Ad Adversaries Continue to Battle

New York Times reported that the ongoing Soup Wars have not benefited either Campbell's or Progresso, both losing market share in canned soup products. The article says advertisers continue to challenge their competitors' advertising as false and misleading despite the recession.

The NYT also reports that the National Advertising Bureau (NAB) is settling about one disparaging puffery dispute a month. The NAB is the industry self-regulatory division of the Better Business Bureau resolves disputes between large advertisers. The NAB procedures are less expensive than court but take longer to stop misleading advertising. NAB decisions also have few teeth, relying on the parties to voluntarily comply with settlement terms. But, competitors who refuse to comply and change false and misleading advertising, risk the NAB referring the matter to the FTC. See my previous post about how to avoid the risk that ad puffery disparages the competition's goods or services.

Potential New Threat to Snack Food Advertising

Today's AAF Government Report brings news of new threats to advertising. Congressman Dennis Kucinich, D-Ohio, sent a “Dear Colleague” letter to other members of Congress announcing his intention to introduce legislation to “eliminate the tax deductibility of fast food and junk food advertising directed at children.” The Congressman is inviting other members to join him as a cosponsor. While well-intentioned, this plan, if enacted would increase the cost of convenience food and restrain advertisers from communicating healthy messages about food.

A misleading statement made by Mr. Kucinich is that snack food advertisers are granted a special tax write off to subsidize obesity, see bolded text below. All businesses have the right under the tax code to deduct ordinary and reasonable business expenses like advertising. To eliminate the deduction for some advertisers but not others would violate those advertisers's Constitutional right to be treated equally under the law, in addition to restraining commercial speech.

Mr. Kucinich's letter follows, as does his aide's contact info. Please let him (and your own Congressional members) know that you do not agree!

Re: Don't Subsidize Childhood Obesity
From: The Honorable Dennis J. Kucinich
Date: 10/28/2009

Dear Colleague:

Research clearly shows that childhood obesity has reached epidemic proportions in this country. As we develop programs to combat childhood obesity, we must also examine the root causes of this problem. The effect of advertising on youth, especially advertising of fast food and junk food, has long been a concern of mine. The Institute of Medicine estimates that in 2004 approximately $10 billion was spent on food advertising directed at children, using every method available--television, radio, the internet, even embedded in video games. Simply put, marketing to children works--companies would not make such a substantial investment if it were ineffective. See n. 1.

Marketing directed at youth is extremely well constructed and relies heavily on behavioral science. The developing brain of the child cannot discriminate fact from opinion; cannot think critically; and cannot yet fully understand abstract thinking. This makes no difference to food advertisers, who exploit this using cartoons, cross branding with popular toys, giveaways, and myriad other methods to develop brand loyalty and shape judgment as early as possible, knowing that those affinities are the most enduring.

Astonishingly, the federal government subsidizes this methodical preying on children by granting a tax write-off for expenses associated with it. (Emphasis added by Ad Disclaimer) This must stop. The government must take action to protect American children and ensure that they grow up in a healthy environment. For this reason will be introducing legislation that would eliminate the tax deductibility of fast food and junk food advertising directed at children. I invite you to join me as a cosponsor of this legislation. There is precedent: approximately 50 countries, including Sweden, Norway, Australia, and Great Britain, have limited or prohibited food advertising directed at youth. Additionally, recent research has concluded that eliminating the tax deductibility of food advertising directed at youth would reduce obesity among youth. See n. 2.

For more information or to cosponsor, please contact Tom Mulloy in my office at 5-5871 or thomas.mulloy@mail.house.gov.

Sincerely,

/s/

Dennis J.Kucinich Member of Congress

n. 1. Institute of Medicine (2006). Food Marketing to Children and Youth: Threat or Opportunity? National Academies Press.

n. 2. Chou, S., Rashad, I. & Grossman, M. (2008). "Fast Food RestaurantAdvertising on Television and Its Influence on Childhood Obesity."Journal of Law and Economics, 51(4), 599-618.

The Threat Returns-- NO TAX ON DTC-- email now!

Senators Al Franken, D-Minn., Sherrod Brown, D-Ohio, and Sheldon Whitehouse, D-R.I., have introduced legislation (S. 1763) to disallow the federal tax deduction for all advertising and marketing expenses for prescription drugs. The Senators have indicated they would like to have the proposal added to the health reform legislation and may offer it as an amendment when the measure is considered by the full Senate.

Please contact both of your Senators as soon as possible and express your strong opposition to any effort to deny the deductibility of advertising expenses. Talking points and contact information are both included.

Here's the rest of Clark Rectors' message. Suggested email text is below.

You know the drill:

Contact Senator Mikulski here.

Contact Senator Cardin here.

Dear Senator _________:

As a taxpayer working in Maryland's advertising industry, I oppose any effort to eliminate tax deductions for the cost of advertising prescription drugs. There are several compelling reasons NOT to eliminate the deduction of advertising prescription drugs as ordinary and necessary business expense:

• It will increase the cost of informing the consumer about prescription drugs by 35%. If an advertiser is taxed at the highest corporate rate of 35%, the loss of the deduction for prescription drug advertising becomes a 35% tax on such advertising.
• Taxing advertising expenses for prescription drugs but not other advertising expenses is discriminatory.
• Taxing advertising expenses for prescription drugs chills constitutionally protected commercial speech. In 1936, the Supreme Court struck down a 2% tax on newspapers as an unconstitutional restraint on speech in Grosjean v. American Press Co.
• Consumers - particularly elderly consumers - will receive less information about prescription drug choices if advertisers reduce spending on prescription drug advertising.
• Legislation requiring a tax on advertising expenses for prescription drugs will make it easier to tax other advertising expenses, adversely affecting the advertising industry.

Advertising for all products and services helps generate $6 trillion in U.S. economic activity and supports more than 21 million jobs. I request that you do not support any legislation that eliminates tax deductions for the cost of advertising prescription drugs.

Sincerely,

Your Name
Address

Advertising Squeezed by States Looking for Funds

Monday's Advertising Age features a 50 state survey on state legislative initiatives to raise funds from or otherwise regulate advertising and production activitities. AAF Baltimore is the only club noted for having a legislative committee --and a climate that is, at times, less than welcoming to advertising and communications businesses. Want to help change the climate in Maryland for advertising and communications businesses? Contact Linda Stanley, director AT baltimoreadvertising DOT com or 410-821-6968, about volunteering on AAF Baltimore's Legislative Committee.

Twitter Allows Advertising

BBJ reports today that Twitter has changed its policy to allow advertising. It's understandable - surprisingly the Internets has an actual cost (!) but also game-changing. Okay we're all aware (a) that ad tweets are highly annoying; and (b) marketers need to follow the current (and proposed) FTC guidelines for endorsements and testimonials when hyping--ahem--discussing products and services. But now there is a new consideration.

The presence of advertising on Twitter converts the website where your tweets appear from editorial to commercial. That conversion casts a commercial light on the messages you tweet. The commercial effect means that parodying celebrities, criticizing brand owners, twitterature, and linking to other websites will cause those so tweeting to climb a steeper slope to prove fair use. Think twice before you use someone else's brand, name, prose, or news story.

Although some brand owners show that they are starting to "get" the important crowd sourcing and grassrooting roles that apps like Twitter provide, many others do not. Some of the great accounts may disappear. That's disappointing since many of the parody and brand criticism tweets like my personal fave, UnPeter Angelos, have an important role in giving readers uncontrollable belly laughs or providing important unfiltered info to consumers.

How to Rock Your Film - Without Landing in Copyright Jail

It's a miracle that Nina Paley's feature length animation, "Sita Sings the Blues," escaped a life sentence. Sadly many films never do. Great music enhances film and video. Digital video editing tools make it easy to add popular music and remixes to a film. Unfortunately, permission to use commercial music in an independent film is not easy to acquire. Filmmakers, who sync commercial music to their films planning to seek permission later when the film attracts investors, are often devastated to learn that the music is unavailable or prohibitively expensive.

Filmmaker Nina Paley is one of the lucky few who find a way to keep their films out of copyright jail. A veteran of syndicated comic strips, Paley began creating short animations in 1998. Inspired by a Ramayana tale she encountered while living in India, Paley spent 5 years creating "Sita Sings the Blues" by hand. Along the way Paley was attracted to similar themes of romance gone wrong found in Annette Hanshaw's 1920's blues recordings. Paley did some research and concluded that her desired recordings are in the public domain. So she developed her animation to sync with Hanshaw's recordings and entered "Sita Sings the Blues" in several film festivals. As it often happens, Paley won awards and was soon offered distribution deals.

Unfortunately, Paley then learned that the songs Hanshaw sang in the recordings were not public domain. Click to continue...

Maryland Employers Improperly Classifying Workers as Independent Contractors Do So at Their Peril

On July 14, 2009, Maryland Governor Martin O'Malley signed an Executive Order establishing The Joint Employment Task Force on Workplace Fraud (Download PDF). Maryland businesses which fail to properly classify individuals as employees as opposed to independent contractors will face large fines, penalties and assessments by treating an individual as an independent contractor when that individual should be treated as an employee. Employers may have heard about recently enacted language focused on the construction and landscaping business, but this Executive Order establishes a Task Force that may affect all Maryland businesses.
This Executive Order comes on the heels of the passage of Maryland Senate Bill 909, the Workplace Fraud Act of 2009, which will take effect on October 1, 2009, and will affect construction and landscaping businesses operating in Maryland. The Executive Order on The Joint Employment Task Force on Workplace Fraud seeks to coordinate and expand in areas other than construction or landscaping. One of its goals is "to develop strategies for systematic investigations of workplace fraud within those industries in which misclassification is most common," and "to consult with representatives of business, organized labor and other agencies to improve and expand upon the operation and effectiveness of the Task Force and its members." This new executive order is a "preview of coming attractions" for Maryland employers other than construction and landscaping contractors. Any Maryland employer utilizing "independent contractors" needs to carefully evaluate its practices because if the newly created law dealing with construction and landscaping contractors expands into other areas at the recommendation of the Joint Employment Task Force on Workplace Fraud, it is conceivable and even likely that the draconian logic of the newly enacted workplace fraud law will be expanded to other types of businesses. Click to Continue...