Tobacco Marketers Lay Out $12.5 Billion for Ads/Promos
The six largest cigarette makers spent a record $12.5 billion on advertising and promotions in 2002.
The $12.5 billion marks an 11% increase over the $11.22 billion spent 2001, the most recent figures available from a Federal Trade Commission study released Friday.
The expenditures were the most ever reported to the commission since it started its annual report on cigarette reporting back in 1963 even though combined spending on newspaper, magazine, outdoor, P-O-S and direct mail advertising declined from the previous year. The number of cigarettes sold or given away dropped by 3.7%.
The largest single category of expenditures, about 63%, or $7.9 billion, went to retailer and wholesaler discounts, who were expected to pass the savings on to consumers. The second largest category, or $1.3 billion, went to promotion allowances including paying retailers for prime shelf space, the FTC said.
Offers for value ads, or “buy two packs, get one free” type offers garnered $1.06 billion and another $24.7 million went to offers that included a premium other than cigarettes like a free T-shirt. Some $49.4 million was spent on selling or giving consumers non-cigarette items, such as branded baseball caps. The companies spent $28.8 million on handing out cigarette samples to consumers, including coupons. Spending on “discount” coupons was $522.2 million in 2002. The event category picked up $219 million spent on events in adult-only venues such as bars and concerts, and another $34 million on general-audience events such as fishing tournaments. Another $54.2 million was spent on sponsoring sports teams or individual athletes.
Magazine advertising dropped to $106.9 million in 2002 from $172.9 million in 2001. P-O-S ads were $260.9 million in 2002 and outdoor was $24.2. Another $111.2 million was spent on direct mail, $940,000 on Web sites and $679,000 on telemarketing.
The companies also reported that they did not solicit product placement or pay any money or other compensation to have a cigarette appear in any movie or TV show in 2002.
The report caused anti-smoking advocates to say the lower prices and prime shelf space were aimed at getting young people to buy cigarettes.
The companies also spent $74.2 million in 2002 on ads directed at youth and their parents that were intended to reduce smoking in young people.
The companies surveyed were Brown & Williamson, Commonwealth Brands, Inc., Liggett Group, Inc., Lorillard Tobacco, R.J. Reynolds Tobacco Co. and Altria Group, Inc.
