Magazines, RJR fuming over Philip Morris ad pull

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Philip Morris Cos.' move to pull more than $100 million in annual cigarette ad spending from 42 titles drew the condemnation of one rival, possible support from a second and screams from magazines.

"Philip Morris is a painful one for us at the moment," said Bruce Brandfon, ad director at Newsweek. "They advertised responsibly in our magazine." In 1999, Philip Morris cigarette ads netted the title $4.3 million, or 1% of total ad revenues.

An executive at another affected magazine company put it more bluntly: "This is a disaster."

In '99, total cigarette advertising in magazines (not including Sunday titles) was $448.1 million, of which Philip Morris spent 47.4%, or $212.4 million. PM cigarette accounts at 35 of the 40 affected non-Sunday magazines for which there are revenue data totaled $129.6 million, or 44.7%.

PM declined to say what it planned to do with money previously earmarked for ads at the affected titles.

"We anticipate they will spend that tobacco money," said a top executive of one title on PM's list, "in the magazines that have stayed on their schedule."

UNAFFECTED TITLES EAGER

An executive who oversees a number of unaffected magazines said "we're trying to have deeper [PM] investing" in those titles, and "I think everybody's doing the same thing." Newsweek Publisher Carolyn Wall said not including PM ads in copies distributed to high schools would make the title comply with PM's guidelines, and that Newsweek would contact PM on this point in hopes of winning the ads back.

Philip Morris broke more than 30 years of tobacco industry solidarity when it acceded to critics' demands that it pull ads from titles with greater than 15% readership under 18 or more than 2 million underage readers. The company suggested it made a "good faith effort" to meet attorneys general's objections to its ads.

"We are committed to marketing responsibly and one way to affirm that is to see that our ads run in magazines only focused on adults," said Brendan McCormick, Philip Morris' manager of media relations. Ads will be pulled after current contracts running through September expire.

Salting the magazine industry's wounds are complaints that the data on which Philip Morris based its ad decisions are faulty.

QUESTIONS ON DATA

Philip Morris conceded its list, based on separate readership surveys from Mediamark Research Inc. and Simmons Market Research Bureau, didn't include a number of magazines and may not be correct. "We don't believe there is a single source that accurately gauges total audience right now," said Tom Robinson, senior VP-marketing and research at the Magazine Publishers of America.

"We are not happy with the primary use of Simmons and Mediamark, particularly as it relates to the African-American market," said Ed Lewis, CEO of Essence Communications. "We feel their sample is very small in terms of making the final decision, but there's nothing we are going to be able to do about it."

Alain Tessier, CEO at MRI, said he sympathized with Mr. Lewis' concerns and that "the numbers are as good as they are."

Some odd titles appeared on the list of teen reads, such as Meredith Corp.'s Better Homes & Gardens. "We respect any decision they make, but it is sort of a strange choice," said Christopher Little, Meredith's president of publishing. "Clearly the magazine is aimed at an adult audience."

While Philip Morris plans to get better numbers, it decided its ads should be pulled before those statistics were ready.

Brown & Williamson Tobacco Corp. said it would be willing to pull its ads, but only when good teen readership data are available.

That data may not be long in coming. A new Simmons study to measure readership of everyone in a family over 6 years old -- viewed more favorably by the MPA's Mr. Robinson -- is due to be released this summer (AA, May 22).

R.J. Reynolds Tobacco Co., however, won't go along.

The 15% measure "is an arbitrary and capricious standard that ultimately points toward banning cigarette advertising," said Jan Smith, senior director of public relations for the company, and she suggested Philip Morris' willingness to act may have been motivated by a desire to freeze its dominant market share.

"You have to ask in accepting further [ad] restrictions, who does that hurt?" Ms. Smith said. "It doesn't hurt the brand that four in 10 smokers are smoking."

A tobacco analyst said Philip Morris is taking a risk by unilaterally deciding not to advertise in some magazines, but "it is manageable."

"They have the best brand portfolio and the best sales force in the industry," said David Adelman, an analyst with Morgan Stanley Dean Witter. "They can manage putting themselves at a moderate disadvantage. Given they are the industry leader, improving the image of the industry may be more important."

Magazine observers, meanwhile, were left wondering if and when the next shoe would drop. "It's really the precursor to removing cigarette ads from all remaining mass media," said David Verklin, CEO for Carat North America. "Today Rolling Stone, tomorrow it's the world."

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