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within the company. Media and the whole brand team. Media cannot work in a vacuum. So often, even RJR Media is not brought into the loop until it's time for specific direction. We need more forward-thinking interaction. (And too often, direction comes in the form of 'we want the most creative media ideas, and oh -- by the way -- we need it in two days.') - somewhat of an accountability/direction problem Media agency plans/places based on brand objective and direction; creative agency develops 'creative ideas' for further investigation by brand/media. Best possible world: ideas are shared and shared alike. However, should media agency be accountable for developing creative ideas -- if so, we need MUCH more communication and vision thinking. - When media agency has broached new, creative design-oriented ideas, there is often not a willing/open audience to build on the opportunity. - Too often, all parties are thinking short- term. Seeds of ideas are lost due to opportunities that are longer-term or off-task immediately. RJR0000001667034464 700302745

- Previous attempts to generate ideas from outside experts have been 'painful' and drawn-out due to lack of understanding of tobacco marketing. Clear understanding of our parameters must be basis of assignment. - Roger suggested that, instead, maybe Coyne-Beahm should engage a media group as "consultant" on a short term basis (vs. a top-to-bottom assignment) 3-months PFI involved throughout Next Steps: - I suggested that, if he wants a point person with real media knowledge at Coyne-Beahm to spearhead this, I have a candidate in mind; I gave the name/number to Roger. (He called me 6/25 to say that he had discussed it with Pat and they are definitely pursuing this candidate.) - Roger wants to discuss with Doug; we'll get back together next week or so. - Roger gave me his list of consultant ideas; I'll add/edit and get back to him. Bottom line: I believe that what we have is: - a communication problem. Creative agency's ideas are not being shared/ given the opportunity to be built on by the media agency. Perceived adversarial relationship is a real stumbling block that must be fixed. - There needs to be a distinction between creative use of media, resulting in "non-traditional" communication and real "new media forms." Recent proposals by C-B are simply creative twists on media exposure opportunities that have been looked at previously and are not really "new media." Between Media and RJR Management. Too many ideas have been lost by short-term rejection ("No money") and not exposed to a broader audience RJR0000001667034464 700302744

Roger's perspective: 2) DORAL is given short shrift in terms of idea generation... not as "important" as WINSTON, CAMEL; not as intensely understood and advocated by LHC. - Another myth which must be dispelled. - Separate media planning groups/'brand stewards' in both RJR and LHC Media groups to assure that no brand is 'favored' - Tracking reports (eg positioning/covers) separate by brand, again to assure fair placement/no 'favoritism' - Frankly, more "unique" vehicles and recommendations are made on behalf of DORAL because the target audience is well defined and understood. 3) LHC is good at "traditional" media -- print, OOH. However, not as good at generating new ideas/new media forms/out- of-box thinking. In fact, LHC has and does recommend many unique non-traditional exposure opportunities. - We have the benefit of a wide network of contacts due to RJR's reputation for seeking, developing unique media. (And Carl's/Carol's close and on-going ties to RJR.) New ideas tend to come to them first from a variety of outside sources. If someone else has an idea (LHC is very open to any and all ideas and brain- storms), LHC has the contacts to investigate resources and develop prototype. - e.g., SALEM Smoke Lamps (permanent fixtures in bars which ventilate smoke; designed as an orb.) Many opportunities presented go far beyond "media" often include promotion, direct marketing, product placement elements. - e.g., check cashing outlets - Non-traditional forms are developed both: 1) in general (no specific brand in mind until the idea is deemed worth pursuing/viable, at which time it RJR0000001667034464 70030 2742

is presented to RJR Media and to the planning group for most-appropriate brand application/refinements) 2) specifically for a brand (with objective/strategic needs in mind.) UNFORTUNATELY, most of the non-traditional opportunities presented are rejected -- usually at the brand manager or assistant level. Therefore, VP+ levels are never exposed to the quantity of real ideas explored. (A few ideas, exposed to Task Forces, have been roundly ignored as well, with no feedback.) 4.) An outside media group should be tapped to generate and execute non-traditional ideas, to develop a "new medium" - The more ideas the better! However, there needs to be some clear direction about what is considered "new media" e.g., the ideas C-B recently presented for DORAL are NOT "new/non-traditional media" Auto trader publications, yellow pages phone book signage -- these are not new ideas. All have been looked at over the years and rejected. - The ideas presented are really creative ideas...and creative ideas -- if Media - Roger agreed and said that these are NOT the kinds of ideas he would propose for an outside agency to generate. - Why the whole ball of wax? (generate and execute?) Where is the benefit for RJR? - Dollars MUST BE considered, and it is highly unlikely that any program can be developed/implemented more efficiently than through LHC. - Back-end administration is critical for our business (as well as checks/balances that assure all legal contraints are adhered to.) This is a reality that must be considered in any outside assignment. RJR0000001667034464 700302743

FILE MEMO LUNCH MEETING 6/24 WITH ROGER BEAHM Roger's perspective: 1) LHC has a`problem' working with C-B because they are competitors and C-B took away the Doral business. - Need to dispel this thinking. It's absolutely not true. - LHC RJR Media Group is organized as a `s~and-alone' entity separate from balance of agency. Success relies on their being absolutely objective among brands...the client is RJR. Not even in same building. - Compensation in no way tied to the account/ creative contracts with LHC. Not fee based. Calculated on RJR spending, not on individual brand basis. - Example of LHC Media's objectivity vs. rest of LHC Agency: Rolling Stone Blues insert and bar event program was recommended for CAMEL. (LHC Media does not communicate with WINSTON account/creative areas separately from media/brand meetings. Therefore, the Media group did not know that WINSTON was developing their Blues program/advertising nor the pending tie-in with Music Makers Foundation!) (Luckily, I had heard the WINSTON brand discussing this and recognized that the opportunity was right for WINSTON, not CAMEL.) Frankly, most of the people in the media planning group, certainly those assigned to DORAL Media planning, don't even know that LHC once had the creative assignment for the brand. And the supervising personnel (C.Sterling/C.Haynes) have a unique overall-RJR orientation vs. brand-specific orientation. Roger acknowledged that this "bias" may be in his own head, therefore, stifling the productive communication and idea- sharing between everyone working on DORAL. Next step: Roger, Carol Sterling (and me) to have lunch and discuss frankly. Determine how they can work together better. RJR0000001667034464 700302741