AAF Government Report: November 27, 2015


November 27, 2015 Facebook LinkedIn Twitter

 Clark Rector Jr., Executive Vice President–Government Affairs

Study Highlights Economic Benefits of Advertising

A new study commissioned by The ADvertising Coalition highlights the importance of advertising to the U.S. Economy. The ADvertising Coalition is an alliance of AAF and many corporations and associations representing various facets of the advertising industry.

Among the study’s findings:

  • Advertising supported $5.8 trillion, or 16 percent, of the $36.7 trillion in U.S. output. Advertising also supported 20 million, or 14 percent, of the 142 million jobs in the U.S.
  • Every dollar spent on advertising, on average, generated about $19 of economic output or sales.
  • The total impact of advertising represented 19 percent of U.S. GDP.
  • Every one million dollars spent on advertising supported 67 American jobs throughout the U.S. economy.
  • Every direct advertising job supported another 34 jobs across all industries.

The study was conducted by HIS Economics and Country Risk. It is an update of a study first designed and developed under the direction of Dr. Lawrence R. Klein, recipient of the 1980 Nobel Prize for Economics.

Ryan Wants House to Pass Tax Reform in 2016

New Speaker of the House Paul Ryan, R-Wis., recently told The Wall Street Journal CEO Council annual meeting that he would like the House GOP majority to pass tax reform before Republicans select their presidential candidate July 18-21, 2016 in Cleveland, Ohio.

Ryan would like the Republican Party to present a substantive economic policy agenda, including tax reform, fairly soon to ensure that the 2016 election can provide a true mandate. Ryan said the Party should run on its ideas and cannot wait until it has a candidate to articulate them.

The Speaker did not talk in specifics about the plan. Ryan has previously endorsed the goals of the last major tax reform bill introduced by former House Ways and Means Committee Chair Dave Camp, R-Mich. That bill would have lowered the corporate tax rate to 25% and eliminated many tax preferences and deductions currently in the code – including a provision reducing the current year deduction for advertising from 100% to 50%, with the remaining 50% amortized over ten years. Ryan has never taken a public position for or against on that specific provision.

AMA Calls for Ban of DTC Advertising

The members of the American Medical Association recently voted to call for an end to all direct-to-consumer prescription drug advertising. The AMA had previously approved of advertising, as long as it was accurate and educational.

AAF believes the AMA should have stayed with its previous position. Far from being harmful, AAF believes that pharmaceutical advertising has provided a great benefit to consumers and public health. By raising awareness of products available to treat many medical conditions pharmaceutical advertising has resulted in countless patients making appointments with their doctors to learn more.

According to an AMA statement, “Direct-to-consumer advertising also inflates demand for new and more expensive drugs, even when those drugs may not be appropriate.” However, patients can only legitimately receive medications when they are prescribed by their doctors who are the trusted advisor, in a position to explain what drugs or alternative treatments are the most appropriate.

While some physicians may not like having to tell a patient why a particular drug is not right for them, many of those conversations would not take place at all without advertising, and many of those patients would be left with untreated conditions.

The U.S. Food and Drug Administration has powerful tools to censure any prescription drug advertiser that goes over the line in marketing a product. Many pharmaceutical companies often voluntarily work with the FDA prior to an advertisement’s release to insure that all claims are accurate and fair.

A ban on DTC advertising is also unconstitutional. Pharmaceutical advertising is protected speech under the First Amendment of the U.S. Constitution which prohibits bans on commercial speech. The Supreme Court has affirmed that commercial speech – as long as it is truthful and about a legal product or service – is protected speech.

DAA Applies Self-Regulator Principles to Cross-Device Data

The AAF supported Digital Advertising Alliance has released guidance to help companies apply the DAA’s Self-Regulatory Principles in the cross-device environment. The guidance makes clear that the transparency and choice obligations in the existing Principles apply to cross-device data practices, which are also subject to the DAA’s independent enforcement.

The guidance helps explain how the Principles apply to browser- and app-based choices made by a consumer to data collected on that browser or device for use elsewhere. It also states that consumer choice applies to data collected elsewhere for use on that browser or device.

The DAA cross-device guidance, titled Application of the DAA Principles of Transparency and Control to Data Used Across Devices, will help participants in the digital advertising ecosystem better understand their obligations regarding cross-device data. It also ensures that a consistent self-regulatory framework is applied to the collection and use of such data across the multiple computers and mobile devices used by consumers.

AAF Government Report is available to all members of the AAF. If you are interested in receiving an e-mailed copy, please e-mail government@aaf.org.

If you are interested in receiving AAF SmartBrief, an opt-in news service, please visit www.smartbrief.com/aaf. AAF SmartBrief condenses advertising industry news from dozens of media sources into a succinct, easy to read e-mail.

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