Cigarette promotion, once not quite a $1 million ad class, may seem as much a relic as Peggy Olson’s typewriter. But with the three largest U.S. tobacco organizations entering the market, Big Tobacco is set to once again turn into a significant spender.
The market is projected to approximately double in size this year to an approximately $1 billion market in 2013 from a $500 million market in 2012, and to grow at a 50% compound annual rate within the next couple of years, based on a Citibank report. “It’s a thrilling time to be in U.S. tobacco,” said Citibank analyst Vivien Azer.
R.J. Reynolds Vapor Co., Vuse may next month start marketing in Colorado — the initial state within an final rollout — with print, TV and direct-mail marketing from CHI, London.
Altria, parent company of Philip Morris USA, the nation’s No. 1 tobacco company, is likely to mention its e-cigarette brand at a June 11 investor function. And Lorillard, the third-largest tobacco company in the U.S., will spend $40 million to advertise its e-cigarette brand Blu, this past year over double what it spent on media.
While print ad spending increased 71.9%, in line with the Citibank record, spending on e-cigarette TELEVISION ads increased 17.9% from 2011 to 2012. The increase on the net spending might be a blessing for magazine editors. Tobacco, once one of the biggest advertisers in U.S.
While ads for Lorillard’s Newport and Santa Fe Natural’s American Spirit (a part of Reynolds American) appear in consumer publications, Philip Morris USA no further promotes in publications. This spring R.J.
Tobacco is a huge somewhat uninspiring advertising story because of the regulations and negative belief, said Michael S. Lavery, an analyst for CLSA Americas, but which may be changing with e-cigarettes: “Companies are advertising up to they could before any restrictions might enter into place.”
The continued growth of ad shelling out for e-cigarettes hinges upon how a FDA decides to control the burgeoning class. Reynolds American CEO Daniel Delen stated that a determination was “imminent,” of which point Big Tobacco can again be turned from TELEVISION.
Gregory Conley, offer legislative director for the Consumer Advocates for Smoke-Free Alternatives Association, said that any regulations the FDA may attempt to enforce will likely create a court challenge, hence preventing any regulations from going into effect next year. “There positively can be an chance to get back in media markets,” he added.
Usage of previously unavailable media doesn’t mean marketing e-cigarettes will undoubtedly be easy. Big Tobacco needs to deal with a lengthy reputation of being disingenuous.
The inherent difficulty in trying to market e-cigarettes being a “more healthful” alternative to traditional cigarettes is that Big Tobacco could bring critique upon it self. Therefore, cigarette businesses have already been careful to market e-cigarettes simply to existing adult smokers buying a viable option to traditional smoking.
Blu deftly sailed this problem a year ago using its “Rise From your Ashes” industrial. In the location, formerly popular actor Stephen Dorff called because it does not have any ash or “offensive odor.” Blu a “smarter” option to smoking
When asked whether Vuse would be sold as an anti-smoking product, Mr. Herko said, “No, friend. . And we’re maybe not making any health claims.”
Over 40 of smokers have tried e-cigarettes, but about 800-930 go back to exclusively smoking old-fashioned cigarettes, in accordance with Brice O’Brien, the company’s exec VP-consumer marketing, therefore the importance, for the time being, is going to be on giving an e-smoking knowledge that accurately replicates the feeling of smoking a real smoke. Hence RJR’s “Promise Landed” tag-line for Vuse.
“For the first many years it’s about product differentiation and innovation,” said Brice O’Brien, RJR’s exec VP-consumer marketing. — it’s difficult to speculate.”
Striking a different route from its competitors is likely to be critical to Reynolds’ success with Vuse, according to CLSA’s Mr. Lavery. “I think … it’s planning to be described as a little tougher for Reynolds and Altria to play catch-up with no product differentiation,” he said.
In 2011, press spend was just $26.9 million. Those pounds shifted to promotional efforts including activities, coupons and retail display.
Major Tobacco undoubtedly won’t achieve its previous spending peak, but moving smokers to e-cigarettes has captivated passion in a previously dormant marketing segment. O’Brien said. “You possess a large and substantial consumer base. They want to get this change.”