Volkswagen won't be 'Voltswagen' after all: Misleading marketing is risky, especially for VW

At a time when America is grappling with a misinformation crisis, is it acceptable to mislead reporters and the public as a marketing strategy?

For Volkswagen, the answer is yes.

The German automaker claimed Monday that it was changing its name in the U.S. to "Voltswagen" in a nod toward the company's heightened commitment to electric vehicles, a significant trend in the auto industry after General Motors, Jaguar and Volvo recently revealed plans to phase out gas cars.

It even went to the trouble of issuing a detailed press release with a new logo and well-articulated quotes explaining its reasoning and timing.

Major news outlets, including USA TODAY, the Associated Press, CNBC, Reuters and the Washington Post, reported on the decision. Before publishing, several spoke with Volkswagen sources to confirm that it was not a joke. They, including USA TODAY, were assured that it was a genuine change.

Now, VW admits that it was an April Fools' joke, after all – two days ahead of April Fools' Day. Volkswagen is not changing its name.

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"The many positive responses on social media showed that the campaign resonated with consumers," VW spokesman Mike Tolbert said Wednesday in a statement after the revelation went viral. "At the same time, we realize the announcement rollout upset some people, and we are sorry about any confusion this has caused. We will continue on our mission towards an EV future, as Volkswagen."

The joke was not dissimilar to the moment in 2018 when IHOP, or the International House of Pancakes, briefly claimed that it was changing its name to the IHOb, or the International House of Burgers. It also fell in line with other April Fools' jokes by companies, including the likes of Google, which announced clearly bogus products or services for years before deciding not to do so last year or this year because of the pandemic.

But experts on brand marketing and business ethics said Volkswagen shouldn't be judged through the same lens as IHOP or Google, especially in the wake of VW's emissions scandal, when it pled guilty to criminal conspiracy charges for deceiving regulators and the public. The company admitted in 2017 that millions of its diesel cars had polluted the earth above acceptable standards and paid more than $30 billion in penalties throughout the world.

"The use of deceit is really dangerous. If you’re Volkswagen, it’s doubly dangerous," said Erik Gordon, a University of Michigan business professor who teaches marketing classes. "Volkswagen is the last company that should be playing around with deceiving people, even if it’s for two days. It doesn’t play well when you have admitted guilt to having tricked us before."

Part of the problem: Issuing the April Fools' joke days ahead of time threw many people off, including even sophisticated Wall Street players who believed it was true.

In a research note sent to investors after the news release was issued but before VW admitted it was false, Wedbush Securities analyst Dan Ives said the move shows that VW is "not playing around."

"We believe the name change underscores VW's clear commitment to its EV brand and massive EV endeavors over the coming years," Ives said.

Misleading the media and public is a risky strategy

When companies use deception as a marketing strategy, they are typically balancing their desire to generate social media buzz with a desire to maintain their reputation as a trusted source of information.

Volkswagen's decision to lie to reporters about the nature of its announcement marks a breach of trust that could undermine the automaker's reputation, said Peter Jaworski, a professor at Georgetown University, who teaches about business ethics.

"It hurts trust amongst reporters, and companies rely on reporters to tell these stories," he said. "They cultivate relationships with these reporters, and it harms those relationships."

USA TODAY specifically asked a VW spokesperson if the announcement was a joke and was told no.

“The company used this fake announcement as a way to manipulate respected reporters from trusted news outlets to get attention for their marketing campaign,” said Gannett spokesperson Chrissy Terrell. “We are disheartened that the company would choose this type of disingenuous marketing.”

To be sure, some Americans found Volkswagen's announcement amusing and say they knew it was a joke all along.

"Can I take a Voltswagen to get IHOB?" one person tweeted.

Others, however, believed the announcement, suggesting that the joke wasn't clearly a joke to everyone.

"That is a really simple and creative name change," one person tweeted.

Generating social media buzz

One risk associated with a head-fake in marketing is that it causes consumers to think twice before trusting you the next time, the University of Michigan's Gordon said.

"Once you lie to them, the next time you make a claim, anybody reading the claim has to pause and say, 'Well, can I believe this? Is this a joke? Is this another joke, is this another trick?" Gordon said.

Georgetown's Jaworski said it's normal for companies to exaggerate their claims. But, he said, there's a fine line between exaggeration and manipulation.

That said, VW certainly generated plenty of social media buzz with the announcement, as it was trending on Twitter in the United States at one point. Thousands of users were talking about it.

If there's no such thing as bad publicity, maybe VW got what it wanted: attention to its investments in electric vehicles.

As recently as Wednesday morning, it was crowing about what it pulled off.

"What began as an April Fool’s effort got the whole world buzzing," VW said on Twitter. "Turns out people are as passionate about our heritage as they are about our electric future. So whether it’s Voltswagen or Volkswagen, people talking about electric driving and our ID.4 can only be a good thing."

But Mario Natarelli, managing partner of brand marketing agency MBLM NYC, said brands like Volkswagen should not be engaged in misleading marketing stunts.

"I understand that there is a desire for attention or engagement or a willingness to gain traction in social media – and maybe somewhere this had a germ of an idea that had some merit – but it feels misplaced, mishandled, and the worst part of it to me is it’s misaligned with the stature of this brand."

Jaworski, the Georgetown business ethics expert, said the nature of electric vehicles also undermines VW's attempt at humor.

"Climate change is a serious thing," he said. "You go, 'Wow, Volkswagen really cares about the environment,' and suddenly it’s another prank. They shouldn’t joke about that given their track record."

Volkswagen could have another problem on its hands. Its track record includes securities fraud charges filed by the Securities and Exchange Commission in 2019 against VW for allegedly deceiving investors during its emissions scandal.

This week's fake release could land Volkswagen in trouble with securities regulators once again because its stock price rose nearly 5% on Tuesday, the day the bogus statement was officially issued. Investors of late have been responding positively to news of companies increasing electric vehicle production, swelling the value of shares of Tesla as well as of some electric vehicle startups.

James Cox, who teaches corporate and securities law at Duke University, said the SEC should take action to deal with such misinformation, which can distort stock prices.

“The whole market has gone crazy,” Cox said. “We need to throw a pretty clear line in the sand, I believe, about what is permissible and what isn’t permissible.”

When USA TODAY asked the agency whether it will investigate VW's "Voltswagen" announcement, the SEC declined to comment.

Contributing: Associated Press

You can follow USA TODAY reporter Nathan Bomey on Twitter @NathanBomey and subscribe to our free Daily Money newsletter here for personal finance tips and business news every Monday through Friday morning.

This article originally appeared on USA TODAY: April Fools' Volkswagen joke: Was 'Voltswagen' misleading marketing?