After weeks of taking the hit, AT&T finally responded with a lawsuit against Verizon for its misleading advertising concerning AT&T wireless service. In the ads "There Is A Map For That", although Verizon put a tiny line underneath its slogan saying "Comparison based on square miles covered with 3G. Voice and data services available outside 3G coverage area", it is still very insignificant in front of AT&T's 'blank' coverage on the 'map'.
Introduction
Below is a link to Verizon's new ads:
1st Ad: (Samsung)
Description: Guy walks through campus with Verizon Wireless phone and plays Rock Band. Guy with AT&T phone doesn't have coverage so he can't use his apps.
http://www.youtube.com/watch?v=0WIXFs_g728&feature=related
2nd Ad: (LG)
Description: Girl walks down street with Verizon Wireless phone. She uses Tweet Tweet and makes plans with friends. Girl with AT&T phone doesn't have 3G coverage so she misses the invite.
http://www.youtube.com/watch?v=ECF-tBIK6pw
3nd: Verizon 3G Website:
http://phones.verizonwireless.com/3g/
After getting the big picture of this argument, let's see how Verizon responded to AT&T and how these ads caused Verizon bigger problems.
1. Watch the language in media (e.g.ads):
In Verizon's earlier ads, it said that AT&T customers were "out of touch" where AT&T "3G" coverage is
not available. Besides, in the ads provided above, Verizon displayed a "3G" coverage map attributed to
AT&T with large blank areas (or no coverage) to bolster its misleading message that customers with AT&T service are "out of touch" in large parts of the US. This "out of touch" brought Verizon trouble with AT&T, which was the trigger event of this crisis.
Later, AT&T confronted with Verizon about its equivocal language in ads."By communicating that AT&T customers have no coverage in large parts of the country, Verizon is misleading the public about an essential component of the services AT&T offers," the lawsuit says. Verizon's company spokesperson Jim Gerace said to the Wall Street Journal that "the lawsuit doesn't have any merits. Our ads clearly explain that non-3G coverage is available elsewhere." What Gerace meant by "clearly" was actually a small line.
Verizon removed the words "out of touch" from the ads and replaced with the phrase "Voice & data services available outside 3G coverage areas" in small fonts at the end of the ads (did you see it in the ads above?). This was a bad PR move for three reasons. First off, it did not solve the problem since the fonts were too small for consumers to see. Secondly, it jeopardized its relationship with AT&T for not providing a valid solution. Last but not least, it dragged the crisis to a higher level. Therefore, Verizon's initial crisis response was a failure.
2. Suggested Best Practice
The recommended best practice for Verizon PR people would be: communicating with AT&T in a formal bi-lateral meeting to negotiate a solution. The relationship with competitors may be tricky, yet it is possible. Losing a lawsuit may cost Verizon hundreds of times more than the profits gained from its misleading ads.Their bad decision put Verizon at a very passive position. Verizon might have faced questioning of its reputation and credibility at any time.
3. Legal Consultant in CMT
Responding to a medium like Wall Street Journal is not a wise choice. No matter how terrible AT&T's network is, Verizon cannot set the fire.
The Lanham Act stated clearly that "in commercial advertising or promotion, misrepresents the nature, characteristics, qualities, or geographic origin of his or her or another person's goods, services or commercial activities, shall be liable in a civil action by any person who believes that he or she is or is likely to be damaged by such act."
Verizon's CMT should at least have several legal professionals who can figure out how to deal with these acts. In Verizon's CMP, risk assessment section should include certain legal issues concerning media releases such as TV commercials. Besides, Verizon needs to hold a CMT meeting with its legal professional present to talk about crisis responses.
4. What About Irreparable Loss of AT&T
Besides legal responses, Verizon CMT should also think about possible compensation for AT&T if the lawsuit actually resulted in a restraining order of the commercials and responsibility to AT&T's damages.
The crisis has been going on for a month since the new ads came to the public in October.Verizon have missed many chances to negotiate with AT&T for a better solution than confronting in court. The PR people in Verizon should take action to actively and pro-actively respond to the crisis through communication with AT&T or through mass media.
5. On AT&T's Side
For AT&T people, communicating with Apple is of the utmost importance. Verizon's commercials highly affect two groups of AT&T's stakeholders---consumers and collaborators. Social media provided the consumers and users a great platform to whine about AT&T's wireless service. Verizon reminded them to do so with the commercials.
AT&T needed to use bolstering strategies to ask for wide support from users, potential consumers, and last but not least, its biggest collaborator---Apple Iphone. Rumors said Apple might drop exclusivity with AT&T next year and would possibly collaborate with Verizon to extend carrier options for Iphone customers. AT&T's CMT needs to meet with Apple's decision makers, let them know about AT&T's current situation, and ask for support. It may be a good idea to talk about continuing the exclusivity and offering much 'leeway' for sharing profits.
It is a battle between AT&T and Verizon. It is also a war between the PR/crisis management team in the two companies. Whoever wins the media and stakeholdes will succeed eventually.
