On the Radar: The Ad Industry’s Top Legal and Regulatory Issues Right Now

Sharon Toerek
Sharon Toerek



legalThere are some legal issues that are “evergreen” in the daily lives of ad professionals, and many relate to intellectual property questions. If your agency does a lot of branding work, for example, trademark clearance and protection is always a concern. When content marketing and social media are a part of the mix, there are copyright compliance and FTC disclosure guidelines to monitor. And agencies are forever concerned about how to protect their intellectual property in new business pitches.

Layered on top of these day-to-day legal affairs and on the heels of the Association of National Advertisers’ recent Ad Law conference in Washington, advertising and marketing lawyers (and their clients) are discussing and debating these emerging legal and regulatory matters in the industry:

1. ICANN’s New Top-Level Domain Releases. As ICANN, the entity responsible for domain name registry in the U.S. prepares to release more new top-level domain names (everything to the right of the “dot”), brand holders are very concerned about the legal impact on their trademarks and commercial brands. The release of new domains creates a vast amount of new real estate on which to secure, monitor and enforce brands. Industry groups like ANA and the 4A’s are vigilantly watching this rollout and have weighed in to advocate for strong trademark protections. One such protective measure that will serve brand holders is the Trademark Clearinghouse, which will enable holders of federally registered trademarks in the U.S. to “deposit” those trademark registrations to protect their marks from other potential domain name purchasers who could cause confusion.

2. Privacy. Big data, ad targeting, ad retargeting, location-based mobile apps – it’s a privacy jungle out there. And if your work involves kids as a target market, the issues get even thornier. The ad industry highly values self-regulation in the area of privacy and generally does a fairly good job of addressing privacy issues. However, the legal and ethical issues associated with consumer and data privacy are increasingly difficult to sort through as they lose ground with the rapid pace of new technology. This makes regulators more nervous and more interested in trying to legislate solutions to the privacy problem. Industry advocates are focusing on the right blend of legal, self-regulatory and technology tools to enable marketers to effectively reach their audiences while protecting the privacy rights of consumers — especially vulnerable consumer audiences.

3. Ad Taxes. As many states show more interest in migrating toward taxing consumption or use rather than income, two potential areas of concern emerge for agencies. First, some states (including Ohio — my home state) have proposed imposing sales tax on all professional services, including agency services. If you run an agency, you would be required to charge sales tax on your professional services and remit those funds to your state tax authority – a double whammy. Not only will your clients have less to spend, but you will also have to incur the administrative hassle of collecting, reporting and remitting the taxes. Additionally, industry policy watchers are growing more concerned that as the federal government searches for new ways to meet its fiscal challenges, the deductibility of advertising and marketing expenses by our clients is “on the chopping block.” Clients who cannot deduct these expenses will reconsider making them in the first place, which directly impacts agency top lines.

4. Food Advertising. Policy makers are continuing to take a very hard look at the potential or perceived impact of food advertising — particularly to vulnerable audiences like children — on the nation’s obesity epidemic and the related health concerns. Whichever side of the issue you come down on, any regulatory decisions made that affect what a marketer must, can or cannot say about food — or to whom she can say it — affects the agencies that serve them. Trending now is an increased interest in requiring full disclosure of nutrition information to consumers, particularly calorie counts on restaurant menus. If your agency works with clients in the restaurant or food industries, this is an issue to watch closely.

To the extent that these hot topics follow any trends, the primary trend appears to be continuing pressure on the industry to self-regulate as it has done for many years on a number of policy issues. They also illustrate the ongoing legal challenges of keeping up with ad industry business trends, which in turn are dictated by even faster advances in the technology that leads those trends.

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