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Obama Promises Change; Is It Bad for
Marketers?
Jim
Edwards
BrandWeek
November 9, 2008
The election of President Barack Obama will bring with
it a Democrat-controlled Congress and a revised set of
priorities for the various federal agencies that
regulate media and advertising.
The finance crisis has brought an end to the idea that
markets should regulate themselves. Lobbyists,
fed-watchers and CEOs say that they are already worrying
about heightened scrutiny and, perhaps, new rules
governing what they do.
Here’s a look at the worst-case scenario for marketers
under Obama. The caveat: It is unlikely that all of
these things will happen; the Iraq war and healthcare
are higher priorities for the new president. But these
are the issues that will likely be debated over the next
few years:
• An end to the corporate tax deduction for advertising:
With the deficit in the trillions, preventing companies
from writing off their ad expenses against their taxes
would give the Obama White House a new way to fund its
spending. This has already been floated by Obama’s new
chief of staff, Rahm Emanuel. “He has already started
looking at ad deduction issues,” said Dan Jaffe, evp of
the Assn. for National Advertisers. “It is my guess that
some people will revisit an across-the-board ad
deduction as well.” Such a move would drive down ad
spend as companies scramble to save their bottom lines
from increased tax levels.
• Sweeping Internet privacy legislation: Sen. Byron
Dorgan, D-N.D., and Rep. Ed Markey, D-Mass., propose
outlawing behavioral targeting, cookies and “deep-packet
inspection” (a way for advertisers to see what Web users
are downloading so they can serve relevant online ads).
“[Markey] said there should be some sort of global bill
of privacy rights,” said Bennet Kelley, founder of the
Internet Law Center in Santa Monica, Calif. Such a move
could hobble the online ad business—the only area of
marketing spend still growing. “There’s absolutely going
to be people screaming for privacy regulation,” added
Michael Cassidy, CEO of Undertone Networks in New York.
• Repeal of the right of drug companies to advertise to
consumers: The U.S. and New Zealand are the only places
in the world that allow Rx consumer drug advertising,
and there are plenty of Democrats who feel that it
simply adds to the cost of medicine and healthcare. “The
forthcoming revised PhRMA guidelines are going to call
for either a six- or 12-month delay in promoting any new
pharmaceutical” in hopes of heading that off, said Peter
Pitts, a former FDA official who is now svp, health
affairs, at Manning, Selvage & Lee. “That’s the way it’s
going. It’s always better for industry to self
regulate.”
• A ban on advertising food to children: Targeting junk
food at kids is virtually illegal in the U.K., and if
U.S. obesity rates don’t improve, American politicians
will draw inspiration from across the pond. “They could
in theory project the tobacco experience to other new
product categories, like alcoholic beverages, or certain
snack foods to kids,” said Ron Urbach, a partner and FTC
watcher at Davis & Gilbert in New York. “Tobacco may be
viewed from the government perspective as a success
story.”
• An end to media consolidation: Call the fall of the
Google-Yahoo! deal Obama’s first victim: Seeing the
antitrust writing on the wall, the two companies last
week mostly abandoned their attempted hookup. “There’s
going to be a focus on the FCC’s [relaxed] view of
allowing media to get bigger and bigger, across print
owning, with Rupert Murdoch owning these megagiants.
It’s partially antitrust,” said Urbach.
• A newly litigious FTC: There is a bill in Congress
right now to expand and enhance the authority of the
FTC. “It is likely that bill will perhaps be passed,”
said Anthony DiResta, a partner at Reed Smith in
Washington. “It increases civil penalties and the
authority of the commission. It includes banks and
nonprofits.” Jaffe added: “Also in that legislation was
a provision to allow civil penalties against anyone who
aided or abetted in false or misleading advertising,
which would impact all ad agencies, anybody who was part
of the chain. That could go all the way down to the
media, to their printers, etc.”
• The FCC takes a heavy hand with product placement: The
agency—which has jurisdiction not only over TV and radio
but also videogames—is currently considering disclosure
requirements for branded entertainment. Strict
disclosure could end burgeoning ad networks that are
growing inside online games. “That would have a dramatic
effect on the converged industries of media, marketing,
entertainment and the like,” said Urbach.
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