December 5, 2007

Jeff Perlman, Executive Vice President – Government Affairs
Clark Rector Jr., Senior Vice President – State Government Affairs
Robert Kohlmeyer, Coordinator – Government Affairs

FEC Allows Nonpolitical Ads Mentioning Candidates Before Elections

The Federal Election Commission adopted new electioneering communications rules that allow companies to advertise commercial products such as books or other products or services using a federal candidate's name or image. The rule modifies the 2002 McCain-Feingold campaign finance reform law that prohibits companies or organizations from running ads mentioning a candidate within 30 days of a primary or 60 days of a general election. The Supreme Court deemed portions of the law unconstitutional in June, noting that it is often difficult deciding whether an ad is commercial speech or not. Chief Justice Chief Roberts commented specifically on such judgments, noting "where the First Amendment is implicated, the tie goes to the speaker, not the censor." Advertisements aired before an election that mention a candidate may not mention any election, political party or campaign issues. The FEC will still require advertisers to disclose who paid for ads, either in public reports or the ads themselves. The AAF submitted comments to the FEC in support of the rule change, which are available here.
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FCC Chairman Martin Proposes Product Placement Inquiry

Federal Communications Commission Chairman Kevin Martin has proposed a formal inquiry into the disclosure of product placement on television shows. Presently, the FCC requires disclosure of all product placements at the end of broadcasts with a show's closing credits. Some consumer interest groups have called for greater disclosure, including announcing all product placements as advertisements as they air. Recently, Martin said that new technologies were causing broadcasters to look toward greater use of product placements, and this increased use and subtlety might confuse the public. FCC commissioners will vote whether to open the inquiry on December 18.
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Michigan Repeals Services Tax

Hours after it went into effect, Michigan Gov. Jennifer Granholm enacted a law repealing a six percent tax on business services, including advertising consulting. House Bill 5408, now Public Act 145 of 2007, removes the services tax that went into effect on December 1 and replaces it with a surcharge on Michigan's business tax. The House, Senate and governor did not reach a compromise on the repeal until 11:30 p.m. on November 30, too late to gather senators and representatives to vote. Instead, the legislature voted on December 1.
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EU Plans to Study Behavioral Advertising

The European Union plans to investigate the practice of targeted advertising based on Web site use behavior of European-based Internet users. The Article 29 Working Party, which regulates consumer data protection in the EU, has raised concerns on a case-by-case basis with large Internet companies in the past, resulting in changes to corporate policies. The EU's study comes after the Federal Trade Commission held a town hall meeting on behavioral marketing last month and is a response to calls from consumer advocates for increased regulation of Internet tracking and targeted marketing.
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