Why the Ad Industry Shouldn't Foot the Bill for Big-Biz Bailout

AAF Chief Says Advertising Is a 'Big Part of the Solution' to Get Us out of This Mess

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President-elect Barack Obama's huge stimulus plan and the equally huge budget deficit that it and the financial bailout will create have the business community worried about who's going to pay for all of that public spending.

How much the ad industry will be asked to foot the bill in the form of possible restrictions on the tax deductibility of ad expenditures is an open question right now, but "the advertising industry does need to be out front to let folks on Capitol Hill know, and the new administration know, the value that we add to the economy."

That's the view of James Edmond Datri, the new president-CEO of the American Advertising Federation, who contends that the role of advertising in our economy isn't "nearly as understood as it should be" -- even though every member of Congress uses ample amounts in their election campaigns. "It's amazing. Everybody sees the power of advertising. But sometimes that reality, that message, doesn't seep into an understanding when it comes to tax decisions. And we need to make sure that the tax-writing committees understand that and understand the power of it: the power to do good. Advertising is really going to be a big part of the solution, a major engine to get us out of the mess we're in."

Mr. Datri comes from a Washington law firm, and he also served as executive director of the Democratic Caucus in the House of Representatives. He's held senior positions with several prominent members of Congress, where he earned a reputation as problem-solver and coalition-builder.

In his AAF post, Jim will need both capabilities. Is it a completely far-fetched notion to build a coalition around the idea of an extra tax break for more advertising to stimulate the economy? I asked him in a video interview.

Jim is also very tactful. "I think that it is much more likely, given the debt that we're facing, to defend what we have now as valuable than to overreach and start asking for stuff," he said. "Let's face it, a lot of folks are asking for things right now, asking for government to come in and help them out... But I think when they do turn to the tax code, they're obviously going to look for ways to close loopholes and bring in revenue."

So I guess that means that AAF won't be asking for any extra tax rebates to boost ad spending, but on the other hand, if the government limits the tax deductibility of advertising, the economy could slow down in a dramatic way. "That's going to be our core argument: If you touch deductibility, you're going to harm every other segment in this economy," Jim said.

OK, so I couldn't get him to buy into my idea. But surely he can see the value of limiting advertising's right to free speech in the case of products that could prove harmful to your health?

Michael Lee of the International Advertising Association believes it makes sense to relate potentially dangerous (but legal) products to the role of responsible communications. He said, "We cannot be as simplistic as we used to be -- and where we also took a blanket approach to the notion 'if something is legal to sell, it should be legal to advertise.' We have to fast-forward now to current demands and conditions."

I am of the view that prescription-drug marketers should be very wary about advertising a new product to consumers before potentially dangerous side effects become known. Jim's position is that commercial speech is "the last thing the heavy hand of government should be involved in." There are other remedies, he said, such as making sure the product is safe before it's introduced.

He acknowledged that the "slippery slope" argument -- giving in to one thing leads to other concessions -- influences his thinking. But he added that since government is "always anxious to place limitations on commercial speech," the ad industry should be very reluctant to give bureaucrats any ammunition to interfere.

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