Back to the Future

Several weeks ago, I was talking with Sam Stern, co-owner of CAP Advertising, about the state of the Sarasota advertising marketplace and he mentioned the growing consideration in Tallahassee about instituting a tax on advertising. I immediately thought that I was being transported with Doc Brown in a DeLorean, equipped with a flux capacitor, back to 1987.

Florida actually passed an advertising tax that lasted from July 1, 1987 until that Dec. 1. It was quickly repealed. It was a disaster for the state. I know because I worked hard to kill it. At the time, I was in charge of about $20 billion of U.S. advertising expenditures.

What we did was curtail all our expenditures in Florida. We stopped supporting the local media with our national advertising dollars. We delayed all support for local dealers and franchisees. We eliminated everything we could, and most of the entire industry did the same.

According to the Association of National Advertisers (ANA), national spot-TV advertising in six major Florida markets declined in 1987 by almost 12 percent. Further, a study commissioned by several leading advertising association groups and conducted by The Wharton School of the University of Pennsylvania, found there was significant loss in consumer confidence, a curtailment in consumer spending, and a significant loss of jobs as a direct result of the tax. Changing today’s tax treatment of advertising, from the cost of doing business to being taxed as a commodity, would increase rather than abate the current state budget crisis.

In 1987 the world was a lot simpler. We did not have Web sites and Internet communication. There was no such thing as e-commerce. Nobody could imagine social network sites, and all the other new forms of marketing.