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Latest data: Tobacco companies quadruple in-store ad spending

The latest report on Big Tobacco’s marketing reveals where the industry is intensifying its focus: ads in point-of-sale locations like convenience stores, gas stations, grocery stores and pharmacies. (Yes, pharmacies still sell cigarettes.)

Recent data from the Federal Trade Commission show that 2014 spending on point-of-sale materials—cigarette advertisements appearing inside stores selling tobacco—more than quadrupled in one year from $55.7 million to $238.2 million.

That sum is only one small part of the billions of dollars in marketing budget going to retail locations. Why does this matter? Exposure to tobacco companies’ retail marketing—not just advertisements, but things like discounts and product displays behind check-out counters—is linked to impulse purchases, an increased likelihood of young people starting to smoke, and decreased success for people attempting to quit. In fact, about one-third of teenage experimentation with smoking can be directly attributed to tobacco advertising and promotional activities in retail environments.

The top four marketing spending categories are all tied to point-of-sale, and together they account for more than 96 percent of Big Tobacco’s $8.5 billion annual marketing expenditure.

#4: Point-of-sale materials

The $238.2 million tobacco companies spent on point-of-sale materials in 2014 marks the biggest growth of any spending category for the year. In-store advertising now makes up more than four times the amount of money the industry spends on magazine and outdoor advertising combined.

#3: Coupons

Coupons received double the amount of money in 2014 compared to the year before. Spending went from $248.8 million in 2013 to $521 million in 2014, making it their third biggest expenditure. More investment in coupons and point-of-sale materials meant Big Tobacco spent less on discounts than the year before (see #1 for what “less” looks like).

#2: Promotional allowances

Promotional allowances that provide incentives for the placement of cigarettes, including on shelves or displays, has long been a top spending category. Companies spent $623.6 million for promotional allowances to wholesalers and retailers in 2014, making up 7.4 percent of their total spending.

#1: Discounts to retailers and wholesalers

Discounts—money paid to retailers and wholesalers to lower consumer prices—have far outpaced all other expenditure categories every year since 2002. In 2014, discounts made up 80 percent of all marketing spending at $6.8 billion. That includes $5.56 billion paid to retailers and $1.20 billion going to wholesalers.   

Point-of-sale promotions have been the industry’s top marketing strategy for nearly 30 years, receiving even more investment after the 1998 Master Settlement Agreement restricted marketing tactics, such as billboard and transit advertisements. States, localities and businesses have taken action to restrict point-of-sale promotions or get tobacco out of inventories, but there is much more to do.

A new truth® and campaign, called Take Back the Shelves, is asking young people to submit drawings of items they think belong behind pharmacy checkout counters in place of tobacco products. The artwork will be posted to social media with the hashtag #TakeBackTheShelves, in an effort to put pressure on pharmacies to remove tobacco from their shelves.