Ad Age's Survival Guide maps the changes and challenges in the year ahead, from new ad-tech wars to shifting policies in Washington, D.C.
Ad industry leaders will greet Inauguration Day with a combination of optimism, anxiety and uncertainty. There is hope that the Trump administration and a GOP-controlled Congress will begin chipping away at regulations like privacy and overtime rules that industry groups oppose. But leaders are also nervous that moves to reform the tax code could put everything on the table, including the ad industry's sacred ad expense tax deduction.
In short, the next few months could prove as unpredictable as Mr. Trump's Twitter account. Marketers -- some of whom have been subjected to direct criticism from the populist tweeter-in-chief over issues like where they build factories -- could be in for a wild ride. "People are more uncertain and find the future of this particular administration more unpredictable than they have in any recent past period because President-elect Trump just doesn't have a major government track record," said Dan Jaffe, exec-VP of government relations for the Association of National Advertisers.
The ANA and another major industry group, the ad agencies' 4A's, will be watching these issues closely in the coming months:
The taxman cometh?
The ad industry has been sounding the alarm over potentially losing its coveted ad expense tax break for so long that it might be easy to dismiss the latest warning cry. But the fight could get real in a hurry. Sure, President Trump and the GOP-controlled Congress could very well reduce corporate tax rates, which agencies and marketers would gladly accept. But the government has to find new revenue somewhere. And ad industry leaders fear that a tax overhaul could eliminate or reduce the ability to write off advertising expenses. One proposal that could be revived would require that 50% of ad expenses be written off over 10 years instead of immediately, which would be at least a $169 billion tax hit for business, says the ANA.
Change on the high court
The Supreme Court has been a fierce defender of commercial free speech in recent years, a key issue for advertisers. Industry leaders are hopeful that Mr. Trump's pick to replace Antonin Scalia will keep this momentum going. But you never know. "For the last probably 20 years now, we have been having an almost unbroken increase in First Amendment protection for commercial speech in advertising," Mr. Jaffe said, noting that Mr. Scalia often provided the deciding vote in 5-4 decisions. "Who replaces him is going to be very significant."
Overtime pay is in play
The 4A's sided with a multitude of business groups last year to oppose regulations approved by the Obama administration that make businesses pay overtime to workers who make less than $47,476 annually, roughly doubling the previous threshold. A federal judge in late November put a preliminary injunction on the overtime pay expansion in late November. For ad agencies, where staffers sometimes pull all-nighters on deadline, overtime costs could escalate under the proposal, said Dick O'Brien, exec VP-director of government relations at the 4A's. The association supports a more gradual approach that would phase in the higher salary threshold, starting at $36,000. Even if supporters of the Obama proposal win on appeal, the 4A's is hopeful the Trump administration would eventually overturn the rule. Andy Puzder, Mr. Trump's pick for labor secretary, is on record opposing hiking the threshold, saying in an op-ed published in Forbes early last year that it would "add to the extensive regulatory maze the Obama administration has imposed on employers, forcing many to offset increased labor expense by cutting costs elsewhere."
Will the FCC opt out of opt-in consent?
Industry leaders strongly opposed privacy rules passed late last year by the Federal Communications Commission that require broadband internet service providers to get opt-in consent from consumers before using or sharing sensitive data, deemed to include geographic locations, browsing history and app usage information. The ANA fears the rule could "seriously undermine the support that data-driven advertising provides to online commerce," according to a blog post late last year. But with the FCC swinging to Republican control under Mr. Trump, ad industry leaders are hopeful the rules will be overturned. "There will be a strong clamor for reconsideration and the reason for this is what the FCC did was unprecedented," Mr. Jaffe said. On Jan. 3, the ANA and the 4A's joined other groups like the Interactive Advertising Bureau in filing a formal petition with the FCC that seeks to overturn the rules.
Watch the states
Even if the Trump administration does away with regulations that the ANA and the 4A's oppose, there is a new risk: that states will step in and fill the void. "What you may see happen here is that as there is less regulatory impulse coming out of the federal government, there will be more regulatory impulse coming out of the state government," Mr. O'Brien said. "You could end up with 30 different states having 30 different policies on the same issue. That makes it almost impossible for an advertiser or a marketer to know what to do."