MEDIA OUTLETS TO GRAPPLE WITH EVAPORATING CIG ADS: ATTENTION TURNS TO ANTI-TOBACCO EFFORTS, OTHER ADVERTISERS TO PICK UP SLACK
Media companies and event-marketing organizers strove to put the best spin on the impact of last week's historic tobacco settlement-even as they watched billions of dollars in marketing money go up in smoke.
"There will be an impact, but we think only in the short term," said a spokeswoman for the Outdoor Advertising Association of America. "In the long term, we'll replace the lost revenue."
According to OAAA, tobacco marketers spend some $200 million annually on the medium, representing about 10% of total outdoor revenue.
Magazines, too, have been preparing for the inevitability of lost tobacco dollars. The category has been shrinking in recent years, but was still the medium's 12th-largest last year, accounting for $317 million in revenue, according to Publishers Information Bureau.
If cigarette ad imagery is restricted from magazines with 15% or more readership under age 18, magazines could lose up to 50% of tobacco ad dollars, said Rita Cohen, VP-economic and legislative analysis, Magazine Publishers of America.
"However, that number is not exact, because tobacco companies may choose to reallocate some of the money from magazines that don't meet the regulations to those that do," she said.
TIME INC. WOULD BE HARD HIT
Time Inc. would be among the hardest hit since four of its weeklies-Time, People, Sports Illustrated and Entertainment Weekly-were among titles singled out by the Food & Drug Administration for reaching too many underage readers.
Other titles FDA has said reach too many young readers to carry tobacco ads include TV Guide, Cosmopolitan, Rolling Stone, Newsweek, Vogue, Elle, Harper's Bazaar and Popular Science.
What media companies will lose in tobacco spending they may pick up in anti-tobacco money. The settlement sets a $500 million annual budget for anti-tobacco ads.
"Magazines in a perverse way may come out ahead," said James Guthrie, exec VP-marketing and sales, Petersen Publishing Co. Added Catherine Viscardi Johnston, VP-corporate sales, Conde Nast Publications: "I guess that's the booby prize."
Auto racing executives said their sport, a prime promotional outlet for tobacco brands such as Winston from R.J. Reynolds Tobacco Co. and Kool from B.A.T's Brown & Williamson Tobacco Corp., will survive without cigarettes.
"There's no question sports marketing is a valuable tool, and there's no question other companies will step in if tobacco is forced to step out," said Tom Cotter, president of agency Cotter Group, Harrisburg, N.C.
Nascar, which counts Winston as its racing circuit's title sponsor, has been ramping up its marketing over the past seven years. Over 70 Fortune 500 companies have Nascar sponsorships, most of them with individual racing teams.
"It's hard for me to imagine that a company like McDonald's or Coca-Cola won't be in the wings to sponsor the Winston Cup Series and play the kind of role tobacco has played historically," said Alex Nieroth, exec VP-managing director, sports marketing agency Clarion Performance Properties.
Some of the biggest losers in the settlement might be promotion companies. According to a 1994 Federal Trade Commission report, $851 million in tobacco marketing expenditures went to distribution of "specialty items," such as branded shirts and hats.
The point-of-purchase industry, too, is at risk to the tune of $250 million a year, said Jeff McElnea, president-CEO, Einson Freeman, Paramus, N.J.
"It will be a real hardship for any [POP companies] too heavily dependent on tobacco," he said. "That would be anybody who has tobacco accounts for more than one-third of their business mix."
Contributing: Jeff Jensen, Ann Marie Kerwin, Jane Hodges.