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Ad Money Moves from Billboards to Print

The Master Settlement Agreement (MSA) between the States’ Attorneys General and the tobacco industry requires the elimination of certain types of outdoor tobacco advertisements, including those found on billboards, in arenas, stadiums, shopping malls, video arcades and advertisements on private or public transit vehicles and transportation waiting areas. The MSA also forbids tobacco manufacturers from "directly or indirectly targeting youth in their promotional activities, or engaging in activities with the primary purpose of initiating, maintaining, or increasing youth smoking."

In advertisements taken out by Philip Morris in March of 2000, the company stated: "Perhaps the most visible change is the removal of tobacco advertising from billboards in the United States. The goal of this provision is to limit the exposure of kids to tobacco advertising, a step defined by the public health community as a way to help reduce the incidence of youth smoking."

This analysis examines cigarette advertising expenditures in January to September 1998 -- the three calendar quarters preceding the MSA -- and January to September 1999. The purpose is to see how cigarette advertising to youth changed after the MSA was implemented.

Cigarette marketing to teens through magazine advertising increased after the Master Settlement Agreement took effect in November 1998. This conclusion is based on analysis of advertising expenditures in 29 magazines for which youth readers (aged 12-17) make up at least 5 percent of the magazine’s total readership. The analysis focuses on magazines with more than 15 percent youth readership, the level used by the Food and Drug Administration in establishing advertising restrictions.

• Cigarette advertising expenditures in magazines with more than 15 percent youth readership increased 33.1 percent after the MSA.

Nineteen of the 29 magazines had more than15 percent youth readers. Cigarette companies spent $119.9 million on advertising in these magazines in the first nine months of 1999. This amounts to more than a third of their total magazine advertising expenditures for the period ($314.0) million. Cigarette advertising in these 19 magazines after the settlement was almost $30 million higher than it was in the corresponding period in 1998 ($90.2 million).

In the first nine months of 1999, the ten magazines with 5-15 percent youth readership had $72.9 million in cigarette advertising. This is an increase of $24.4 million over the level for the corresponding period in 1998.

Much of the increased advertising in youth magazines came from the brands that have been recognized as the brands most preferred by youth. But several other brands also stepped up advertising strongly in magazines with more than 15 percent youth readership.

• Marlboro spent $26.1 million in the first nine months of 1999 on advertising in magazines with more than 15 percent youth readers. That is the most of any single brand, and a $5.2 million increase over 1998.

During the first nine months of 1999, the five cigarette brands recognized in previous research as the leading youth brands spent a combined $71.1 million on advertising in magazines with youth readership of more than 15 percent. Marlboro, Winston, and Kool are the three top spenders. Kool increased advertising by $4.3 million, or 75.8 percent, relative to the pre-MSA period.

• Generic brands Doral and GPC dramatically increased their advertising in the 19 youth magazines. Doral nearly tripled its expenditures, from $3.3 to $9.5 million.

Basic, the third major generic brand, spent much more than Doral and GPC in 1998 in magazines with more than15 percent youth readership. Doral far surpassed Basic in the first nine months of 1998, however, and GPC substantially narrowed the gap with Basic. The three brands combined increased their spending in these magazines by 64.5 percent from 1998 to 1999.

• Salem, Parliament, and Benson & Hedges all had major increases in advertising in youth magazines after the MSA. Salem jumped from $0.6 million in the first nine months of 1998 to $4.3 million in the corresponding period of 1999.

Among the brands examined, only four spent less on advertising in magazines with heavy youth readership after the MSA. Only one of the four, Winston, has traditionally had a major share of the youth market, and Winston advertising declined by less than 2 percent.

Grouping these brands by manufacturer shows that all four companies increased their advertising in youth magazines, but to different extents.

• Brown and Williamson increased its advertising in magazines with more than 15 percent youth readership by 72.1 percent, from $9.0 to $15.5 million.

RJR had the biggest increase in absolute dollars, at $11.0 million (30.9 percent). Philip Morris expenditures increased by $5.5 million. Lorillard, with just one brand in the group examined (Newport), increased its spending by $0.8 million, or 23.0 percent.

Only three of the 19 magazines with more than 15 percent youth readership saw a decline in cigarette advertising between the first nine months of 1998 and the first nine months of 1999. The other 16 had increases averaging 43 percent.

• Cigarette advertising in Essence more than doubled. Sport, Spin, Soap Opera Digest, and Hot Rod all had increases of more than 50 percent.

The increase in cigarette advertising was apparently financed by the funds that would otherwise have been spent on billboard advertising.

• Total cigarette advertising expenditures — including magazines, newspapers, and outdoor advertising — were $350.8 million in the first nine months of 1999. Despite the ban on most outdoor advertising, expenditures declined less than 1 percent from the $353.1 million spent in the corresponding period of 1999.

Outdoor advertising expenditures plummeted after the MSA took effect — an expected result, since the MSA banned most forms of outdoor advertising. From a level of $118.6 million in the first nine months of 1998, expenditures fell to just $8.1 million in the corresponding period of 1999.

Magazine advertising increased correspondingly. Cigarette advertising expenditures in magazines climbed from $225.8 million to $315.1 million. Advertising in newspapers and Sunday magazines also increased dramatically, from $8.8 million to $28.8 million. The net result was to maintain cigarette advertising expenditures at the pre-MSA level.

The four major tobacco companies all made substantial increases in total magazine advertising in magazines. Brown & Williamson more than tripled its magazine advertising, while Lorillard and RJR increased magazine advertising by more than a third.

Only Brown & Williamson showed a net increase in total media advertising, with an 88.6 percent increase. Reduced outdoor advertising offset the increases in magazine advertising for the other three companies, leading to net reductions in total advertising.

• Kool, Marlboro, and Winston reached over 89 percent of teens, 12-17, five or more times in 1999 based on their magazine advertising schedule. ^{1, 2}
  

• Eight of the top ten brands reached over 70% of teens, 12-17, five or more times in 1999 based on their magazine advertising schedule. ^{1, 2}
  

• Based on its magazine advertising schedule in 1999, Marlboro, the favorite brand of teens, had an effective 5+ reach among 89 percent of teens. ^{1, 2}
  

• Pre-MSA, Newport reached 43% of teens, 12-17, five or more times in the first three quarters of 1998. That number jumped to 68% post-MSA, in the first three quarters of 1999. ^{1, 2}
  

• Pre-MSA, Kool reached 59% of teens, 12-17, five or more times in the first three quarters of 1998. That number jumped to 84% post-MSA, in the first three quarters of 1999. ^{1, 2}
  

• Pre-MSA, Camel reached 65% of teens, 12-17, five or more times in the first three quarters of 1998. That number rose to 77% post-MSA, in the first three quarters of 1999. ^{1, 2}
  

• In 1999, ten out of the top ten tobacco brands advertised in magazines that have higher than 15 percent teen, 12-17, composition. ^{1, 2, 3}
  

• In 1999, Winston, Camel, Kool, Virginia Slims, and Benson & Hedges advertised in Vibe, a publication with over 42 percent teen, 12-17, composition. ^{1, 2, 3}

• Kool, Winston, Newport, Marlboro, and Doral each spent over 40 percent of their respective 1999 magazine media budgets in publications with higher than 15 percent teen composition. Camel spent 33 percent of its total budget on magazines with a 15 percent or higher teen composition. ^{1, 2, 3}
  

1. 1998 Simmons Teen-Age Research STARS

2. 1998 Simmons Spring SMM

3. 1999 Competitive Media Reporting

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