The Federal Trade Commission issued a report last week regarding the amounts spent by tobacco companies on advertising and promotion in 2007 and 2008. Perhaps not surprisingly, the amount spent on advertising and promotion by the largest cigarette companies declined by 13% between 2006 and 2007, and another 8% between 2007 and 2008.
Also not surprisingly, the major manufacturers spent most of their promotional dollars on price discounts to retailers and wholesalers. The major manufacturers spent more than 70% of their marketing budgets on price discounts in both 2007 and 2008.
On the other hand, the major manufacturers of smokeless tobacco increased dramatically their spending on advertising and promotion, about 16% more between 2006 and 2007, and about 33% more between 2007 and 2008. Although consumption of smokeless tobacco products also increased during this period, the advertising and promotion of these products increased at a much greater pace.
With the passage of the Tobacco Control Act (and its stringent limitations on tobacco advertising and promotion) in 2009, one would expect that promotional spending by big tobacco will continue to decrease, with price discounts taking an even larger share of promotional spending in the future.