E-Cig Marketing Budgets Growing by More than 100% Year over Year
The second coming of tobacco marketing is pouring millions into adland, a new report confirmed.
Last year, the largest e-cigarette makers spent nearly $60 million combined on advertising and promotion, with marketing budgets at some e-cig companies growing by more than 100% year over year, according to the report, released Monday by Sen. Dick Durbin, the Democrat from Illinois.
Lawmakers are concerned that e-cigarette companies' marketing strategies are targeting young people, a tactic from Big Tobacco's old playbook that anti-smoking advocates spent years trying to stop. The report from Sen. Durbin, who was joined by a consortium of other Democratic members of Congress, urges the Food and Drug Administration to "promptly" issue regulations around the booming e-cig industry. It also calls upon the e-cig makers to refrain from certain kinds of marketing, including radio and TV ads.
E-cigarette revenue has doubled every year since 2010, the report said, with sales expected to hit $2 billion in 2013. But the industry is currently unregulated, allowing manufacturers to advertise their products in any way they see fit, including on TV, where a four-decade federal ban has prohibited cigarette ads.
The new report surveyed eight of the largest e-cigarette companies. Six provided marketing data, which showed they spent a combined $59.3 million on marketing and promotions in 2013. Five companies increased their ad spending by 164% in 2013 compared with 2012. One company boosted its marketing budget by 300%, while another grew its ad spending by 352%, according to the report.
E-cig makers are "using a broad range of marketing techniques employed by traditional cigarette companies to entice young people to use their products," the report says.
The marketing techniques include not only TV, radio and print promotions, but also social media tactics, celebrity endorsements and events, arenas where large numbers of young people can be exposed even if they aren't the primary aim. Lorillard's Blu e-cigs use product placements in movies, the report said. "E-cigarette companies are taking advantage of the regulatory vacuum that exists to market their products to youth," it noted.
E-cigarettes are not intended for children, said Phil Daman, president of Smoke Free Alternatives Trade Association, a trade group that represents the e-cig industry. "We encourage responsible marketing directed to those over the age of 18," he said in a statement. "SFATA does not support, and our industry does not use, youth-oriented product marketing."
A Reynolds American spokesman said in an email that the nation's second-largest tobacco company supports prohibiting youth access to e-cigs.
A spokesman for Altria, the largest tobacco company in the U.S. and maker of Nu Mark e-cigarettes, said in an email that it supports "appropriate marketing regulations which allow e-vapor companies to communicate to adult vapors, respect adult consumer choice, while at the same time reducing exposure of e-vapor marketing activities to unintended audiences."
Companies included in the survey are Altria, R.J. Reynolds Vapor Company, NJoy, Logic, VMR, Lorillard and Green Smoke. One company, Lead by Sales, maker of White Cloud e-cigs, did not respond to the survey questions. Two companies, Altria and Green Smoke, which Altria bought during the survey-process, did not provide complete responses, according to Sen. Durbin's office.
The report does not break out spending by company because the eight companies surveyed were promised confidentiality, a spokeswoman for Sen. Durbin said.