The Facts
What is ambush marketing?
Ambush marketing is the practice by which a company attempts to associate its products or services with an event without paying to become an official sponsor of that event. Businesses sometimes do this as a way to get more customers while at the same time saving money on the cost of sponsorship.
This happened in 2016 when telco giant Telstra decided to associate itself with the Rio Olympic Games, presumably for the obvious marketing benefits of being linked to a universally popular and widely televised sporting event. Another factor in Telstra’s decision to take this course of action could have been that its arch-rival, Optus, was an official sponsor of the Olympic Games.
Telstra not an official sponsor of the Rio Olympic Games
Instead of paying the substantial fee necessary to sponsor the Olympic Games as an official partner, Telstra took the more circuitous path of becoming the “technology sponsor” of the Channel 7 television coverage of the event and the related smartphone application. Both of these were very clearly connected to the Olympics.
Australian Olympic Committee takes Telstra to court
Telstra ran television commercials featuring Peter Allen’s famous song “I go to Rio” and highlighting Telstra’s role as Channel 7’s technology sponsor. The Australian Olympic Committee (AOC) wanted to protect the official sponsors of the Olympic Games and was concerned that busy people often recall an ambush marketer even more than an official sponsor, potentially handing the ambusher the advantages of being an official sponsor without having to pay the substantial fees required.
The AOC took legal action against Telstra in the Federal Court, claiming that Telstra had engaged in misleading and deceptive conduct and that its advertisements would indicate the existence of Olympic sponsorship to a reasonable person.
Expert commentary on the court's decision
Why the AOC lost the case
The legislation that the court had to consider was the Australian Consumer Law, which governs misleading and deceptive conduct, and the Olympic Insignia Protection Act, which governs the use of “protected Olympic properties” in advertisements and promotional material.
The key question which the court had to answer was whether a reasonable person who saw the Telstra advertisements would think that a sponsorship or sponsorship-like relationship existed between Telstra and the Olympic Games.
Telstra deliberately associated itself with the Olympic Games
What was not in dispute is that Telstra did intentionally associate itself with the Olympic Games through its advertisements. This was spelled out in Telstra’s own marketing brief.
It was noted in the judgment that “Telstra was well aware that, in exploiting its commercial arrangements with Seven, it had to walk a fine line. It could promote the fact that it sponsored, or was a partner of, Seven’s Olympic broadcast. It could not, however, suggest or imply that it sponsored, or was affiliated with any Olympic body. The critical question is whether any of Telstra’s advertisements, promotions or marketing material crossed that line.”
Prominent disclaimer in television advertisements
There were three versions made of the Telstra television commercials. The judge described the first version as “perhaps borderline”, but stated that even this first version “does not cross the line”. The second and third versions, which were created after the AOC threatened Telstra with legal action, both featured a prominent disclaimer, which stated: “Telstra is not an official sponsor of the Olympic Games, any Olympic Committees or teams”. In respect of these, again the judge found that they “[did] not cross the line”.
It was also in Telstra’s favour that its advertisements did not mention or feature the International Olympic Committee, any image of the Olympic symbol, flag or emblem, or any current or former Olympic athlete or team.
AOC fails to prove that Telstra breached the law
The judge decided that it was not enough for the AOC to prove that Telstra’s advertisements were “Olympic themed”. The court took the view that the AOC had failed to prove that the advertisements “conveyed the alleged representation concerning sponsorship by or affiliation with an Olympic body or bodies”.
Not only did the AOC lose the case – it also had to pay Telstra’s costs, which would have been considerable. Given the muscle of Telstra’s legal department and the telco giant’s skill at the game of brinkmanship, one wonders if the AOC would have taken the case to court if, in the not unlikely event it lost the case, it would have been forced to spend its own money, rather than ours.