The US Supreme Court’s overturn of the Chevron ruling could prove to be a double-edged sword for the advertising industry.

The 1984 Chevron v. Natural Resources Defense Council ruling set a precedent for administrative law in the U.S. by giving agencies the final say in interpreting gray areas of the law—ultimately helping shield agencies from lawsuits from industry groups. Repealing the rule will subject agencies to greater scrutiny and likely make many federal regulations—supported by both Republicans and Democrats—vulnerable to aggressive legal challenges.

The executive branch’s decisions and plans — such as limits on power plant pollution, health care regulations, net neutrality and a ban on non-compete clauses — will now be more vulnerable to being overturned by courts.

The decision came from what some have called “the most pro-business Supreme Court in history” in a 6-3 vote last week, with all three liberal justices on the court dissenting from overturning the Chevron ruling. Reversing that doctrine has long been a goal of conservatives.

In a 35-page majority opinion, Chief Justice John G. Roberts Jr. argued that Chevron had wrongly forced courts to abandon their basic duty to interpret the challenged law and instead unconditionally defer to bureaucrats.

The ruling marks a significant change in the regulatory landscape as a whole. As Stuart Benjamin, a law professor at Duke Law School, says: “Reduced deference to agency interpretations will make it less likely that a given agency decision will apply to regulated entities. This will increase uncertainty because relying on agency regulations will become a riskier proposition.”

But for businesses, including those in marketing, advertising and media, the ruling presents both potential opportunities and possible challenges.

New obstacles for the advertising industry

For the advertising industry, the new level of uncertainty in the regulatory environment creates incentives for flexibility and caution.

“The regulatory environment will likely become more complex, requiring us to remain agile and responsive to new regulations and interpretations,” says Brian Town, CEO and founder of marketing agency Michigan Creative. “Ensuring compliance will be key, and our strategies must be agile to quickly adapt to these changes.”

Town adds that his company, Michigan Creative, “will have to remain extremely vigilant and flexible.”

Brand-agency relationships and business models may also become a critical area of ​​focus. As Alan Murdock, founder of marketing and media production firm Murdock Media, notes, “many companies have moved marketing and advertising more in-house and are creating less work through agencies.”

Now, he suggests, Chevron’s reversal could create new incentive structures for brands. “I suspect we’ll see (marketing) companies interested in challenging FTC decisions and policies that use outside agencies to push the boundaries of what’s allowed.”

Of course, marketing and media agencies can also be drawn into cases against their clients, which increases the need for vigilance. “The changing landscape will force CMOs and agencies to stay ahead of trends in controversial issues or lawsuits involving their business clients,” says Baruch Labunski, CEO of SEO marketing agency Rank Secure.

He argues that it is likely that future legal challenges to the existing rules will seek to hold advertising and marketing organisations accountable to some extent.

Labunski predicts the industry will need to invest in more advocacy to protect itself in the face of a more contentious climate. “Marketers and advertisers will take on a bigger lobbying role as corporations push for regulatory change,” he says.

The Path to Empowerment?

Of course, not everyone sees the Chevron overturn as a risk for advertisers and marketers.

First, the decision could allow businesses—including marketing and media organizations—to more effectively challenge regulatory overreach. Ken Nahigian, co-founder of the Washington-based think tank Balancing Act Project, sees this as a net positive: “It puts the power in the hands of regulated entities to question whether their regulators have the authority to make rules that affect them.”

“Before this decision,” Nahigian continues, “if a marketing or advertising company was adversely affected by a new rule and the company believed that the agency that created it did not have the authority to do so, there was not much the company could do to challenge the rule in court because the agency was given the benefit of the doubt—or deference. After today, the company will be able to challenge the rule, and the courts will decide whether or not the agency did have the authority. This will lead to a more thoughtful and collaborative process for regulating industries.”

Nahigian’s organization, the Balancing Act Project, advocates “for Congress to give final approval to significant regulations by federal agencies that affect American industry and its consumers.”

Even Rank Secure’s Labunski, who acknowledges that adland could potentially be at risk under the new ruling, agrees that companies will likely take advantage of the ability to challenge agency decisions in court. The move, he says, “removes a lot of power from government agencies that regulate companies… It also gives companies more leverage in court to defend themselves against overreaching regulations, because a judge can rule on a case rather than dismiss it out of deference to the agency that issued the regulation.”

Anticipating future lawsuits

Of course, legal challenges to specific regulations may prove more or less beneficial to the advertising and marketing industry as a whole.

For example, the FTC’s decision to ban noncompete agreements in employment contracts will likely face immediate legal challenges. The ruling on that regulation will have significant implications for adland, regardless of how it pans out.

“If this is challenged in court and overturned, it could help agencies retain top talent, although it could have a bigger impact on the engineering and design departments of … corporations and businesses,” Murdock says.

However, “if the FTC’s denial-of-compete order is challenged in court but upheld, it could significantly increase the level of competition for products and services, which would increase advertising and marketing opportunities but make doing so more difficult as creators compete for position.”

Murdock also predicts legal challenges related to the use of AI in marketing and advertising, as well as various consumer protection regulations – all of which could have a knock-on effect on marketing and media ecosystems.

And by Murdock’s estimate, it won’t be long before we see a reaction to the Chevron repeal in the form of, you guessed it, marketing. “Anytime there’s a change this big … organizations (are) going to react to it. We’re likely to see political and advocacy marketing around this particular decision, with calls for new legislation to speed up the introduction of federal agency recommendations into law.”

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