American Tobacco Firms Hike Marketing Spend 17%

16 June 2003

Ad limitations and falling sales notwithstanding, America’s tobacco firms increased their marketing spend in 2001, new figures show.

According to the Federal Trade Commission, the six largest firms paid out $11.2 billion (€9.5bn; £6.7bn) on advertising and promotions in 2001, a 17% jump from the previous year. By way of comparison, the total was $8.2bn in 1998, the year the industry agreed to curb some marketing in a deal with 46 states.

Some forms of advertising certainly have dropped: newspaper ads were down 38.7% to $31.7 million, magazine ads fell 41.4% to $17.9m, outdoor spend dropped 11% to $8.2m and point-of-sale outlay slipped 18.1% to $62.7m - though direct mail rose 44.2% to $41m.

However, expenditure on retail promotions surged 38% to $4.76bn, and the budget for allowances such as paying stores for prominent shelf display jumped 15% to $4.5bn.

Philip Morris was quick to point out that the cost of product marketing and retailer incentives had gone up, adding that most promotions were targeted at existing smokers. “Traditional brand advertising represented only 8% of the company's total reported expenditures in 2001,” it continued.

Aside from this spend, the six comapanies paid out $79.4m on ads urging children not to take up smoking. The FTC also noted that they made no payments to media firms to feature cigarettes in movies or TV shows.

Data sourced from: Financial Times; additional content by WARC staff