Q&A: Ad Taxes, Web Privacy and FTC Fines on the Agenda

The day after the election of Barack Obama as president, I called my favorite lobbyist, Dan Jaffe of the Association of National Advertisers, to ask him what he thought was in store for the advertising business. Here’s what he told me:

BNET: What is this new administration going to do for advertisers and marketers?

Dan Jaffe: It’s going to be a little tricky to tell, some of the other shoes need to fall. Who are going to be the key staff in the president’s cabinet? Who’s going to be the new staff in the regulatory agencies? To some extent, talking to lobbyists across the political spectrum, theres a general feeling — whoever was elected — that there’s a regulatory mood in the land and that therefore we would be facing a great deal more scrutiny and legislative proposals to restrict advertising.

BNET: Prescription drug advertising — which is worth $5 billion a year to agencies and media providers — seems to be a specific target.

Jaffe: Chairman John Dingell (D-Mich.) of the House Energy and Commerce committee has called on the industry to put in a two-year moratorium, there’s legislation for a three-year moratorium, so that issue is far from put to bed. It’s going to extensively discussed.

BNET: What about web advertising and privacy?

Jaffe: Privacy issues are going to be very important in the next Congress. Behavioral advertising and targeting issues — that issue has been going for some time.

BNET: A sales tax on advertising usually comes up every couple of years.

Jaffe: One issue that I think will become more significant is the whole question of how are we going to pay for government programs. We’re going to be facing a deficit that some have estimated may be a trillion dollars. President-elect Obama and the leadership of the House and Senate have a very broad agenda. The concern is that they will look to ad taxes. Already Rahm Emanuel has stated he may look to ad deduction limitations: he has been chosen as chief of staff for Obama. We have been working actively on that. He talked about it for drug ads but it is my guess that some people will revisit an across-the-board ad deduction as well. The fact that he has these concerns highlights that these issues will be keyed up in this administration.

BNET: I thought ad taxes were usually a states issue?

Jaffe: We will certainly face the problem in the states because of the economic downturn.

BNET: What do you think the issues will be at the FTC, which regulates most advertising?

Jaffe: Efforts by Senator Byron Dorgan (D-N.D.) to reauthorize the FTC and give it vastly increased powers and money, and to give it the power to make civil penalties immediately. They do not have that power right now. Currently, you have to have a consent agreement in furtherance of a rulemaking. (Companies are fined only if they violate it again.) You could face tremendous penalties. Also in that legislation was a provision to allow civil penalties against anyone who aided or abetted in false or misleading advertsing, which would impact all ad agencies … anybody who was part of the chain. That could go all the way down to the media, to the printers, etc. It was some of the most extensive legislation with regard to the FTC in a generation. We were able to convince the Senate Congressional Committee not to move that legislation. He (Dorgan) also wants the FTC to have jurisdiction over banking issues.

BNET: Sounds like the ad business has a fight on its hands.

Jaffe: We have one-party control, with a strong regulatory mood in the country, and a very broad agenda of advertising issues. Our community is going to have a very steep uphill climb in defending our interest in the next couple of years. I believe that would have been true if the election had gone the other way.

BNET: What about the issue of advertising junk food to kids?

Jaffe: Obesity issues are major, food advertiser issues will also be very extensive. Again, the children’s food and beverage initiative has put the industry in a good position to step up to the plate on that issue. The key to that is what is happening to obesity rates. And there’s pressure from the international side. Our government always keeps an eye on what’s happening in Europe, so it’s a two-way street. I think this could be one of our most active years. I could be wrong. Depending on what happens internationally (ie with Iraq and Afghanistan). They may find they have little time on their agenda

BNET: What’s happening with the FCC’s review of product placement disclosures in TV shows?

Jaffe: The ANA led a major coalition of 18 groups, we filed a 65-page brief on that; we will be filing further comments and reply comments in the next week or two. The question is what does the FTC do? All that will be in President-elect Obama’s hands. The dust is still settling.