage consumer trust; the self-regulatory system offers an expert, cost-efficient, meaningful alternative to litigation and provides a framework for the development of a self-regulatory to emerging issues.

To learn more about supporting advertising industry self-regulation, please visit us at: www.asrcreviews.org.

Linda Bean Director, Communications,
Advertising Self-Regulatory Council

Tel: 212.705.0129
Cell: 908.812.8175
lbean@asrc.bbb.org

112 Madison Ave.
3rd Fl.
New York, NY
10016

Greg,

For the third time in eight months Oracle has agreed to kill a misleading advertisement targeting IBM after scrutiny from the Better Business Bureau’s National Advertising Division.

Oracle’s ‘$10 Million Challenge’ ad claimed that its Exadata server was ‘Five Times Faster than IBM Power or You Win $10,000,000.’ The advertising council just issued a press release announcing that the claim was not supported by the evidence in the record, and that Oracle has agreed to stop making the claim. ‘[Oracle] did not provide speed performance tests, examples of comparative systems speed superiority or any other data to  substantiate its message,’ the BBB says in the release: The ads ran in The Wall Street Journal, The Economist, Chief Executive Magazine, trade publications and online.

The National Advertising Division reached similar judgments against Oracle advertising on two previous occasions this year. Lofty and unsubstantiated claims about Oracle systems being ‘Twenty Times Faster than IBM’ and ‘Twice as Fast Running Java’ were both deemed to be unsubstantiated and misleading. Oracle quietly shelved both campaigns.

If you follow Oracle’s history of claims, you won’t be surprised that the company issues misleading ads until they’re called out in public and forced to kill the campaign. As far back as 2001, Oracle’s favorite tactic has been to launch unsubstantiated attacks on competitors in ads while promising prize money to anyone who can disprove the bluff. Not surprisingly, no prize money is ever paid as the campaigns wither under scrutiny. They are designed to generate publicity for Oracle, nothing more. You may be familiar with their presentation, ‘Ridding the Market of Competition,’ which they issued to the Society of Competitive Intelligence Professionals laying out their strategy.

The repeated rulings by the BBB even caused analyst Rob Enderle to comment that, ‘there have been significant forced retractions and it is also apparent that increasingly the only people who could cite these false Oracle performance advantages with a straight face were Oracle’s own executives, who either were too dumb to know they were false or too dishonest to care.’

Let me know if you’re interested in following up on this news. You won’t hear anything about it from Oracle.

Best,

Chris

Christopher Rubsamen
Worldwide Communications for PureSystems and Cloud Computing
IBM Systems & Technology Group
aim: crubsamen
twitter: @crubsamen