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Anne Landman's Collection

Product Movie Placement

Date: 19000000 (estimated year 1983)
Length: 5 pages
680118048-680118052
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Abstract

This report from Brown & Williamson (B&W) describes the mechanism through which movie stars were recruited to use specific cigarette brands in their films in exchange for money and gifts.

The report explains the benefits of movie placement, and how cigarette companies use stars and their images to subtly market cigarettes through film:

"Placement of signage/product in movies allows BWT to receive extensive exposure at minimal costs..." and,

"Product usage/association with a specific star provides exposure and linkage with a star's personality/character. Stars tend to set trends, e.g., disco dancing with 'Saturday Night Fever...Association with a specific star's image can enhance/build a brand's personality -- more so than traditional media."

Movie placement also allows tobacco companies to "reach smokers who are light readers."

One "con" listed to placement of cigarette brands in the movies is that it "could be construed as aiding and abetting tax evasion--primarily because AFP [the promotion company in charge of placing the product] has been making payments in cash and gifts, rather than by check." Another "con" is that the cigarette companies could be required to place a health warning in the film...an indication that the cigarette companies took advantage of a situation in which their products could be freely promoted to the public without a health warning.

The five-page report recommends that the company continue its program of product placement in movies, even though the company risks adverse publicity by doing so. In a section entitled "Rationale," the report minimizes the risk to itself, saying any adverse publicity would be shared by many companies, and not just them:

"Adverse publicity, if any, will be leveled against entire industry, or all packaged goods advertisers who use this medium...not just BWT. Thus, the potential for embarassment to BWT specifically, is limited."

This document's historical significance is that it shows how cigarettes were placed in movies without leaving a paper trail, e.g. by "making payments in cash and gifts, rather than by check," and shows clearly how fully utilizing a new route of promotion (and beating the compeition in doing it) became the prime focus of cigarette companies, to the detriment of public health.

Fields

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BACKGROUND

A. Industry practice

1. BWT [Brown & Williamson Tobacco Co.] has been utilizing a firm (Associate Film Promotions) to place product in movies and negotiate product usage arrangements with specific starts. For this, we pay AFP $120M/year.

2. PM has extensive involvement in this area, and as best as we can deterine, they utilize an employee located in California.

3. RJR uses a firm similar to AFP for their product placement activities.

B. Value of Placements

1. Placement of signage/product in moves allows BWT to receive extensive exposure at minimal costs. For example, the S. Stallone arrangement was analyzed on a cost per thousand basis--the resulting estimate CPM [cost per thousand], not counting sydications, is $30.00, which compares favorably with that of cinema advertising ($28.00).

Product usage/association with a specific star provides exposure and linkage with a star's personality/charater. Stars tend to set trends, e.g. disco dancing in "Saturday Nigh Fever."

III. Key Issues

A. Should BWT continue with this program?

Pros

--Can be an efective alternative medium --Can be cost effective if movie is successful --Allows BWT to reach smokers who are light readers --Association with a specific star's image can enhance/build a brand's personality -- more so than traditional media.

Cons

--Potential for adverse publicity --Could be construed as aiding and abetting tax evasion -- primarily because AFP has been making payments in cash and gifts, rather than by check. --Could be required to include a warning notice.

...IV. RECOMMENDATION

We recommend that BWT continue with a moditifed version of this program ...

V. RATIONALE

Adverse publicity, if any, will be leveled against entire industry, or all packaged goods advertisers who use this medium, not just BWT. Thus, the potential for embarassment to BWT specifically, is limited.

B. Our competitors are moving into this potentially effective marketing area more heavily. If we are not involved, our competitors (especially PM) would have a significant edge.

VI. PROPOSED PROGRAM

A. Concentrate our resources on special movie placements where a star actually smokes our brands in a manner clearly visible to viewers and where our presence in the movie is more apparent, e.g., Budweiser in "North Dallas Forty," Marlboro in "Apocalypse Now," or KOOL with Sylvester Stallone. For these efforts, we will be prepared to pay $100M-$250M/movie, depending on star involvement and quality of movie...

B. For each placement, we will have a written contract directly with the studios. The contract will specify how our brands will be treated in each movie. Pay 20% down and the balance 80% payable upon proof-of-placement, i.e., actual screening of film. Payment will be made directly to studio by check.

C. Continue to pay AFP $120M/year retainer fee in return for representing B&W exclusively in tobacco category and arranging special placements with major movie studios/stars. In addition, we will pay AFP a commission of $10M for each special placement with a major star...

Company
Brown & Williamson
Author
Presumed corporate author, Brown & Williamson
Recipient
Presumed corporate recipient, Brown & Williamson
Region
United States
Type
REPT, REPORT, OTHER
REPORT
Litigation
10004026
10004026 02170
10004026 13816
Named Person
Stallone, Sylvester (Movie actor)
Accepted $500,000 for cigarette placement in various movies (BW 690132319)
Operation/Project
Product Placment in movies
Named Organization
MGM, Metro Goldwyn Mayer
BWT, Brown & Williamson Tobacco
Philip Morris
AFP, Associated Film Promotions
R.J. Reynolds
Subject
Smoking in the movies
promotional campaign
promotions
mass media
advertising activity
advertising expenditure
advertising medium

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Page 1: 0000268413
• ,L • :I__ L -- le A, REVIEHjCORPORATE POLICY REGARDING MOVIE pLACEMENTS, RECOMMEND "INTERNAL CONTROL" STEPS TO BE TAKEI~ IF PROGRAM IS CONTINUED. IN~HT OF--AUI~T~ EPORT, O~ w~ ~D Q~
Page 2: 0000268413
AI* INDUSTRY PRACTICE Is~ll~"~'~/sl~#'" ~.. ~WT HAS BEEN UTILIZING A FIRM (A~,sOCIATED FILM PROMOTIONS) TO pLACE PRODUCT~ IN MOVIESJJ~.f~/~ AND NEGOTIATE PRODUCT USAGE ARRANGEMENTS H =- rvf~. 1 WITH SPECIFIC STARS, FOR THIS. WE PAY AFP $120M/YEAR /~r ~" .-~ ~-,#~ t~-,c~. PM HAS EXTENSIVE INVOLVEMENT IN THIS AREA. AND AS BEST WE CAN DETERMINE. THEY UTILIZE AN EMPLOYEE LOCATED IN CALIFORNIA ~#~"~"'~- 3, RJR USES A FIRM SIMILAR TO AFP FOR THEIR PRODUCT PLACEMENT ACTIVITIES, VALUE~OF PLACEMENTS 4 I, PLACEMENT OF SIGNAGE/PRODUCT IN MOVIES ALLOWS BWT TO RECEIVE EXTENSIVE EXPOSURE AT MINIMAL COSTS, FOR EXAMPLE. THE S, STALLONE ARRANGE- .., ~ F-/&p--~:~/p6/l~~_ MENT WAS ANALYZED ON A COST PER THOUSAND ~,~#'/ BASIS - THE RESULTING ESTIMATED CPM, NOT COUNTING SYNDICATIONS. IS $30,00. WHICH COMPARES =AVORABLY WITH THAT OF CINEMA ADVER- TISING ($28,00), PRODUCT USAGE/ASSOCIATION WITH A SPECIFIC STAR PROVIDES EXPOSURE AND LINKAGE WITH A STAR'S PERSONALITY/CHARACTER, STARS TEND TO SET TRENDS~ E,G. DISCO DANCING WITH "SATURDAY NIGHT FEVER". l=
Page 3: 0000268413
! Ill. _!" A, SHOULD BWT CONTINUE WITH THIS BI PROGRAM? PROS CAN BE AN EFFECTIVE ALTERNATIVE MEDIUM, CAN BE COST EFFECTIVE IF MOVIE IS SUCCESSFUL, ALLOHS B~T TO REACH SMOKERS WHO ARE LIGHT READERS, ;! ASSOCIATION WITH A SPECIFIC STAR'S IMAGE CAN ENHANCE/BUILD A BRAND'S PERSONALITY - MORE $0 THAN TRADITIONAL MEDIA, CONS POTENTIAL FOR ADVERSE PUBLICITY,:~: ~ c##~¢/~'~ COULD BE CONSTRUED AS AIDING AND ABETTING TAX EVASION - PRIMARILY BECAUSE AFP HAS BEEN MAKING PAYMENTS IN CASH AND GIFTS~ RATHER : THAN BY CHECK, COULD BE REQUIRED TO INCLUDE A WARNING NOTICE, :i [F WE CONTINUEj CAN THE CONTROL WEAKNESS NOTED IN THE AUDIT REPORT BE CORRECTED? r C~ :, 0
Page 4: 0000268413
IV, VI W~ RECOMMEND THAT BWT CONTINUE WITH A MODIFIED VERSION OF THIS PROGRAM AND REVISE OUR METHOD OF PAYMENT TO ELIMINATE THE CONTROL WEAKNESSES IDENTIFIED, AI ADVERSE PUBLICITY, IF ANY, WILL BE LEVELED AGAINST ENTIRE INDUSTRYj OR ALL PACY'J~GED GOODS ADVERTISERS WHO USE THIS MEDIUM, NOT JUST BWT, THUS, THE POTENTIAL FOR EMBARAGSMENT TO BWT SPECIFICALLY, IS LIMITED, BI OUR COMPETITORS ARE MOVING INTO THIS POTENTIALLY EFFECTIVE MARKETING AREA MORE HEAVILY, IF HE ARE NOT INVOLVED, OUR COMPETITORS (ESPECIALLY PM) WOULD HAVE A SIGNIFICANT EDGE, CI THE CONTROL WEAKNESS CAN BE CORRECTED AS NOTED IN THE PROPOSED PLAN BELOW, C5 O~ pa pa O~ 61 p~
Page 5: 0000268413
VI, PROPOSED PROGRAM A. CONCENTRATE OUR RESOURCES ON SPECIAL MOVIE PLACEMENTS WHERE A STAR ACTUALLY SMOKES OUR BRANDS IN A MANNER CLEARLY VISIBLE TO VIEWERS AND WHERE OUR PRESENCE IN THE MOVIE IS MORE APPARENT, WITHOUT COMMERCIALIZING THE MOVIE, E.G. BUDWEISER IN "NORTH DALLAS FORTY", MARLBORO IN "APOCALYPSE NOW", OR K00L WITH SYLVESTER STALLONE. FOR THESE EFFORTS, WE WILL BE PREPARED TO PAY $100M- $250M/MOVIEj DEPENDING ON STAR INVOLVEMENT AND QUALITY OF MOVIE, I.E. A OR B. BI FOR EACH PLACEMENT, WE WILL HAVE A WRITTEN CONTRACT DIRECTLY WITH THE STUDIOS. THE CONTRACT WILL SPECIFY HOW OUR BRANDS WILL BE TREATED IN EACH MOVIE. PAY 20~ DOWN AND THE BALANCE 80~ PAYABLE UPON PROOF-OF- PERFORMANCE~ I.E. ACTUAL SCREENING OF FILM. PAYMENT WILL BE MADE DIRECTLY TO STUDIO BY CHECK. (SEE ATTACHED EXHIBIT.) CI CONTINUE TO PAY AFP $120M/YEAR RETAINER FEE IN RETURN FOR REPRESENTING B&W EXCLUSIVELY IN TOBACCO CATEGORY AND ARRANGING SPECIAL PLACEMENTS WITH MAJOR MOVIE STUDIOS/STARS. IN ADDITION, WE WILL PAY AFP A COMMISSION OF $20M FOR EACH SPECIAL PLACEMENT WITH A MAJOR STAR, TO BE PAID AFTER THE SIGNING OF A CONTRACT BETWEEN B&W AND THE STUDIO INVOLVED, E,G, MGM, WE WILL DO THIS ON A TRIAL BASIS FOR B MONTHS TO DETERMINE IF AFP CAN REALLY DELIVER. ~D I'O

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