Nest Labs can support advertising claims that appeared in a New York Times print ad for its smart thermostat product, the National Advertising Division recently determined.
An advertisement in The New York Times promoting Nest Labs’ Learning Thermostat made the following claims: “Nest Learning Thermostats have saved 7.3 billion kilowatt-hours of energy,” “What if everybody in America had a Nest Learning Thermostat? We’d save enough energy to light up each house in this country for a year. Enough to take dozens of power plants off the grid,” and “When people save energy with the Nest Thermostat, a tiny leaf appears. They see it and think they’re lowering their energy bills, saving a few bucks. And they are. But they’re also saving something bigger.”
As part of its routine monitoring program, the NAD requested substantiation for the claims. The self-regulatory body also expressed concern about implied claims that the thermostat provides a general environmental benefit as well as an energy-efficient or energy-saving benefit.
Nest Labs provided evidence in the form of three studies. One was an internal observational study that analyzed the energy bills and energy savings of Nest customers, and was conducted using industry standard practices as defined by the U.S. Department of Energy. According to the advertiser, the study showed that Nest Labs customers saved, on average, about 10 percent on heating use and 17 percent on cooling use, which translated into a savings of between $131 and $145 annually.
Two additional studies—one performed by the Energy Trust of Oregon and the other by an Indiana gas and electric company—revealed similar results for local energy use
The advertiser also explained how it arrived at the kilowatt-hours energy-savings number and how houses were powered in the country. Considering the data from the studies, Nest Labs took the total runtime of the thermostats, converted those measures to kilowatts, and computed the total energy-savings figure.
As for the “saving something bigger” language, Nest Labs argued that it was accurate because Learning Thermostat users save money and resources based on the energy-savings benefits the product provides. Nest Labs also argued that no general environmental claims were implied by the ad because the advertising only communicated a specific energy savings benefit.
The NAD agreed. The three studies provided competent and reliable scientific evidence to substantiate the claims, and were conducted with appropriate methodologies and analyses. Further, the data the advertiser used to support its claims was reasonable. Its claims that the product would “light up each house in this country” and “take dozens of power plants off the grid” were truthful and accurate.
“NAD also determined that telling consumers that they are ‘saving something bigger’ communicated the truthful message that in addition to saving money, consumers are conserving natural, non-renewable resources (like petroleum and coal) that would otherwise be expended to generate additional electricity and gas,” the self-regulatory body wrote. “Thus, NAD determined that the advertiser provided a reasonable basis for this claim.”
Finally, the NAD noted that its concerns about implied claims had been laid to rest after reviewing Nest Labs’ claims in the context of the advertising as a whole. “NAD determined that the advertisement does not reasonably convey an unqualified general environmental benefit message,” according to the decision. “Rather, the advertisement conveyed a limited series of discrete energy savings messages that were supported by the evidence in the record.”
To read the NAD’s press release about the case, click here.
Why it matters: The NAD and the Federal Trade Commission have made clear that environmental claims must be promoted in a responsible manner because consumers cannot typically verify themselves the truth of such claims. As this decision underscores, advertisers should take special care to comply with the FTC’s Green Guides, which caution advertisers against making unqualified general environmental benefit claims because “it is highly unlikely that marketers can substantiate all reasonable interpretations of these claims.” The FTC suggests that “To avoid deception, marketers should use clear and prominent qualifying language that limits the claim to a specific benefit” and that the overall context of the advertisement does not imply an unsupported general environmental benefit message. Because Nest Labs conveyed “a limited series of discrete energy savings messages,” the advertiser survived NAD scrutiny.