In the last issue of Infoconomist magazine, we questioned the veracity of some of the claims in a Siebel Systems advertising campaign and predicted that "things are about to turn ugly" in the increasingly competitive customer relationship management (CRM) market. They have.
In early May 2002, a court in Frankfurt granted an injunction to SAP banning the Siebel advertisements from Germany. The adverts heavily criticised SAP's track record in CRM. The judge agreed with SAP's argument that the campaign was unfairly critical of the German enterprise software group's CRM products and bore a strong resemblance to earlier SAP ads.
"The ads were factually wrong," says an SAP source. "We felt that Siebel was trying to mislead our customers. You just cannot misrepresent information in advertising like that here [in Germany]."
Siebel, for its part, complained that SAP got the court to rule in its favour "without a hearing or a discussion of the facts."
SAP's intention, say company sources, is to drive Siebel's negative campaigning from the whole of Europe. Lawyers at the Walldorf-based company are now poring over newspapers and magazines from across the continent – with a view to possibly launching legal action in territories such as the UK, where the campaign is still running.
The Frankfurt court ruled that Siebel's German boss would be fined €250,000 and could face jail if the ad ran again in the country. But by mid-May it had appeared in Germany again – in, of all places, Frankfurt's own newspaper, the Frankfurter Allgemeine. Siebel, sources say, apologised privately to SAP, calling the placement an "oversight" by a local media agency.
The case serves as a reminder of the differences in advertising regulation between the US and Europe. In the US, virtually anything goes – a fact cleverly exploited not only by Siebel but also by Larry Ellison, CEO of database giant Oracle and champion of the negative advertisement campaign. But regulations are far stricter in Europe, where so-called 'comparative' campaigning is permitted only so long as the content is fair and accurate.
