Marketing to stay under microscope

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Direct-to-consumer drug advertising isn't the only troubling issue on Capitol Hill. After a relatively worry-free year in Washington, marketing groups are bracing for major woes in 2005 as Congress returns this week to the nation's capital.

Marketers' ability to deduct ad costs, attacks on food advertising aimed at kids, rising postal costs and the potential threat to e-mail marketing are all expected to be on the Washington agenda this year-in addition to efforts to limit DTC advertising.

This year "will be much more of a minefield than 2004," said Dick O'Brien, exec VP of the American Association of Advertising Agencies.

He said growing concerns about childhood obesity could make the issue "the flash point for advertising" with the question being whether "food and beverages should be advertised to children."

fear of being drawn in

Mr. O'Brien and officials of several other ad groups said President Bush's concern about the deficit with a new Medicare drug benefit to start combined with the political unpopularity of DTC advertising have ad groups worried that advertising's full deductibility could get prominent attention. "I expect a challenging year," said Wally Snyder, president-CEO of the American Advertising Federation. "The deficit that the country is facing will have to be dealt with and the fear is that advertising deductibility will get drawn into it."

Republican wins in November would appear to dictate that the new Congress will be business-friendly. But ad groups said the effect on advertising is far from clear, even though one of the Senate's leading critics of DTC ads, Sen. John Edwards, D-N.C., is being replaced by Rep. Jim DeMint, a Republican who once owned a small ad agency.

The turnover of committee chairmen in the House and Senate-in two of the biggest, Sen. Ted Stevens, R-Alaska, takes over from Sen. John McCain, R-Ariz., as chairman of the Senate Commerce Committee and Sen. Michael Enzi, R-Wy., succeeds Sen. Judd Gredd, R-N.H., as chairman of the Senate health committee-brings a level of uncertainty. In the House, too, there are changes as Rep. Joe Barton, R-Texas, takes his first full term as chairman of the House Energy and Commerce Committee and it is expected that Rep. Charles Norwood, R-Ga., will take over the panel's health committee. (Mr. Barton was appointed last spring, but didn't fully set last year's committee's agenda.)

the postal situation

"I don't see issues like prescription-drug advertising, privacy or obesity going away," said Dan Jaffe, exec VP of the Association of National Advertisers. "But the question is whether efforts to deal with Social Security privatization and taxes could swallow up congressional energy or we will instead get more scrutiny."

The postal situation worries magazine publishers and direct marketers who last year saw postal reform essentially booted to this year. The Postal Service has indicated it will seek a rate increase this April and mailer groups expect the service to propose a 15% increase that would take effect early in 2006, unless reform legislation passes that would abate some of the need for an increase.

"It's a very big issue for us," said Jim Cregan, exec VP of the Magazine Publishers of America. "The imminence of this rate case makes it very, very important to resolve this during 2005 before the higher rates have an impact."

In addition, House efforts to stop spyware and impose new limits on privacy worry the Direct Marketing Association, which supports both, but worries that the limits could go too far. Jerry Cerasale, senior VP of the Direct Marketing Association, said proposals to limit the selling of children's lists and limit spyware have to be closely watched this year.

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