November 15, 2013

Threats to Advertising Deductibility Worse than Feared

House Ways and Means Committee Chairman Dave Camp, R-Mich. is continuing in his attempt to draft major tax reform legislation. Sources from within the committee indicate that the limitations on the deductibility of advertising may be worse than anything the industry had feared.  According to multiple reports the current proposal would only allow a 50% deduction of advertising expenses in the first year, with the remaining 50% to be amortized over a period of ten years.  This would have a devastating impact on the industry and economy as a whole.

AAF has issued an alert to our membership, urging them to contact their members of Congress asking them in turn to contact members of the House Leadership and Ways and Means Committee and express opposition to any limitations on the deductibility of advertising expenses.

The tax reform effort, however, does appear to be slowing.  After a meeting with the Republican leadership of the House of Representatives Chairman Dave Camp, R-Mich., seemed to acknowledge that any tax reform bill will likely not be moved out of the committee by his previously stated goal of the end of the year.  When asked about the timing after the meeting he stated, “I’m not going to make a prediction on that right now.” 

Congressional leaders are reportedly reluctant to address such a potentially controversial proposal in the upcoming election year.  They may also have concerns that the reform effort will distract from other legislative and political priorities.
The issue continues to garner wide attention across the country.  AAF EVP-Government Affairs Clark Rector was recently interviewed on talk radio in Florida to discuss the issue.

New Online Privacy Bill Introduced

Senator Ed Markey, D-Mass. and Representative Joe Barton, R-Tex. have introduced legislation aimed at providing protections for teenager’s online behaviors.  The lawmakers want to curb targeted advertising to teenagers as well as insure that they can erase previously posted content such as comments, photos and videos.  Unfortunately the mandates may be impossible to implement as once something is posted to the Internet and shared there is no technological way to go back and remove it. 

Consumers Recognize Value of Online Advertising

A recent Zogby poll conducted for the Digital Advertising Alliance shows that the more Internet users learn about the protections and choices available to them online, such as those offered by the DAA’s AdChoices icon, the more comfortable they become with online interest-based advertising.

The poll shows that consumers like and trust the advertising supported Internet.  Among the notable findings:
•51% of consumers said they would be more likely to click on an online ad that displayed an icon linking to information and an opt out
•More than 73 percent of users polled said they’d feel more comfortable with interest-based ads if they knew they had access to the protections that the DAA currently provides (opt-out, limitations on data collection, third party enforcement)
•By a margin of 5:1 consumers recognize that the Internet is ad-funded,
•More than 57 percent of respondents said they wouldn’t visit any of the free, ad-supported sites that they currently use if those sites converted to pay model, and
•Less than 5% of consumers would be will to pay to continue to access the free, ad-funded sites they currently visit

Advertising Day on the Hill Set for March 12

Planning is underway for AAF’s Advocacy and Action: Advertising Day on the Hill scheduled for Wednesday, March 12 2014.  Rep. Lee Terry, R-Neb. is the first confirmed Congressional speaker.  Terry is Chair of the House Energy and Commerce subcommittee on Commerce, Manufacturing and Trade with jurisdiction over the Federal Trade Commission and most advertising issues.  Chairman Terry was a last minute cancelation at the April 2013 conference and has graciously agreed to do a “make good” next March.  Plan now to join us for this important event.