AD DEDUCTION SPECTER LIVES AT AAF MEETING

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WASHINGTON-New warnings about the threat to advertising's deductibility are being sounded even as some contend the chances for congressional action may have passed this year.

Days after the Democratic Leadership Council's Progressive Policy Institute again listed advertising's deductibility as second largest of 120 examples of "corporate welfare," attendees at the American Advertising Federation's annual conference heard AAF officials and legislators warn advertisers to be vigilant.

"If we get down to the crunch, it could be an issue," said Sen. Charles Grassley (R., Iowa), a member of the Senate Finance Committee. "In my view it is not a good idea, but there is pressure for a [reduction in the deductibility of advertising] particularly for cigarettes and alcohol."

Carla Michelotti, chairman of AAF's government affairs task force and senior VP-associate general counsel for Leo Burnett USA, Chicago, described "our No. 1 threat" as the reduction of advertising deductibility to 80%, which the institute says would bring in an additional $3.66 billion a year.

Executives of a second ad association also expressed worry.

"I don't want to be Chicken Little, but if Congress moves against welfare, it is going to have to move against `corporate welfare,'*" said Dan Jaffe, exec VP of the Association of National Advertisers. "If the advertising community doesn't get up on the Hill, we could get hurt."

Others who agreed the danger exists also called chances of passage remote at best.

"It is sort of like the nuclear bomb to advertising," said Hal Shoup, exec VP at the American Association of Advertising Agencies. "It's not in as much danger as some of the other things."

While deductibility was in the forefront of issues at the AAF conference, another pressing concern was the role of African-Americans in the industry.

Rep. Cardiss Collins (D., Ill.) delivered a strong statement about the need for ad agencies and clients to increase diversity in their hiring of people and naming of agencies.

"It is despicable that while Kraft Foods earns millions with Bill Cosby's pudding pops and Nike dominates the athletic footwear market with African-Americans, and hip hop and rap music are used to bring home the advertising message not just for blacks but for all consumers, that African-American agencies are systematically excluded from fully participating in this billion-dollar industry," Rep. Collins said. "It appears that African-Americans are valued in the advertising world only as product endorser and responsive consumer.'

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