TOBACCO TALKS COULD BRING $1 BILLION MEDIA WINDFALL: ANTI-SMOKING BUDGET WOULD RIVAL WHAT P&G SPENDS ON TV

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While tobacco liability settlement talks probably will do away with certain advertising dollars, reports that the proposed deal will include $1 billion in annual media spending for anti-smoking ads would be one heck of a consolation prize.

That's comparable to what Procter & Gamble Co., the nation's largest advertiser, spends annually on TV time.

The talks between tobacco marketers, state attorneys general and select health groups are far from resolved because of other issues. But the prospect of another $1 billion in ad spending directed at children has some agency and media executives wide-eyed.

"Is that at rate card?" asked Jon Mandel, jokingly.

HOW TO SPEND $1 BIL?

Mr. Mandel, senior VP-director of national broadcast at Grey Advertising, New York, said the impact of the mandated effort largely depends on how it's divided and where it's spent.

For example, Sports Illustrated might lose a lot of money if tobacco companies no longer advertise in the magazine, but Sports Illustrated for Kids could get a huge boost from the anti-smoking ads.

"I would imagine that to have national reach, most [of the PSAs] would be spent on the national broadcast networks," said Marvin Goldsmith, president of sales and marketing for the ABC Television Network. "It could have a huge impact."

Several people close to the tobacco talks say details of how the $1 billion would be spent haven't been negotiated yet, but half the monies would likely be spent by the states involved with any national buys and creative overseen by an independent board.

The $1 billion would be spent annually for several years with future spending rising or falling depending on the campaign's success in reducing underage smoking, according to those familiar with the talks.

CHANGING IMAGERY

Tobacco companies last year spent about $400 million in measured media advertising, and far more on promotions and sponsorships that would be cut back under the agreement. Cigarette marketers have agreed to follow the terms of the proposed Food & Drug Administration restrictions and also remove people and cartoon characters from ad imagery.

The big beneficiary would be broadcasters, who get no tobacco advertising dollars now. Because the anti-smoking campaign will be aimed at people under 18, much of the spending is expected to be for media reaching that target audience.

John Popkowski, exec VP-advertising sales, MTV Networks, cautioned that the anti-smoking ad copy would have to be approved by the media before being used.

DIVERSIFIED PRODUCTS

Mr. Popkowski referred to the fact that a company such as Philip Morris Cos. is both a marketer of cigarettes-including the Marlboro brand-as well as one of the biggest ad spenders on TV for other products. TV networks would be loath to offend the giant marketers.

However, if Philip Morris is part of the tobacco settlement, it would not likely oppose the PSAs.

The size of the buys and the targeting at one specific group immediately raised some fears that the effect could be to drive up prices for other advertisers trying to reach the same audience.

"Much of the impact depends upon how much is spent where," said Alan Gottesman, analyst and managing director at West End Communications.

"You have about $27 billion spent on TV," said Mr. Popkowski. "Let's say you add half a billion a year on TV in total for the anti-tobacco ads. Will that have an impact? Sure. A significant impact? No."

He said, however, that if the money was highly targeted, such as putting a lot of it on the MTV Networks, "Yes, that could have a significant impact in driving rates up."

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