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N 229 ; RECEIVED MAR 115 W THIS DOCUMENT CONTAINS CONFIDENTIAL INFORMATION FEDERAL TRADE COMMISSION STAFF REPORT ON THE CIGARETTE ADVERTISING INVESTIGATION BY: Matthew L. Myers Program Advisor Craig Iscoe Carol Jennings William Lenox Eleanor Minsky Andrew Sacks APPROVED: Collot Guerard Deputy Assistant Director Division of Advertising Practices Mallace S. Snyder Assistant Director Division of Advertising Practices CONCUR: James Sneed Director Bureau of Consumer Protection May, 1981 nm

230 explicit and varied. Their constant repetition in advertising which reaches vast numbers of Americans of all ages must be viewed as significantly contributing 'to the portrayal of the desirability of smoking.30 Thus, the dominant themes of cigarette advertising are that smoking is associated with youthful vigor, good health, good looks and personal, social and professional acceptance and success, and that it is compatible with a wide range of athletic and healthful activities. One theme is conspicuously absent from all cigarette ads. Although these ads contain the required general warning, they make no mention of the numerous and specific adverse health consequences of using the advertised product.31 /IV. ADVERTISING THEMES AS DESCRIBED BY THE MANUFACTURERS' ~ MARKETING PLANS The cigarette companies' documents reinforce the findings of the staff about the themes of cigarette advertising. For example, R.J. Reynolds' 1977 marketing plan for Salem states explicitly that: Motivational research has identified the phenomenon of image projection as a highly motivating force. Therefore, through the association of SALEM, and its brand styles rith emulatable personalities and situational elements that are compatible with the aspirations and lifestyles of contemporary young adults, this important target segment will be attracted to the brand. Importantly, older smokers also relate 231 favorably to this personality type; reinforcement of the current franct simultaneously achieved.32 The same marketing plan indicates that a pri promotion of Salem has been to associate the lifestyle of "young adult males' who are "ma confident, self-assured, daring/adventurous, nians for other cigarettes are similar. A L project the image of •an independent, self-r take-charge kind of person."34 A Winston me nan's man who is strong, vigorous, confident :nature.'35 Liggett i Myers' documents show that the balloon high above land sought to give the c -Lth "lightness and exhilaration."36 L&M's position Lark as a'youthful, contemporary b lifestyles of the modern smoking public." I 32 Document A900022 -'Salem 1977 Annual Mar 33 Id. 34 Document A900003 -'RJR Statement of Busi :igarettes." 30 1964 Cigarette Rule, supra, 20 Fed. Reg. at 8342. 31 To the best of our knowledge, cigarette companies never have provided health information, other than the required warning and 'tar' and nicotine figures, in their advertisements. 2-13 a! 35 Document A900001 -'Winston King 1978 Mar 36 Document A900230 - "1974 Lark Annual Mark 2-14

rN 231 favorably to this personality type; therefore, reinforcement of the current franchise is simultaneously achieved.32 The same marketing plan indicates that a primary theme for the promotion of Salem has been to associate the cigarette with the lifestyle of 'young adult males" who,are "masculine, contemporary, confident, self-assured, daring/adventurous, mature."33 Marketing plans for other cigarettes are similar. A Doral campaign sought to project the image of 'an independent, self-reliant, self-confident, take-charge kind of person."34 A Winston man was projected as "a 'man's man who is strong, vigorous, confident, experienced, mature."35 Liggett i Myers' documents show that their Lark ads picturing a balloon high above land sought to give the consumer an association with "lightness and exhilaration."36 L&M's campaign planned to position Lark as a "youthful, contemporary brand that satisfies the lifestyles of the modern smoking public." Its ads emphasize "moments 32 Document A900022 - "Salem 1977 Annual Marketing Plan." 33 Id. 34 Document A900003 - "RJR Statement of 6usinee:s 1977 - Doral Cigarettes." 35 Document A900001 - "Winston Hing 1978 Marketing Plan." 36 Document A900230 -"197< Lark Annual Marketing Plan." 2-14

232 of post-tension and relaxation."37 The Eve smoker has been portrayed as a "sophisticated, up-to-date, youthful and active woman who seems to have distinct ideas about what she wants.•38 .P:F V. EFFORTS OF SOME CIGARETTE ADVERTISEMENTS TO DIVERT ATTENTION 1'•l AWAY FROM THE A HE LTH HAZARDS OF SMOKING Many cigarette advertising techniques appear to denigrate or undercut the health warning. Information obtained from subpoenaed documents indicates that, at least in the case uf several advertising eampaigns, these techniquea have been carefully planccd. For example,•documents from Brown i Williamson (BCW) and one of its advertising agencies, Ted Bates and Company, Inc., set forth the development of an advertising strategy for Viceroy cigarettes designed to suppress or minimize public concern about the health effects of smoking. The documents show that, at the request of Ted Bates, a marketing and research firm conducted a number of focus group interviews on the subject of smoking in order to assist the ad agency in developing a marketable image for Viceroy cigarettes.39 The final report summarizing the results of this research asserts that many smokers 37 Document A900251 - "1973 L&M Marketing Plan." 38 Document A900245 - "1974 Eve Portfolio Test.• 39 Document A011345 -"An Action-Oriented Research Program For Discovering And Creating The Best Possible Image For Viceroy Cigarettes," prepared for Ted Bates Advertising in March 1975 by N. Rennan, Marketing and Research Counselors, Inc. 2-15 ±f) 233 perceive the smoking habit as a "dirty" anc only by "very stupid people."40 The repor+ Thus, the smokers have to face 'the fac• illogical, irrational and stupid. Peo; to go throughout life with such negati' and evaluation of self. The saviours : zation and the repression that end up : defense mechanism that, as many of the we use, has its own 'logic', its own r Thus, smokers don't like to be reminde they are illogical and irrational. Th be reminded by either direct or indire The report proceeds to describe the el advertising campaign, in light of its find entitled, "How To Reduce Objections To A C premise of the report's recommendations is any real, absolute, positive qualities and cigarette," the most effective advertising obiections" 42 to the product by presentir. ambiguous enough to provide smokers with a behavior and a means of repressing their t smoking. To provide a rationale for smoki 40 Document A901268 - May 26, 1975 "What I People? A Conceptual Summarization of 18 The Subject Of Smoking." 41 Id. at 2, 3(emphasis in original). 42 Id. at 12 (emphasis in original). 2-16 ~ ~ ~ ~ ~ ~ ! V1~

233 perceive the smoking habit as a"dirty• and dangeroua o++e engaged in only by 'very stupid people."40 The report concludesa Thus, the smokers have to face 'the fact that they are illogical, irrational and stupid. People find it hard to go throughout life with such negative presentation and evaluation of self. The saviours ace the rationat - zation and the repression that end up and result ln a defense mechanism that, as many of the defense sechanisms we use, has its own 'logic', its own rationale. . r • . . . . a Thus, smokers don't like to be reminded of the fact that they are illogical and irrational. They don't wt7t to be reminded by either direct or indirect meiine.. The report proceeds to describe the elements of a good cigarette advertising campaign, in light of its findings, in a chapter entitled, •How To Reduce Objections To A Cigarette.' The basic premise of the report's recommendations is that since there "+re not any real, absolute, positive qualities and attributes in a cigarette,• the most effective advertising is desiqned to "reducs objections" 42 to the product by presenting a picture or situation ambiguous enough to provide smokers with a rationale fur their behavior and a means of repressing their health conrerns about smoking. To provide a rationale for smoking, the ad must project the 40 Document A901268 - May 26, 1975 'What Aave We Learned E'rnm People? A Conceptual Summarization of 18 Focus Cruup lnterviewe On The Subject Of Smoking." 41 Id. at 2, 3 (emphasis in original). 42 Id. at 12 (emphasis in original). 2-16

234 iaage that cigarettes provide the smoker with social acceptance, an acceptable means of rewarding himself or herself, a stimulant, a tranQuilizer, a better self-image, etc. With regard to health issues, the report recommends: "Start out from the basic assumption that cigarette smoking is dangerous to your health - try to go around it in an elegant manner but don't try to fight it - it's a losing war."43 One chapter of the report describes how the company can introduce "'starters' to the Viceroy brand, a discussion which focuses almost exclusively on how to persuade young people to smoke., The report assertss For the young smoker, the cigarette is not yet an integral part of life, of day-to- day life, in spite of the fact that they try to project the image of a regular, run-of-the- mill smoker. For them, a cigarette, and the whole smoking process, is part of the illicit pleasure category...In the young smoker's mind a cigarette falls into the same category with wine, beer, shaving, wearing a bra (or ur osel not wearing one), declaration of ndependence and striving for self-identity. For the young starter, a cigarette is associated with introduction to sex life, with courtship, with smoking 'pot' and keeping late studying hours.44 The •starters' to cigarette smoking: chapter then recommends a strategy for attracting young 43 Id. at 17. 44 Id. at 29-30 (emphasis in original). 2-17 235 Thus, an attempt to reach young smok be based, among others, on the follo - Present the cigarette as one into the adult world. - Present the cigarette as part pleasure category of products . : - In your ads create a situatior day-to-day life of the young : elegant manner have this situ< the basic symbols of the grow: process. - To the best of your ability, ( some legal constraints), relat to 'pot', wine, beer, sex, etc - Don't communicate health or he B&W adopted many of the ideas contair development of a Viceroy advertising camF entitled, "Viceroy Strategy," BcW notes r advertising campaign must provide consumc for smoking and a "means of repressing th smoking a full flavor Viceroy."16 The f 'Viceroy Strategy' are representative and view, the other cigarette companies also 45 Id. at 31. 46 Document A015538 - "Viceroy Strategy," ,Broach, Group Project Manager, B&W (empha ~ 95-077 0-82--16

Thus, an attempt to reach young smokers, starters, should be based, among others, on the following major parameters: - Present the cigarette as one of a few initiations into the adult world. - Present the cigarette as part of the illicit pleasure category of products and activities. 1. f t • f • t • - In your ads create a situation taken from the day-to-day life of the young smoker but in an elegant manner have this situation touch on the basic symbols of the growing-up, maturity process. - To the best of your ability, (considering some legal constraints), relate the cigarette to 'pot', wine, beer, sex, etc. - Don't communicate health or health-related points.45 B&W adopted many of the ideas contained in this report in the development of a Viceroy advertising campaign. Thus, in a document entitled, "Viceroy Strategy," BiW notes repeatedly that its advertising campaign must provide consumers with a rationalization for smoking and a"means of repressing their health concerns about smoking a full flavor Viceroy."46 The following excerpts from 'Viceroy Strategy' are representative and indicate that in BiW's view, the other cigarette companies also have developed advertising 45 Id. at 31. 46 Document A015538 -"Viceroy Strategy," March 3, 1976, V.C. •Broach, Group Project Manager, B&W (emphasis in original). 2-18 95-077 0-82-16

236 strategies designed to cause repression of consumer health concerns about smoking: full flavor smokers perceive cigarette smoking as dangerous to their health...Given their awareness of the smoking and health situation, they are faced with the fact that they are behaving illogically. They respond to this inconsistency by providing themselves with either a rationalization for smoking, or, by repressing their perceptions of the possible dangers involved. To date, major full flavor brands have either consciously or unconsciously 'coped' with the smoking and *health issues in advertisin b a ealin to -Tepreaa on. (emphasis adde . The marketing efforts must cope with consumers' attitudes about smoking and health, either providing them a rationale for smoking a full flavor VICEROY or providing a means of repressing their concerns about smoking a full flavor VICEROY. [emphas,is in original.) a a a a a a . a . BiW documents also show that it translate attract young •starters' into an advertising 237 feels good, smoke it.... 47 adults in situations that the vast majority c would experience and in situations demonstrat and easy, hedonistic lifestyle.'48 Other documents submitted by BiW show thz attempted to capitalize upon the erroneous cc there is s health benefit to smoking menthol, Documents pertaining to the marketing of Roo that the company is aware of the consumer mii relative safety of menthol cigarettes and ut development of advertising strategies for Ito 47 These strategies were employed in a six-n conducted in three test cities in 1976. The the campaign was approximately ten times thf dollar amount for a six month period. (Doc. from M.M. Matteson to V.C. Broach, July 14, 48 Document A080115 - 'Viceroy Marketing/Ad• January 26, 1976. 19 In 1976, BaW held four focus group discu smokers' responses to a new Kool 120mm ciga participants were menthol cigarette smokers the participants told B&W that they switche health considerations or from a general fee cigarettes are less dangerous. According t image' has accrued to mentholated cigarette 'Low Tar Longs Project - Creative Agency As characterizing the health image of inentholz B&W admits its knowledge that menthol is of Advertising Objective - To communicate effectively that VICEROY is a satisfying flavorful cigarette which young adult smokers enjoy, by providing them a rationali- xation for smoking, or, a repression of the health con- cern they appear to need. BiW then describes'its plan to accomplish its advertising objective. Three advertising strategies would be used: 1. 2. The 'satisfaction' campaign provides a rationalization: VICEROY is so satisfying that smo ers can smoke fewer cigarettes and still receive the satisfaction they want.... The 'tension release' campaign provides a rationalization: VICEROY'S satisfying flavor can help the smoker in a tense situation.... 3. The 'feels good' campaign appeals to the smoker by re ressin the concerns he may have about smoking by 7ustification: If it feels good, do it; if it 2-19 2-20

237 feels good, smoke it.... 47 BiW documents also show that it translated the advice on how to attract young 'starters• into an advertising campaign featuring young adults in situations that the vast majority of young people probably would experience and in situations demonstrating adherence to a"free and easy, hedonistic lifestyle.'48 Other documents submitted by BiW show that the company has attempted to capitalize upon the erroneous consumer perception that there is s health i>enefit to smoking mentholated cigarettes. Documents pertaining to the marketing of Rool cigarettes demonstrate that the company is aware of the consumer misperception about the relative safety of menthol cigarettes and utilizes it in the development of advertising strategies for Rools.49 47 These strategies were employed in a six-month media campaign conducted in three test cities in 1976. The advertising allotment for the campaign was approximately ten times the normal advertising dollar amount for a six month period. (Document A015486 - Memorandum from M.M. Matteson to V.C. Broach, July 14, 1976, emphases added). 48 Document A080115 -'Viceroy Marketing/Advertising Strategy,' January 26, 1976. 49 In 1976, BiW held four focus group discussions to gauge menthol smokers' responses to a new Rool 120mm cigarette. The majority of the participants were menthol cigarette smokers. In a number of cases, the participants told BiW that they switched to menthol either for health considerations or from a general feeling that menthol cigarettes are less dangerous. According to B6r1, a"pseudo-health image" has accrued to mentholated cigarettes. (Document A080675 - 'Low Tar Longs Project - Creative Agency Assignment,' 1977.) By characterizing the health image of mentholated cigarettes "pseudo," BiW.admits its knowledge that menthol is of no health benefit to (Continued) 2-20 0 0 0

238 A third set of documents obtained from Brown and Williamson - reveal that in 1976, Brown and Williamson introduced a new brand of cigarette named Fact. The Brown and Williamson documents indicate that the company believed that Fact cigarettes were a new product which reduced the amount of harmful gas in the cigarette smoke inhaled by the consumer. Therefore, Fact was initially advertised as a brand with the unique ability to filter certain gases.50 However, initial sales of Fact were not considered satisfactory by erorn and Williamson, so in 1977 it temporarily halted all advertising and promotion of the cigarette while it developed a new market strategy.51 49 (Footnote Continued) smokers. In a 1978 document discussing Rool cigarettes' strengths and weaknesses, B&W also admits that one of Kool's strengths "rides on the connotation that menthol has health overtones.' (Document A006981 - Memorandum from R.L. Johnson to F.E. McGowan, B&W, March 13, 1978.) In addition, BSW states that one of the strengths of its ltool Super Longs is that "menthol and 'tar' delivery has synergistic therapeutic implications." (Id.) B&W intends to exploit this false belief. In its document describing Kool's objectives through 1981, BiW states that its strategy will be to provide product safety reassurances while enhancing the satisfaction and refreshment perception. (Document A035669 -"Rool Three-Year Objectives," August 15, 1978.) In fact, mentholated cigarettes tend to have a high "tar" and nicotine content. 50 Document 7244 -"Fact 1976 Concept Description and Potential and Marketing Plan.• 51 Document 3~523 -"Fact 1977 Repositioning and 1978 Marketing Plan Summary. _ 2-21 239 In April 1977, Brown end Williamson's Keyes-Gardner, Inc., presented Brown and marketing and strategy recommendations fc cigarettes.52 The ad agency proposed twc distinguish Fact from other cigarettes: 1 protection through selective gas filtrati satisfaction in a low tar cigarette."53 atrategy focusing on better health protec itthmling lorer levels of gas, Post-Reyes- A secondary opportunity to distingui: of tar number claims is by capitalizi unique selective gas filtration. Thi ' roduct ime e" advert~sing and wou1C r t a rea po nt of difference. It the cigarette health issue beyond tar However, this would require establist ful health hazard in cigarettes becaL very low consumer awareness or comprc problem. The Agency believes one of the introductory advertising for Fact educate health concerned consumers at This failure to establish the gas prc aelective filtration promise was meai of the target audience. However, if educated regarding this problem, the promise may still be powerful, parti, health conscious.54 52 Document 35524 - Brown & Williamson, ' Strategy Recommendations for the Reintro, April 18, 1977. (The same document was & Gardner, Inc. - Document 714569). 53 Id. 54 Id., at 3. 2-22