Watchdog Group Attacks Wal-Mart Spots

Claims the Ads Cite Stats From Unreliable Study

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COLUMBUS, Ohio (AdAge.com) -- Opposition group Wal-Mart Watch, crying foul over two of the retailer's TV spots that broke today in Tuscon, Ariz., and Omaha, Neb., said it will file a formal complaint of false advertising with the attorneys general in both states.
Wal-Mart Watch faulted study data produced for Wal-Mart by market research firm Global Insight.
Wal-Mart Watch faulted study data produced for Wal-Mart by market research firm Global Insight.

TV stations targeted
The group is also lobbying TV station managers to drop the ads, said Nu Wexler of the Washington-based coalition, which is backed by the Sierra Club and the Service Employees International Union.

In one of the spots in question, a 60-second commercial dubbed "Sam's Dream," a narrator breaks in among the smiling associates in blue smocks and says: "It's been said that when Wal-Mart comes to town, it's like getting a nice pay raise." The spot then refers to an oft-touted statistic that the retailer's low prices save working families, on average, $2,300 a year "which buys a lot of things -- and a whole bunch of freedom."

Global Insight study faulted
"That $2,300 figure is based on a study that they bought and paid for and of course when you pay for something you are going to get favorable numbers like that," said Mr. Wexler, referring to the study commissioned by Wal-Mart from research firm Global Insight. The study took a year-long look at the retailer's economic impact.

The commercials were created not by a traditional advertising agency, but Washington-based Blue Worldwide, a division of Wal-Mart's PR firm Edelman, and are more reflective of political ads than consumer-branding spots.

Airing a little over a month after Wal-Mart named Edelman executive Leslie Dach its exec VP-corporate affairs and government relations, the ads did not stem from the company's marketing department. The effort breaks as Wal-Mart CMO John Fleming wraps up an agency review for the retailer's $578 million consumer advertising business. Notably, Mr. Fleming was not involved in the initiative.

'Corporate affairs deal'
"[The marketing department] didn't approve them -- this was a corporate-affairs deal," said Wal-Mart spokesman Kevin Thornton. The ads "are a test to see if this can work in a national campaign," Mr. Thornton added. "Our main advertising push will stay around merchandising and this would be something separate from what they [Fleming's group] are doing."

Mr. Thornton said spend for the campaign is minimal right now and does not represent a shift of dollars from consumer advertising.

Misleading?
Chris Kofinis of WakeUpWalMart.com, backed by the United Food and Commercial Workers, said the spots are misleading, particularly in saying that health-care premiums cost employees less than $1 a day, since the plan's deductibles can run as high as $1,000 for an individual and $3,000 for families.

"That's the part that is so disingenuous," Mr. Kofinis said. "If you are only making $16,000 a year, how can you afford that? Are you not going to feed or clothe your children?"

Mr. Thornton, the Wal-Mart spokesman, did confirm the deductible amounts, but countered that under the plan employees can go to the doctor before paying the deductible three times in one year for a $20 co-payment and receive three generic prescriptions for a co-payment of $10.

Group plans its own campaign
Mr. Kofinis said the group plans to run its own media campaign this fall, including in-house-created TV spots and online viral elements, in key target states in a run-up to the November elections.

He would not disclose spending, but said "it will be a significant buy" to try to counter the claims made in the spots. "We will drive home that this is a company that, on average, pays full-time employees $2,200 below the poverty line," he said.

Instead of changing consumer views, the Wal-Mart spots could instead create more skepticism in the minds of consumers, who upon viewing them may ask: "Why are they really doing this and spending the money on TV ads instead of putting the money into lowering prices?" said Stephen Greyser of the Harvard Business School and an expert on corporation reputations and crisis communications.

Possible political motivations
Although Wal-Mart claims it chose Omaha and Tuscon because "they are diverse markets and they are a good representation of our customer base," there may be political motivations for breaking the spots first in Arizona, where Wal-Mart has come under fire recently.

Last month, Attorney General Terry Goddard, a Democrat, filed a consumer-fraud lawsuit against the retailer for failure to correct pricing violations at their stores in the state. The lawsuit claims the company has been consistently cited for the past five years for discrepancies between posted prices and checkout prices and for not posting shelf prices on many products.
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