Results tagged “Public Policy” from IABlog

IAB Launches Digital Advertising Regulation 101 Guide

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Are you familiar with Section 5 of the FTC Act?   Do you know how the government enforces its privacy laws?  What are the important state and federal laws that are relevant to your business model?

 Historically, the U.S approach to regulating privacy has been largely sectorial, meaning that there are a number of laws in place that address individual industries (e.g., healthcare or financial services) versus the far more comprehensive approach taken by the European Union.

To provide digital advertisers with a basic working knowledge of the current privacy laws applicable to the industry, the IAB has created a Digital Advertising Regulation 101 resource

This guide is for those with a limited understanding of current privacy law who are looking to learn a little bit more about the U.S.’s basic approach to these issues.  It is not meant to provide extensive detail into legislative histories or prognosticate on the outcome of pending privacy cases winding their way through the courts, but instead to give those new to the world of privacy a lay of the land.  

The guide covers all facets of digital advertising regulation.  It explains the basic rules that businesses need to follow, outlines both federal and state regulation, and provides summaries of sector-specific rules pertinent to digital advertising (all linking out to further information for those interested in delving deeper into a certain topic).  

This new resource is a supplement to the IAB’s Legislative and Regulatory Tracker that went online in October of last year.  It is meant to provide a general overview of the policies already in place, while the Legislative Tracker shows up-to-date developments on individual pieces of pending legislation in the context of digital advertising.

About the Author

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Stephen Hicks

Since February 2009, Hicks has served as General Counsel and Corporate Secretary for Ziff Davis, LLC. and its predecessor. Hicks is co-chair of the Interactive Advertising Bureau (IAB) legal affairs committee. Prior to joining Ziff Davis, Hicks served as General Counsel and Secretary for: MTM Technologies Inc. a publicly traded IT services provider and product resller; OutlookSoft Corp. a VC backed international financial software corporation acquired by SAP; and AMICAS Inc. (formerly VitalWorks) a publicly traded medical software corporation. Hicks also worked on the executive staff of Dennis Vacco, the New York State Attorney General; and was an associate at a New York law firm.
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Congress to Propose Tax on Advertising

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The economic consulting firm IHS Global Insight estimates this could place 1.7 million U.S. jobs at risk.  Today, advertising sales help support 20 million jobs, or 15% of all jobs in the country.

IAB members have no doubt been exposed to the congressional turmoil of late over budget policy in Washington.  From one debt ceiling crisis to the next, to sequestration, and a complete shutdown of the government, U.S. budget deficits are driving policy down the same road as a kicked can.Moneypie.jpg

It is widely understood that a reform of our taxation system is the first step forward to finding a long term solution for deficit reduction and economic growth.  Early last year, House Ways and Means Chairman Dave Camp (R-MI) and Senate Finance Chairman Max Baucus (D-MT) established a process to begin review of the U.S. tax code, last overhauled in 1986. 

IAB has learned Chairman Camp is prepared to formally release the Committee’s draft tax reform bill in the coming days; and, Chairman Baucus will begin briefing Committee members next week to prepare introduction shortly thereafter. 

Why does this matter to you?

Many U.S. companies have, for decades, declared advertising as an, “ordinary and necessary cost of doing business.”  Similar to employee payroll, office rent and other business expenditures, advertising is considered a standard deduction under applicable U.S. Internal Revenue Service (IRS) tax rules.  It is the unified goal of Chairmen Camp and Baucus, and many U.S. industries, to see a lowered corporate tax rate (from 35% to as low as 28%).  However, in order to accomplish a lowered overall rate, many deductions find themselves on the chopping block as “pay for’s” to offset the reduced revenue.  

Specifically, the House Ways and Means Committee has developed draft tax reform legislation that would be funded by imposing a tax on advertising. 

Today, businesses may deduct 100% of the cost of their advertising. The proposal in the Committee’s draft tax reform legislation would allow a business to deduct only 50% of its advertising costs in the year the ad runs but to delay the deduction for the remaining 50% over 10 years - thus deducting an additional 5% each of those years. The Senate Finance Committee draft is widely rumored to mirror this “Cost Recovery” bill language. 

While Leadership in both the House and Senate is not prepared to hold a vote on tax reform this year; once introduced, the draft bills will become THE base line for all future debates. 

What are the consequences?

The very real consequence of having advertising re-classified (in whole or in part) as a taxable business activity is that client advertisers will do less of it. Any tax percentage assessed will incline companies to reduce advertising and media spending in order to mitigate or off-set any tax. This impacts ad agencies directly -and can adversely affect entire local economies and job bases where agencies and advertising-related businesses play such an important role.

The proposal also does not consider that companies buy new advertising each year and would feel the brunt of this tax annually. Not only would they have less money to spend on advertising year after year, but media companies would also be impacted as advertisers would be forced to reduce their ad buys.

Consider the impact this proposal would have on the economy:

  • Employment in the ad-supported internet ecosystem doubled over the past four years to 5.1 million, making it one of the most dynamic sectors in the recessionary American economy, according to a study by researchers at the Harvard University Business School, commissioned by the Interactive Advertising Bureau (IAB). 
  • The ecosystem contributed $741 billion to the U.S. economy in 2011, close to double 2007 figures, and accounted for 5.1 percent of the U.S. gross domestic product (GDP), an uptick from 3.5 percent four years ago.

What can I do?

Begin thinking about what this change in tax code would mean to your company’s bottom line and ability to keep hiring.  Stay plugged into IAB Public Policy news and alerts; and, be prepared for a call to action.  

Please direct any and all questions to Mike Zaneis ([email protected]) or Sarah Hudgins ([email protected]) in our Washington, D.C., office.


About the Author

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Mike Zaneis

Mike Zaneis is SVP & General Counsel at the IAB.

 

The Digital advertising industry exists in a complex legislative and regulatory environment. Policies in Internet governance, privacy, advertising, taxation, and intellectual property all have significant impacts on the growth and direction of the industry.

 And these policies are not being developed in one place. Within the Washington, DC beltway, laws and industry guidance are promulgated by regulatory agencies, such as the Federal Trade Commission or the Federal Communications Commission, the judicial system and past precedent set by court cases, and legislation enacted by Congress.

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To make this policy landscape even more complex, the digital advertising industry must also be cognizant of local and international laws. As those working in the industry know, digital advertising is borderless in nature and therefore depends upon a base level of legal cohesion among countries and regions. Disruptions stemming from policies in one nation, or U.S. state, are felt globally. Take, for example, two recent anecdotes from Europe.

On October 21, a data privacy bill before the European Parliament passed through committee on its path to becoming law. This draft bill, created in response to the recent revelations about U.S. national security data-tracking practices, directly impacts the digital advertising industry in several ways. For one, the bill calls for explicit consent before a wider variety of processing activities. The bill would also create new barriers to transferring information about EU citizens to the U.S. Perhaps most importantly, the bill proposes a new definition of personally-identifiable information that includes “online identifiers.” The European Parliament will now negotiate with the Council of the EU to reach a compromise agreement.

Contemporaneously, the EU is considering whether or not to allow the U.S.-EU Safe Harbor Framework to continue. This framework allows participating U.S. companies to comply with EU privacy rules through a streamlined self-certification process. Under this framework, Over 4000 companies, and many IAB members, have demonstrated their high level of privacy protection in order to work with European companies and serve European citizens. Although Safe Harbor is focused on addressing commercial privacy practices, the value of the Framework has been questioned in recent months in association with national security concerns.

Were digital advertising practices and technologies static, there would already be a complicated set of rules to follow. But industry practitioners know that digital advertising is never static. Innovations are constantly created that raise new public policy questions. This is evidenced by the FTC’s recent interest in native advertising and the Internet of things.

To help the digital advertising industry identify the policies relevant to them, the IAB has created an online Legislative and Regulatory Tracker. This webpage summarizes draft legislation and regulations that will impact our ecosystem, and categorizes these proposed laws by subject, such as children’s privacy, location privacy, and trade. It also offers IAB’s positions on the draft laws, providing further insight into how IAB is working to promote growth in the interactive marketplace on behalf of its members. Whether you’re a publisher, advertising network, or marketer, we hope you find this service helpful in navigating the complex policy environment.

This tracker will continually be updated and expanded, so check back regularly for up-to-date information on the policies that could affect your business. For more updates on the IAB’s public policy work, visit the IAB public policy website. If you have questions about the tracker or IAB’s other public policy initiatives, please feel free to email me at [email protected].

About the Author

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Alex Propes

Alex Propes is Senior Manager, Public Policy, at the IAB.

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Refuting the ‘Social Media Hangover’ at Political Conventions

Please excuse this IABer’s arrogance when she says: the experts got it wrong.

After Tampa and Charlotte, the reports came flooding in “social media revolution failed,” “Parties still need physical convention,” and “will social media ever live up to its promise?”

But if you know what I mean when I say #eastwooding, read no further, you probably already get everything I am about to highlight.

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For some reason, just like novice mobile marketers, the pundits looked to social media to replace the political norms, and missed the true Holy Grail. Just as a successful cross platform marketing campaign reaches the consumer as they move throughout their day, in different contexts utilizing both old and new, social media supplements the convention and campaign platform, it is not there to replace it. Breaking down the walls did not simply mean to host a virtual convention, rather, it’s a tool to expand audience and break down access barriers.

Let’s be honest, while baby boomers and beyond are still happy to find a couch during prime time TV, up and coming generations are highly mobile (and I don’t mean by device), they are cord cutters, and they consume a lot of information and entertainment through multiple platforms and services, at the time convenient for them.

Social media is our Where Brother Art Thou’s tin can and soapbox. It’s retail politicking. How in a modern national campaign do you recreate the glad handing, baby kissing, and storytelling necessary for intimate, voter engagement?  Accessibility and communication.

Kal Penn’s call for #sexyface wasn’t just a funny gimmick; it created an opportunity for engagement.  Voters like to feel as though they are a part of the process and in on the secret. It took less than an hour for #sexyface to trend on Twitter.  While an unintended consequence, @InvisibleObama had tens of thousands of followers in the first hour, 40,000 by the next morning.

And this raises a separate question that has yet to truly unfold: measuring social media’s impact.  Some argue in order for social media to be successful, it must be organic. On this point, the two campaigns seem to be diverging, and we will be presented with two case studies by year’s end. Last week, the Romney campaign was the first political campaign to purchase a paid promotion on Twitter. Consider, the President clocks in over 19.6 million followers to the Governor’s 1.1 million.

Campaign strategies aside, the beauty of social media at the conventions this year was its seamless integration - it was universally present, yet invisible - like any great technology should be. From delegates swiping badges to update their Facebook timeline, Eventbrite check-ins, to the hottest ticket in town literally: lattes in the Google Media Lounge, to Convention real-time apps, and Tweet-ups. The experts failed to realize social media at the conventions wasn’t a replacement, but an enhancement.

The 2008 Presidential and 2010 Midterms were just the beginning.  We are only beginning to see the tipping point, and there will be mistakes, flaws, and downright failures as campaigns navigate the best way to put these tools to use.  I am often pointed to the Veep App as evidence social media and technology platforms don’t work for political.  The much-vaunted Veep App would be the first place for voters to find news on the Governor’s announcement for a VP candidate.  Unfortunately for the App, and the campaign, that news broke before the App could.  And it is true; campaigns must have controlled messaging, and esoterically will remain unchanged for the near future.  But don’t shoot the App, campaign leaks are tech-agnostic.

And we’re just scratching the surface. Be sure to join us this year at the IAB MIXX Conference & Expo as some of the smartest minds in media and political discuss the “Digital Election” and examine how the Internet will decide the Presidency this year. To find out more, please visit http://www.iab.net/mixx/agenda.

About the Author

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Sarah Hudgins

Sarah Hudgins is Director, Public Policy, IAB. Follow her @SarahAHudgins.

 

This week, IAB brought together 44 small publishers from 18 states to visit Capitol Hill for the IAB Fourth Annual Long Tail Alliance ‘Fly-In’.

While much attention in the digital ecosystem is paid to the larger players, a growing and vital part of this world are the small businesses. These small shops are often at the cutting edge of breakthroughs in information and entertainment, and they truly represent the sort of self-empowerment that we value as Americans. By convening members of IAB’s Long Tail Alliance, we can show policymakers the real difference that these pioneers are making in the field.

During this week’s Fly-In, members of the IAB Long Tail Alliance joined IAB in the nation’s capital to meet with members of the U.S. Congress and their staffs to give legislators and policymakers a better, fuller understanding of the challenges and concerns facing online entrepreneurs and the negative impact that legislation and regulations may have on their livelihoods and businesses. Since most of these smaller digital companies are dependent on advertising revenue, the policies that impact digital advertising have a direct link to their livelihoods.

IAB Long Tail AllianceIt is vital for Congressional leaders to consider and appreciate the consequences of their work in the online arena of our members—many of whom are small, family-owned businesses that rely heavily on advertising to sustain their entrepreneurial mission. The timely, grassroots message that the IAB Long Tail Alliance brings to Capitol Hill each year is a key reminder of the growing importance of small digital businesses to our industry and to the overall national economy.

These IAB members not only represent the best of the internet—they represent what the ‘American Dream’ is all about. These are passionate small business owners, many of whom are home-based, who took a hobby and made it into a career. Many of their sites exist to serve a strong social or community purpose, generate rich content, and all provide a valuable niche service to users. They are changing the landscape of digital media every day for the better. I often hear chatter about how politicians should look out for the little guy—well, the little has done digital.

IAB’s Long Tail Alliance Fly-In was launched in June 2009. Since then, hundreds of ad- supported small publishers have networked with lawmakers and staff in the U.S. House and Senate to ensure their voices are heard and valued, and to share their perspectives on how additional legislative action could create unwarranted and unmanageable barriers to their current operations and prospects for future growth.

These online entrepreneurs are the new face of small business in America, and it is crucial that their voices are heard on Capitol Hill. If you are one the scores of digital pioneers out there who want to have more of a say in how policy affects your business, I would invite you to find out more about the IAB Long Tail Alliance. This is a special member category for publishers who sell online advertising opportunities indirectly, through ad networks or directly, and have revenues under $1 million per year. To learn more and to find out how to qualify for membership, visit www.iab.net/longtailalliance.

About the Author

Alison Pepper

Alison Pepper

Alison Pepper is Senior Director of Public Policy, Interactive Advertising Bureau.