Why is Congress trying to shut down the advertising industry?

The biggest threat to boom times for ad-supported businesses isn’t bubbly valuations — it’s new legislation from the House Ways & Means Committee

Love ‘em or hate ‘em, ads in many shapes and forms are an integral part of our daily lives. They help us decide between Coke or Pepsi at the check-out counter, entertain us between segments of Real Housewives of New Jersey (cringe), and most importantly they fuel a multi-trillion dollar economy employing tens of thousands of Americans.

According to a recent article in Adweek, the House Ways and Means Committee is mulling a plan to end the tax deduction companies receive for advertising expenditures. “We’ve been told by House staff that they are seriously looking at some limitation on the deduction, but they haven’t told us all the details,” said Dan Jaffe, EVP of the Association of National Advertisers (ANA).

The ANA are advocating that the potential limits on the deductions will have no positive impact and could potentially be detrimental to the advertising industry.

The Ripple Effect

If  tax deductions for advertising are slashed, it’s possible that the nation’s largest brands would cut back internal marketing resources, scale back their agency support, and spend less across publishers, networks and exchanges.

Ad tech is currently riding high with the recent IPOs of Rocket Fuel and Twitter, as well as resurgence of Facebook’s stock. These industry leaders are advertising-dependent and the passing of this measure would be a massive blow to the current momentum seen not only in the ad industry but the US economic recovery as a whole.

Every million dollars in ad spend supports 69 American jobs.  What happens when the spending that supports those jobs goes away?

Right now, we’re left to wait and see if the ANA can put a halt to the proposed legislation, so everyone in the advertising industry can continue to push forward delivering enjoyable marketing experiences and creating jobs for a wide spectrum of Americans.

Let’s hope they succeed.


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