The ad industry is watching regulatory developments in Washington and state legislatures in the coming year.

Photo: andrew caballero-reynolds/Agence France-Presse/Getty Images

Marketers and the rest of the advertising industry expect a busy year ahead confronting possible government rules and regulations that would bear on their businesses.

Not only will brands and ad agencies be working to rebuild businesses disrupted by the pandemic, they are likely to face revived proposals that may have been on hold this year, said Dan Jaffe, executive vice president and head of government relations at the Association of National Advertisers.

“This is going to be an enormously active period, which will have substantial issues that will affect advertisers,” he said.

Consumer Privacy

“2021 is going to be the most active year in regard to privacy at the state level,” said Mr. Jaffe. “Numerous states looked at the issues this year, but because of Covid a lot of it got sidelined.”

The ad industry for years has been pushing for a federal privacy law, saying it would be better to have one set of national rules for everyone to follow.

But states including Washington, Utah and Virginia are drafting their own rules around how advertisers can use their residents’ data.

California was the first state to implement sweeping privacy regulations in 2020 under its California Consumer Privacy Act, which sets strict rules that give consumers more control over the personal information that businesses collect about them. This year, the state also passed the California Privacy Rights Act, creating a government agency solely focused on data privacy with the power to implement and enforce new rules.

“So far the proposals we are seeing are not identical,” said Mr. Jaffe. “It’ll create a Balkanized landscape and regulatory framework which will be extremely difficult for everybody.”

Mr. Jaffe predicted that half the states in the U.S. will have their own bills for privacy laws by the middle of 2021. “How many will go and how far they’ll go, we’ll have to see,” he said.

Greenwashing and Endorsements

The Federal Trade Commission typically updates its guides for various areas of disclosure every 10 years, but it hasn’t updated those for endorsements in ads overall since 2009.

The issue has gained significance with the rise of social media and influencer marketing and is ripe for a regulatory face-lift, said Jeffrey Greenbaum, managing partner at Frankfurt Kurnit Klein & Selz PC. “The rules governing influencers and a lot of social media were created before a lot of social media was created,” he said.

As marketers increasingly create products and claims that are focused on the environment and sustainability, the FTC will also likely step up its green-related enforcement. It hasn’t reviewed its “Green Guides” on environmental marketing claims since 2012, said Mr. Greenbaum, who is a partner in the firm’s advertising, marketing and PR group.

“One of the top issues on everyone’s mind is the environment, global warming and saving this Earth, and the Democrats have already said this issue is a real priority,” he said.

A spokesman for the FTC said the commission wasn’t ready to disclose which rules and guides it will review in 2021.

The Ad Tax

For years, the industry has successfully fought off various proposals to remove a longtime tax deduction that is available for advertising expenses.

This year, the issue of taxes and advertising is likely to return, according to the ANA’s Mr. Jaffe.

“We’re seeing again all sorts of signals this is going to be very significant,” he said.

In 2020, the ANA helped convince Washington, D.C., to drop a new ad tax, arguing that it would weigh on community businesses and local newspapers already struggling to survive during the pandemic, Mr. Jaffe said.

The association is now focused on a bill in Maryland to impose a 10% tax on digital ad expenses.

“We’re far from out of the woods,” said Mr. Jaffe.

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Write to Alexandra Bruell at [email protected]

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This post first appeared on wsj.com

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