[Intl-tobacco] Hungary: ad ban and industry response

[Robert Weissman]

Ad ban makes cigarette firms redirect marketingby 
by Ágnes Csonka
Source: Budapest Business Journal (hu), 2002-01-07
Outdoor advertising media owners expect to see a sizable portion of
their revenues go up in smoke thanks to the full ban on tobacco
advertising, which kicked in Jan. 1.

An amendment passed by Parliament in December 2000, aimed at
harmonizing the 1997 Advertising Law with EU regulations, banished
tobacco ads from newspapers and magazines from July 1, 2001, and
from the outdoor media as of the beginning of 2002.

The restrictions were already trimming media agencies’ and print
media owners’ income last year, and outdoor media companies will see
their revenues plunge this year, said Péter Niklai, a board member
of the Outdoor Advertising Association.

“There’s no similarly strict regulation in place anywhere in Europe,
and according to my calculations, the tobacco ad ban means a roughly
12% drop in revenues for the outdoor industry,” Niklai said. “This
is a sum that should be supplemented from other sources, but whether
that’s going to be possible is another question.”

While they say they are unlikely to trim their sizable marketing
budgets, local tobacco companies are now forced to devise new
marketing methods and say they will shift the focus to in-store
advertising, promotion and events.

“From [2002], we’ll have to concentrate our marketing efforts on the
points of sale, where we target adult consumers only,” Péter Dávid,
spokesman for Philip Morris Hungary Kft, said in December.

Advertising and media research firm Médiagnózis Bt put Philip
Morris’ 2000 advertising spending at roughly Ft 1 billion (#4
million), making the company the biggest advertiser among Hungary’s
tobacco makers. Other locally based tobacco manufacturers include
Reemtsma Debrecen Tobacco Factory Kft, BAT Pécs Tobacco Factory Kft
and R.J. Reynolds Tobacco Rt.

Together, these four cigarette companies, plus cigar distributor
V-Tabak Rt, spent over Ft 3 billion on advertising in 2000,
according to figures from Médiagnózis. In the first six months of
2001, they shelled out Ft 1.1 billion on ads. According to industry
estimates, the full tobacco advertising ban will cause an overall Ft
300 million drop in advertising and media agencies’ profits this
year.

In 2000, outdoor ads collected revenue of Ft 16 billion at rate card
prices, representing 7% of the total ad market, according to
Médiagnózis.

The ban does not affect business-to-business ads targeting tobacco
wholesalers and retailers or promotional material posted on the
premises of retail outlets. Hungary’s Formula 1 race – otherwise
known as the Marlboro Hungarian Grand Prix – is also exempt thanks
to a clause allowing the Economy Minister to waive the rule in the
case of “worldwide motor sport events.”

However, private automobiles on the street qualify as outdoor
advertising media, and in the first week of the New Year, Budapest
police removed the license plates of a car that sported a sticker
promoting a cigarette brand.