Archive for October, 2009

Franken and Senate Democrats Go After Tax Deduction for Advertising

Move Could End Deal Between PhRMA and Administration, Jeopardize Health-Care Reform Bill

NEW YORK ( — Yet another piece of legislation has been introduced in the Senate to eliminate the federal tax deduction on advertising for prescription-drug medications, but this one could endanger the proposed $829 billion health-care reform bill.

U.S. Senator Al Franken (D-Minn.), along with co-sponsors Sens. Sherrod Brown (D-Ohio) and Sheldon Whitehouse (D-R.I.), have introduced legislation (S. 1763) to disallow the federal tax deduction for all advertising and marketing expenses for prescription drugs. There are rumblings that the senators would like to have the proposal added to the health-care reform legislation, and the possibility exists that they may offer it as an amendment when the proposed bill is considered by the full Senate.

That would seemingly put in jeopardy the handshake deal that pharmaceutical companies struck earlier this year with the Obama administration and Senate Finance Committee leaders, which calls for drug-makers to pick up an estimated $80 billion in health-care costs over 10 years in exchange for no further crackdowns on the industry.

“From our perspective, that would appear to be the case,” said Clark Rector, exec VP-government relations for the American Advertising Federation.

The proposed legislation to eliminate the tax deduction for health-care advertising is going under the short title of the “Protecting Americans from Drug Marketing Act.” Mssrs. Franken, Brown and Whitehouse are asking to amend the Internal Revenue Code of 1986 “to deny the deduction for advertising and promotional expenses for prescription pharmaceuticals.”

Ken Johnson, senior VP for the Pharmaceutical Research and Manufacturers of America (PhRMA), the Washington, D.C.-based lobby group for drug-makers, did not return two messages by press time.

Mr. Franken’s chief of staff, Andrew Littman, also did not return a voicemail message by press time.

Former Food and Drug Administration associate commissioner Peter Pitts, now the president of the Center for Medicine in the Public Interest, said the proposed legislation to cut the ad tax deductibility endangers more than just the health-care reform bill.

“What this endangers is the public health, as every survey — including those done by the FDA — show that DTC advertising, beyond helping to sell product, actually increases the health literacy of the American health consumer,” he said. “Such a move is actually an anti-health reform amendment and is nothing more than grandstanding by a long-time opponent of the pharmaceutical industry [Mr. Brown] and a ‘Saturday Night Live’ alum [Mr. Franken]. Painting pharmaceutical marketing as an ‘enemy’ of health reform is like saying automotive advertising is the enemy of emissions control.”

The AAF estimates that disallowing the advertising tax deduction would increase the costs of advertising and marketing for affected companies by up to 35%. The ad industry provides $6 trillion in annual sales in the U.S. and 21 million jobs, according to the AAF.

“We absolutely view this as a threat, a very serious threat,” Mr. Rector said.

Asked if he thought the proposed legislation by Mssrs. Franken, Brown and Whitehouse was done in a way to slip it through the overall massive health-care reform bill, Mr. Rector said, “It is what it is. They’re looking for ways to go after revenue in any way possible.”

Dan Jaffe, exec VP-government relations for the Association of National Advertisers, said the ANA and the ad community are aware of the proposed legislation and are “disappointed that this effort to treat prescription-drug advertising differently and more adversely than any other category of advertising continues to surface. … There is no reason that the right to deduct the costs of these ads should be eliminated. They should be treated as they always have been in the past — no differently than any other ordinary and necessary business expense.”

By Rich Thomaselli
Published: October 21, 2009

Microsoft’s Bing to Integrate Twitter and Facebook Posts

Microsoft planned to announce Wednesday that it had fully integrated posts from Twitter into the search results of Bing, according to people with knowledge of the company’s plans. The company also planned to announce that it had integrated Facebook status updates into Bing, according to a person with knowledge of the plans.

The announcement will be made by Qi Lu, president of Microsoft’s online services division, during a presentation at the Web 2.0 conference in San Francisco beginning at 11:30 local time. Yusuf Mehdi, senior vice president for Microsoft’s online audience business group, will conduct a demo of the service.

Representatives for Microsoft and Twitter declined to comment. A Facebook spokesman, Larry Yu, said the the company doesn’t comment on speculation.

The deal with Twitter, which was expected to be nonexclusive, had been in the works for several weeks, and Microsoft engineers had already integrated Tweets into Bing. The terms of the deal are not likely to be disclosed, but a person familiar with the negotiations said it involved a payment from Microsoft to Twitter.

It is unclear how much progress Bing has made integrating Facebook updates. But Microsoft and Facebook have been allies since October 2007, when Microsoft paid $240 million for a stake.

The deals are something of a coup for Microsoft. Both Microsoft and Google have talked with Twitter about getting access to the company’s real-time stream of conversations. In June, Bing made a first stab at offering real-time search results from Twitter, integrating tweets from some select users into its search service.

The deals will further since Microsoft unveiled the revamped search service in May.

News of the deals with Twitter and Facebook were first reported by AllThingsD, an industry blog.


By Miguel Helft AND Brad Stone

Web Users Prefer E-mail Interaction With Marketers, Says Study

Web users are far more willing to share personal information with marketers via email than on social networking sites, according to new research commissioned by lead generation specialty firm Pontiflex.

The new study, conducted by Harris Interactive, found that just 12 percent of online adults have been willing to share information like their Facebook user name or their Twitter handle with a brand in exchange for information or promotional offers. However, a whopping 96 percent of online adults who have actually taken the step of providing brands personal information have shared their email addresses with marketers.

That trend would seem to run counter to most American consumers complaints about spam, as well as many Web users’ demonstrated willingness to share all sorts of personal information via social networks. Yet Harris’ study—which surveyed 2,064 adults aged 18 and older from Sept. 2 through 4, just 17 percent of online adults 18-34, eight percent of adults 35 to 44 and seven percent of users 45 to 54 claimed to be ok with sharing social networking information with brands.

Pontiflex’s business is focused on acquiring leads for advertisers online by targeting users on content sites and social networks, or by directly acquiring email addresses through various channels. The company claims Kimberly-Clark and Blackberry as customers.

According to Pontiflex’s interpretation of the research results, users may be more comfortable with sharing via email because of its opt in nature—and brands may need to start with that relationship with users before jumping into acquiring leads via social networking environments. 

“Building a relationship in the social networking space is not very different from building a relationship in the real world,” said Pontiflex CEO and co-founder Zephrin Lasker. “Once marketers have built relationships and trust through email, they then engage consumers in relevant ways on social networking sites.”


By Mike Shields


States Putting Squeeze on Ads to Raise Funds

NEW YORK ( — The marketing industry isn’t just under threat of regulatory pressure by the federal government — it’s also under fire in states across the country. The issues range from pushes to tax advertising (under discussion in the legislatures of at least 15 states) to a county supervisor in Virginia asking his legislative committee to determine if it can regulate “human billboard” advertising.

“States are under enormous financial pressure and they’re looking at any source they can find,” said Dan Jaffe, exec VP-government relations for the Association of National Advertisers. “That’s … why there are more taxes and creative ways to tax the industry to pay for programs that are being somewhat diminished.”

There have been several proposals so far this year to tax or restrict advertising, notably in South Dakota and Arizona. The legislation in South Dakota was killed in committee and the Arizona proposal never came to a vote. Bills have been introduced in the New York State Assembly to restrict the deduction for direct-to-consumer prescription drug advertising, and to tax ads for certain foods, beverages and entertainment products to combat childhood obesity. Neither bill has moved.

A bill was introduced in the Massachusetts legislature to ban all alcoholic-beverage ads on public facilities, such as trains and bus shelters. A hearing was held last month, but the bill has not moved.

In Florida, seemingly the headquarters of advertising industry headaches, a bill introduced to repeal the ad-tax exemption last year was shot down (again), but a bill to end the ad-tax deductibility for pharmaceutical companies is on the table.

Fight in Maryland
Even in states where the threats are benign at the moment, the industry is bracing. “In Maryland, most advertising services are not subject to sales tax, but tangible items produced from advertising services and equipment used in producing ads are taxed. So we have seen an uptick in sales audits of agencies and production companies,” said Cynthia Blake Sanders, the legislative committee chair for the American Advertising Federation’s Baltimore chapter.

Ms. Sanders, who said Maryland has an economic climate that is “hostile to business, including those in advertising and communications production,” said AAF-Baltimore is assisting the national AAF in opposing any federal cessation of the business expense deduction for health-care advertising. “But we have seen signs that the Maryland delegation may not back the advertising community in this fight,” she said.

Said Mr. Jaffe: “There’s been real anger at the business community right now because the government believes the business community failed in their responsibilities and brought on this current economic crunch. … But, unfortunately, sometimes these regulations make the problem worse.”

New York has been another bugaboo state for the ad industry. The state has already passed a bill that forces consumers who buy products from internet sites based in New York to pay state sales tax — dubbed the “Amazon Tax” — which resulted in dozens and dozens of marketers pulling their ads on New York-based websites. Now New York City has angered the beverage industry with its anti-obesity ad campaign that targets sugared drinks.

In Michigan, where the economy is one of the worst in the nation, the state Senate is voting this week on tax incentives being offered to filmmakers. Michigan currently offers a 40% tax break to entice filmmakers to come to the state, and it has worked — Clint Eastwood filmed “Gran Torino” there two years ago, and an Ernst & Young study showed that states realize strong ROI with the credits (New York got $1.90 back for every $1 in tax credit; New Mexico realized $1.50 back on every $1).

But the Michigan Senate has interpreted the current bill to exclude commercial filmmakers, which could severely curtail the ad industry in the state. “We’ve already talked to the Big Three automakers and they said they would commit to between 40% and 50% of their commercials to be produced in Michigan [if commercial filmmakers receive the same tax credit as movie makers],” said Bill Ludwig, vice chairman of Warren, Mich.-based Campbell Ewald. Mr. Ludwig says a report shows that participation just from the automakers alone would reap, conservatively, $20-$30 million and create 1,300 permanent jobs and 15,000 work-a-day jobs.

Click here to see what’s happening in your state.


By Rich Thomaselli

Oct. 12, 2009

Choosing an Agency Based on a Rate Card Is a Big Mistake

Last week the 4A’s released a survey on agency billing rates that stirred up some controversy. Among other things, the study suggested smaller agencies are a bargain — with labor billing rates one half or one third of their larger brethren. As someone who started a small agency, you might expect me to be thrilled to see that in print.

I’m not.

Shopping for agencies on the basis of price is a big mistake. After 23 years of working at agencies large and small, one thing that’s become clear is how important it is for clients to find an agency that is the perfect fit. Truth be told, many clients need the services a large agency offers — and for those clients, looking for a smaller agency on the basis of cost-savings isn’t likely to deliver the results they want. That’s simply fishing in the wrong pond.

Yes, large agencies can get pretty expensive. But there are often good reasons for that. First, they have some incredible talent that needs to be paid well. Resources? They have them. Technical experts, support people, field teams, global oversight groups, strategic planners, proprietary and secondary research. You need a contact in Kuala Lampur tomorrow? An entertainment unit, direct marketing people, PR, full scale in-house production support? An on-the-ground person in Cleveland — yesterday?

They’re on it. Not to mention one-degree-of-separation-away-from-anything-you-could-possibly-need. Particularly if you’re a large marketer–grappling with things like multiple brand levels, different geographies — a big agency can often match all of those points of contact and service requirements. I think of it like this: When you select a large agency, in many ways you are buying a system. And all of that costs money. That’s a lot of what you see in the rates they charge.

Now, small shops, they are a very different breed of agency. Instead of a system, you are usually buying into specific people. You are buying talent, and usually, it’s the senior kind.

That makes each agency a slightly different beast. You’ll find that every small agency has a unique proposition — a vision built around the particular talents of that team.

They also have strong cultures that are a direct reflection of the agency founders. Their skills, their track record, their tenacity and their ability to get things done.

So, in many ways, instead of buying into a system, hiring a small agency is much more like hiring an actual employee — a member of your team — than it is like hiring a vendor.

When it comes to selecting their marketing partners, clients have become far savvier about their options and the kinds of structures that can help them get the best value for their money. That means a departure from a “one-size-fits-all” model, selecting both large and small agencies for their roster. It’s becoming more the norm for my agency to find itself sharing clients with some of the biggest agencies around.

So, a bit of common-sense-but-worth-keeping-top-of-mind advice to any clients thinking about an agency search: do not start with a rate sheet.

Saving money is the worst reason to look to a smaller agency. Instead, spend time examining your needs and seek an agency that’s the best match. If you need to rely on the full resources and capabilities of a larger shop — and you commit to making use of all those resources — go for it and be prepared to pay for it. But if you are focused primarily on the idea and creative execution, and need a solution that is nimble and flexible, a smaller agency could be the right answer.

After all, the way to ensure getting the most out of any creative resource is to pick the right partner and pay them what they are worth. Then, once you have your resource, show them that you trust them to do their job.

Because the dirty little secret in the agency business is that all agencies, no matter the size, model or location, are passionate pleasers, wired to solve problems creatively. You will get your best value for money not by comparing rate cards, but by finding an agency that’s best for you and treating them like a true partner. If you do, you’ll be “that client.” The one that gets the best people, the best work, and a team that will never want to leave you disappointed.

Posted by Anne Bologna on 10.08.09 @ 03:11 PM

Fresh Bits October 2009

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New Clients

Dailey Marketing Group is proud to welcome two new clients who have chosen to work with our experienced team – Biosense Webster and ThermoGenesis. Both of these companies are leaders in their respective industries, and Dailey Marketing Group is thrilled for the opportunity to help them advance their brand and market positions.

Biosense Webster, a Johnson and Johnson company, pioneered electrophysiology catheters more than 30 years ago and continues to drive advances in diagnostic and therapeutic catheters and 3D mapping and navigation systems. As the global leader in navigation systems, the company’s CARTO® System Technology is present in leading hospitals and teaching institutions across the globe.

ThermoGenesis has been a leader in developing technology for the processing, isolation and preservation of blood components for over a quarter of a century. From stem cells to platelet rich plasma, every Thermogenesis product shares a commitment to unsurpassed precision and quality.  From blood processing to cellular isolation to cryopreservation and controlled thawing, ThermoGenesis systems consistently achieve superior cell viability and yield while providing uncommonly efficient processes and unparalleled dependability.

Fresh Thoughts

As the holidays are drawing near, it’s time to start thinking about gifts for clients and employees. Each company is different, and some have set rules on gift giving, so make sure to check with your HR department or read your Employee Handbook before deciding on how to handle the holiday presents this year. If you are able to give gifts to people, finding the perfect one can be tricky. For help in finding that perfect gift, or ordering multiple quantities of the same item, visit our Promotions company, DMG Promotions at and let one of the Product Experts help you find what you are looking for!

eMail Blasts

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View the Entire Edition of Fresh Bits October 2009