Trends in Cigarette Marketing Expenditures, 1975-2019: An Analysis of Federal Trade Commission Cigarette Reports.

Abstract

With tightened regulations on cigarette marketing and decreased smoking, the major tobacco companies quickly shifted their marketing expenditures in recent decades to maintain profits. We investigated cigarette marketing expenditures in the United States from 1975 through 2019 to examine the trends in cigarette marketing expenditures over the past 45 years. Cigarette marketing expenditure data were obtained from the Federal Trade Commission (FTC) cigarette reports, 1975-2019. Based on individual expenditure categories included in the FTC reports, we created seven aggregate categories for marketing expenditures: Retail; Print; Out of home; Free tobacco products and gifts; Sports, public entertainment, and sponsorships; Telephone and digital; and Other. Dollar amounts and percentages by category were examined to assess trends in marketing expenditures. Cigarette marketing expenditures increased since 1975 and peaked in 2003 at $21.1 billion (adjusted dollars); afterward, they declined dramatically until 2010 and remained stable at around $9 billion through 2019. While all other expenditures decreased, retail expenditures increased, comprising more than 50% of expenditures in 1988 and reaching about 98% in 2019. In the retail category, tobacco companies spent the most on promotional allowances, coupons, and retail-value-added bonuses between 1988 and 2003, after which price discounts dominated retail spending. Overall, cigarette marketing expenditures peaked in 2003 and retail first became the leading category in 1988. Tobacco companies adapted their marketing strategies in retail and allocated most of their retail spending on price discounts since 2003 to lower cigarette prices. The major US tobacco companies directed the bulk of their vast spending on the retail environment since 1988. Moreover, they have dramatically shifted their marketing strategies within the retail category from cigarette advertising before 2003 to customer-directed price discounts since then. This shift may imply a change in focus from recruiting new smokers to retaining current smokers, in response to tax increases and government regulations. Accordingly, restrictions on price-related promotions in retail and nontax strategies should be implemented to counter tobacco companies' marketing efforts in retail.