Government Report: December 20, 2006


The American Advertising Federation had a busy year promoting to policy makers the value of advertising and warning of the dangers of restricting commercial speech. As we look forward to 2007 and the many issues we expect to face with control of Congress changing, here is a year-end summary of advertising issues at the federal and state levels.
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Food Marketing
A number of bills concerning food marketing were introduced in the past Congress, but none were passed into law. There were significant examinations of food policy by industry as well as regulatory agencies.

In May 2006, the Federal Trade Commission and Department of Health and Human Services issued a report saying the food and advertising industries should intensify their efforts to create new products, reformulate existing products and examining the impact of new media advertising to children, including product placement, advergaming and licensed commercial characters. The report, a summary of a July 2005 workshop, "Perspectives on Marketing, Self-Regulation & Childhood Obesity," also suggests that the food and advertising industries should consider a number of other possible steps, including adopting nutritional standards for the foods they market to children.

The Institute of Medicine (IOM) released a report urging advertisers to modify their food marketing in order to increase consumer demand for healthy food options and reduce childhood obesity. In the report "Progress in Preventing Childhood Obesity: How Do We Measure Up?" the IOM suggests that food marketers partner with the government and others to assess progress in promoting healthy lifestyles, implement independent evaluations of industry initiatives and develop broad, unified obesity prevention programs.

The AAF this year joined forces with PE4life, an advocate for physical education programs, in an effort to increase awareness of the growing childhood obesity problem and establish and expand physical education programs in communities. PE4life’s mission is to raise awareness about the physical inactivity levels of America’s youth and the state of physical education across the nation and promote quality physical education programs to youth. The AAF’s Ad 2 division is assisting PE4life by developing a marketing plan to promote PE4life programs in targeted local communities.

The Children’s Advertising Review Unit (CARU) revised its children’s marketing guidelines and announced a voluntary food and beverage advertising initiative. The changes will require companies to distinguish between advertising and content, identify when interactive games contain advertising and show meal items in the context of a balanced meal, rather than part of a balanced diet. Additionally a food and beverage initiative was signed by 10 companies who have agreed to shift their advertising to children to encourage healthier lifestyles, including AAF members the Coca-Cola Company, General Mills, Inc., Kellogg Company, Kraft Foods Inc., McDonald’s and PepsiCo, Inc., as well as Cadbury Schweppes USA, Campbell Soup Company, Hershey Company and Unilever.The 10 companies represent over two-thirds of children’s food and beverage television advertising expenditures. The companies signed pledges saying they will devote at least half their advertising to children to promote healthier dietary choice and/or encourage good nutrition and healthy lifestyles, limit messages shown in interactive games and not advertise food or beverages in elementary schools.

Lastly, Senator Sam Brownback, R-Kan., Federal Communications Commission Chairman Kevin Martin and FCC Commissioner Deborah Taylor Tate announced in September that they will form a task force to study the impact of media and advertising on children’s health. The group will hold a series of meetings with representatives of children’s programming and the food marketing industry, as well as consumer advocacy and children’s health groups. According to Sen. Brownback, it is expected that this task force will meet throughout 2007.
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Direct-to-Consumer Pharmaceutical Advertising
In 2006, a number of different groups called for increased restrictions on direct-to-consumer (DTC) advertising of prescription drugs. Nearly all of the suggested changes have included a moratorium on the advertising of new pharmaceuticals. Of note, the American Medical Association, the Institute of Medicine and the American Association of Pediatrics have all separately suggested that a moratorium on advertising of new drugs should be imposed by the government.

In Congress, Senate Health, Education, Labor and Pensions (HELP) Chairman Mike Enzi, R-Wyo., and Ranking Member Ted Kennedy, D-Mass., introduced a bill (S. 3807) that would allow the Food and Drug Administration to impose a two-year moratorium on new drug advertising, as well as require advance approval of DTC advertising of new drugs. The bill was approved by the HELP Committee but did not receive a vote in the Senate.

Responding to concerns of drug safety, Sens. William Frist, R-Tenn., Charles Grassley, R-Iowa, and Herb Kohl, D-Wis., called for a Government Accounting Office review of the Food and Drug administration’s oversight of drug ads. The study, released late in 2006, says that the FDA lacks the necessary resources needed to adequately monitor and enforce advertising rules. Responding to the report, Sen. Kohl, who will serve as the new chairman of the Senate Committee on Agriculture, Subcommittee on Agriculture, Rural Development, and Related Agencies, which has jurisdiction over the FDA budget, said he will seek additional funds for the FDA to increasingly regulate DTC ads.
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Signed into law in 2006 was a bill permitting a tenfold increase in fines for airing indecent content on broadcast television. The bill, S. 193, introduced by Sen. Sam Brownback, R-Kan., raises fines to a maximum of $325,000 per incident and per affiliate station broadcasting the violation. After languishing for months without any hearings, the House and Senate each quickly passed their own versions of the bill. The House version would have raised the fines up to $500,000. Sen. Frist brought the Senate version of the bill to a floor vote without a hearing in the Senate Energy and Commerce Committee. After the bills were resolved in conference, the president signed the fine increase into law.
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Underage Drinking
A bill aimed at preventing underage drinking was passed by the House and Senate. The Sober Truth on Preventing Underage Drinking Act (H.R. 864), introduced by Rep. Lucille Roybal-Allard, D-Calif., and identical to a bill (S. 408) introduced by Sen. Mike DeWine, R-Ohio, would direct the Secretary of Heath and Human Services to steer underage drinking prevention policy, including overseeing an Ad Council public service campaign targeted to adults. Additionally, the bill would fund research on the impact of underage alcohol use as well as ways to reduce drinking among college students. The bill awaits a signature from the president.
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Children and Media
A bill that would fund a comprehensive study on children and the media was approved by the Senate. The Children and Media Research Advancement Act (S. 579), introduced by Sen. Joe Lieberman, D-Conn., and co-sponsored by Sens. Sam Brownback, R-Kansas, Hillary Rodham Clinton, D-N.Y., Rick Santorum, R-Pa., and Mary Landrieu, D-La., would provide $90 million for a study administered by the Centers for Disease Control and Prevention. The research would focus on the effects of television, computer games and the Internet on children’s physical and psychological development. A House version of the bill was introduced but never brought to a vote.
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State E-Mail Registries
In addition to Utah and Michigan, which already have child e-mail registries in place, lawmakers in Connecticut, Georgia, Hawaii, Illinois and Iowaproposed requiring companies to clear their marketing lists with the government to ensure that materials are not sent to minors. After much criticism from many different industries, including advertising, these bills were not signed into law. The Federal Trade Commission expressed "grave concerns" about such registries and has stated that "the possibility that such a list could fall into the hands of the Internet’s most dangerous users, including pedophiles, is truly chilling."

In Utah, the AAF has joined five other groups in filing an amicus brief against the Utah Child Protection Registry Act. A similar filing is being considered in Michigan. In Illinois, club presidents from the Chicago Advertising Federation and the Northern Illinois Advertising Federation wrote to members of the Illinois House of Representatives, voicing their opposition to an e-mail registry bill under consideration. The sponsor of the bill withdrew his support soon thereafter. In Georgia, club presidents representing the Advertising Federation of Columbus, the Athens Advertising Club, the Augusta Advertising Federation, Creativity Atlanta: The Advertising and Creative Club and the Savannah Advertising Federation sent letters to key Georgia state senators in response to a new e-mail registry bill there, urging the legislators to oppose the bill.
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State Advertising Taxes
In response to a proposed state sales tax on many services, including advertising, all six Pennsylvania advertising club presidents signed a letter to state senators urging their opposition to the ad tax. In the letter, the presidents of the Advertising Club of Central Pennsylvania, the Erie Advertising Club, the Lehigh Valley Advertising Club, the Northeast Pennsylvania Advertising Club, the Philadelphia Advertising Club and the Pittsburgh Advertising Federation noted the impact such a tax would have on small businesses unable to compete with out-of-state firms, as well as the difficulty in administering such a tax. Support for the service tax in the state has languished.

Many state lawmakers continue to look at services and advertising when looking for new revenue to cover deficits or provide relief from property or other taxes. The AAF and member clubs remain vigilant in educating lawmakers to the harm an advertising tax would cause consumers, the state and the business and advertising communities.
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AAF Government Report will resume publication in January 2007, after the new Congress convenes.

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