Fast growing German grocery chain Aldi has been told by a self-regulatory group to revise ads on YouTube as well as in print ads.
The company, which is planning a $3.4 billion U.S. expansion, boasted in print ads that ran in Texas that shoppers could save up to 50% on their grocery bills by shopping at Aldi instead of Kroger, Wal-Mart and HEB Grocery.
The company also ran nationwide print ads and YouTube ads, with the latter featuring bloggers and consumers posting videos of themselves shopping at Aldi. The YouTube ads allegedly included an on-screen statement that people "really do save up to 50%* by switching to Aldi," but the asterisk didn't link back to any disclosures.
HEB, which is based in San Antonio, Texas, challenged the ads to the National Advertising Division, a self-regulatory unit administered by the Better Business Bureau. HEB argued that Aldi's ads were problematic for several reasons, including that the claims regarding discounts were based on comparisons between Aldi's own private label brands and national brands.
HEB alleged that it has three competing private-label brands for most of the products advertised by Aldi, and that HEB's prices are either similar to or cheaper than Aldi's private-label brands.
Siding against Aldi, the NAD recommended that the company stop running the challenged ads, and also "ensure that future price comparisons clearly define the basis of comparison, are limited based on the scope of the comparison."
The NAD added that if Aldi is comparing its prices to those of competitors that sell their own private-label products, Aldi should "avoid the implication ... that the competitor does not make a private-label product."
The watchdog also recommended that any disclosures by Aldi should be clear and conspicuous, and in close proximity to the claim.
Aldi unsuccessfully argued that the NAD lacked jurisdiction on the ground that the NAD only deals with national advertising. The store said that HEB's initial challenge involved print ads that only appeared in Texas, and that HEB didn't raise questions about the national print ads or YouTube ads until later it filed a reply letter to the NAD.
The NAD concluded it has jurisdiction, noting that the ads -- including the YouTube campaign -- were "disseminated to a sufficiently substantial portion of the United States."
Aldi plans to follow the recommendation, but will also appeal the decision to the National Advertising Review Board, according to the NAD.