There is one thing each business has in common, no matter its size or purpose, and that is marketing. Marketing has become a must for every company to reach a certain target audience strategically. More and more companies have started to increase their budget for marketing. The correct strategy helps increase sales, reach new targets, go global and improve brand reputation. Marketing strategies require a large amount of research and understanding of the targeted market. The process can be fun and full of market risks.
One marketing mistake can destroy the brand and make a famous brand look foolish. Marketing mistakes might include spelling mistakes, copy infringements, false promises and more. These errors can be costly due to lawsuits and loss of customers.
Right now, you may be thinking, ‘our company wouldn’t do that we have an expert team or agency’. However, the biggest international brands have fallen victim to these mistakes, which have cost them millions to fix.
Marketing mistakes can be surprising to any business, and errors can spread like fire in the digital world. However, one solution to reduce the financial and negative brand impact is purchasing professional indemnity (PI) insurance. Every business should buy the insurance just in case. This article will explain the surprising famous marketing mistakes and how professional indemnity (PI) insurance was the perfect cover.
What Is PI Insurance?
Professional indemnity insurance (PI), also known as errors and omissions insurance (E&O) – provides coverage for professionals and businesses to protect against claims of negligence from clients or customers.
The insurance will cover the insured’s business against loss from any claim(s) made because of any covered error, omission, or negligence. It is the perfect insurance when marketing mistakes turn out costly and result in lawsuits.
Famous Marketing Mistakes Covered By PI Insurance
KFC – “Eat Your Fingers Off” (Lost in Translation)
Marketing in a new country can be exciting and an excellent step for a business. It allows the brand to broaden its target market and grow the brand. However, entering a new market requires a lot of research to understand the country, culture, and language to customise the marketing strategy to their needs. This includes marketing in the local language, which doesn’t always go as planned.
A wrong translation can turn an original message into something absurd in a matter of seconds. For example, the massive brand KFC in the late 1980s decided to take their American success to China. Unfortunately, the marketing team mistranslated the famous slogan “Finger-Lickin’ Good” into “Eat Your Fingers Off”. Even though their chicken is tasty, that is not what they meant. Yikes-imagine if the graphic was an image of people eating (licking) their fingers. The famous marketing mistake cost KFC millions to change and recover.
A situation like this can result in lawsuits against the marketing agency/professionals from the local government or the brand itself. Fortunately, PI insurance will provide cover for legal and settlement costs. Additionally, the insurance will pay for the cost spent to change or remove the marketing mistake. It is always better to translate with an expert.
Urban Outfitters – Unauthorised Use of Model’s Photograph
When creating a marketing campaign, every aspect needs to be authorised and signed off by the brand, models, photographers and anyone involved. The authorisation gives the marketing team the right to use their work in the campaign to promote the product or service. This could include the model’s pictures, location, logos and more. If a campaign has not authorised something small or big, the team in charge can be sued for the unlicensed property.
For example, in 2012, the famous clothing brand Urban Outfitters was sued for using unauthorised pictures. The unauthorised images were of a teen model Hailey Clauson, whose parents sued the retailer for $28 million after Urban Outfitters used shots taken in a German fashion magazine called ‘Qvest’.
It is the duty to make sure every photograph is authorised and approved, although mistakes happen. Even in such cases, PI insurance will support the insured business and provide legal costs to defend themself. Additionally, the insurance will also reimburse the cost of settling the claim if lost. Companies can avoid marketing mistakes like these, but it is always best to be prepared with PI insurance.
Reebok – Muscle Building Shoes (Fraud Marketing)
Marketing is all about being creative and catching the audience’s eye. A good advert includes attractive colours and unique facts about the product or service. Creative adverts can lead to higher sales and new customers. Of course, everything in the advert must be true, and some factors can be slightly exaugurated. However, marketing doesn’t give the license to make up facts. Lying about facts or over-exaggeration is a mispresenting marketing mistake and results in lawsuits.
For example, the famous sports brand Reebok in an advert, claimed that their shoes resulted in more than 28% strength in leg muscles than regular walking shoes. How amazing does that sound?- a fantastic excuse to skip leg days. But sadly, there was no evidence of research to support these claims. As a result, the Federal Trade Commission fined Reebok USD 25 million for misrepresentation and fraud-truly an expensive marketing mistake.
PI insurance for marketing mistakes like this will provide the settlement and fine costs related to the marketing mistake. In addition, the insurance will help the business recover from the claims and financial loss. Although the insurance will not cover any product recall costs, the brand will need product recall insurance for that cover. A business must be honest, as lies/frauds will be picked up quickly and be brand damaging.
Walkers – Selfie Competition (Someone Didn’t Do Their Job Right)
Marketing can be exciting, but creating even one small campaign is also a lot of work. Marketing agencies or teams are responsible for the outcome: good or bad. Every detail in the campaign needs to be studied and edited to avoid possible marketing mistakes. However, sometimes marketing agencies make negligence errors that result in costly lawsuits and awful outcomes.
A famous example of a negligent marketing mistake is the selfie competition by ‘Walkers’, the crisps brand. The #WalkersWave campaign allowed public members to send a selfie- which Walkers used to create videos on the brand’s Twitter feed. The videos showed Gary Lineker holding up their picture and wishing them luck in the competition. Sounds harmless, right? –It was a disaster, as instead of uploading selfies, people sent in images of murderers and sex offenders, including Jimmy Saville, Rolf Harris, and dictator Josef Stalin.
Walkers could sue the marketing agency handling their marketing for not screening the pictures. As a result, walkers faced embarrassment and wasted a large amount on the campaign. Even though it may have been the marketing agency’s fault, PI insurance will still help the agency. The insurance helps by reimbursing the settlement, commission, and legal costs. Every detail needs to be analysed to avoid embarrassing marketing mistakes when planning or executing a campaign.
Apple vs Samsung – Not everything is original
With so many campaign and marketing ideas out there, it can sometimes be hard to find that perfect original idea. Every product and marketing must be unique to succeed without any lawsuit cases. Even if your business did not intend to copy the concept and the campaign has some accidental similarities, you may still be subject to a copy infringement lawsuit.
For instance, a famous marketing mistake is a lawsuit by Apple against Samsung. Apple sued Samsung, claiming that their 2012 phone and tablet models were too similar to Apple products. The case included how they promoted the product and marketed it to similar target markets. As a result, a federal judge ruled that Samsung must pay Apple more than USD 450 million for copying and marketing alike Apple products.
The marketing agency and brand should own PI insurance to solve such marketing mistakes. The insurance will cover the legal costs to fight your case and the final settlement (if the case is lost). The marketing mistake could also be caused by using specific media (google images) without the right licence. Copy infringement claims can be costly, but with PI insurance, you can focus on creating the best ideas.
Why Marketing Agencies Need PI Insurance to Cover Marketing Mistakes?
Professional indemnity (PI) insurance is a crucial insurance that every business should buy. Especially marketing agencies that work with multiple clients and handle large accounts. The insurance comes with many benefits, like financial and brand damage coverage.
As you can tell from the famous marketing mistakes above, a negative outcome can still occur even with the best planning. The insurance provides companies with the peace of mind to focus on the work without worrying about the risks. It is good to be careful, but it should not affect work creativity.
Additionally, these situations often may not be what is intended and a true error, but your business could still be penalised for it. Hence PI insurance is the perfect safety net when things go wrong, and you don’t know what to do.
To Learn More about professional indemnity insurance and get the best protection for business, contact Red Asia Insurance.
