Tobacco Promotion Spending Up, Sales Down: FTC
Top tobacco companies spent a record $11.2 billion on marketing in 2001, up 17%, even though cigarette sales fell 3.8% to 398.3 billion cigarettes, the Federal Trade Commission reported last week.
Spending jumped 38% for retail promotions and 44.2% for direct mail, while print ad spending plummeted 41%.
Most of the money funded retail promotions such as multi-packs and premiums and trade allowances. The top six tobacco marketers spent $4.76 billion, about 45% of their budgets, on retail value-added offers ranging from multi-pack discounts to premiums with purchase. That’s up 38% from 2000, the FTC reports. Meanwhile, P-O-P spending fell 18.1% to $284.3 million.
Trade allowances to retailers rose 13.8% to $4.45 billion, nearly 40% of total marketing budgets. Direct mail spending rose 44.2% to $133.9 million, and marketers spent $79.4 million on anti-smoking efforts targeting kids and parents.
Meanwhile, tobacco brands spent $333.4 million on non-retail distribution of specialty items—via direct mail and at events, for example. That’s up only 1.7% over 2000, per the FTC. Coupon spending fell 14.6% to $602 million, and sampling fell 23.1% to $17.2 million. Marketers gave away 3.9 billion cigarettes in 2001, the first year the FTC asked for that data.
Entertainment and sports sponsorships were fairly flat (up 0.9%) at $312.4 million, and tobacco companies reported that they didn’t solicit or allow any product-placement deals in movies or TV shows in 2001.
Ad spending fell for print ($204.6 million, down 41%) and outdoor ($8.2 million, down 16.3%). Brands spent less than $1 million on Internet ads.
The data comes as lawmakers mull marketing regulations for reduced-risk cigarettes, and whether to give the Food & Drug Administration authority alongside the FTC to oversee marketing (Xtra, June 12). The FTC has collected annual spending and sales data from tobacco marketers since 1963.
