From –Advertising Age

Traditional smokers taking up electronic cigarettes might be trying to quit the real thing, but e-cigarette marketers can’t talk about that. In fact, they can’t discuss any potential health benefits in marketing, as the Food and Drug Administration doesn’t regulate e-cigarettes as “drug-delivery devices.”

But at the same time, because the cigarettes are not regulated, marketers in this relatively new and growing space are benefiting from looser FDA restrictions and are boosting budgets — even though finding marketing agencies and search platforms willing to rethink no-tobacco-client policies isn’t so simple.

One such brand is Spire, launched in October by Procter & Gamble marketing veteran Jeffrey Hill. It is looking to take advantage of any of the category’s health benefits without saying as much in consumer-facing marketing.

Mr. Hill is making his case to oncologists. He told Ad Age he is also in talks with city officials across the country to ink public-private partnerships that could make the products available for sale in public locations. He said it’s appealing for cities with no-smoking policies in outdoor spaces and for regions under financial duress, and added that he’s close to signing one such deal.

Mr. Hill is also selling in bulk to corporations in a handful of cities, after pitching them on his findings that employees who work in tall buildings lose an average 15% of daily efficiency going outside to smoke. One of the corporations that signed on is a top-five health-care company, though he wouldn’t name it. Mr. Hill said the company “bought 1,000 units to test and give to their employee base, and they can say “Here’s something that’s better for you.'”

In 2009, Sottera, which owns e-cigarette company NJOY, won a case against the FDA that loosened regulation of the category. The company expanded the number of its retail stores to 15,000 stores in 2011 from 3,500 stores in 2010. It’s also on track to almost quadruple its marketing spending next year, said NJOY Exec VP Roy Anise, and a former research-and-development executive at Marlboro maker Philip Morris.

NJOY is readying the expansion of a campaign called “NJOY Life Today.” At first glance that slogan could be on a campaign trudging into the forbidden territory of health claims, but Mr. Anise explained that the brand doesn’t even need to go there. “People might use [e-cigarettes] to quit and start to feel better because they can walk up stairs and they don’t stink,” he said, adding that consumers recognize the benefits. “We don’t need to say it; we don’t need to market it as a cessation device. The point is that it’s a better way to get the satisfaction you get from smoking cigarettes.”

E-cigarettes are not, however, limited like tobacco companies as to where they can advertise. NJOY’s current marketing campaign centers around a “gold standard” theme that runs mainly in store and on the net, but moving forward the company plans to use traditional media, events and guerrilla-marketing tactics. “Given the strength of our business, we have the resources to invest heavily,” said Mr. Anise. “We’ll focus on retail and merchandising and then expand into more consumer media.”

Its agency is Release the Hound. But during the 2009 trial, a large PR firm turned down the account, despite its conclusion that the “nicotine” product could actually help people, said a senior-level executive at the firm. It was too risky, the executive added, since the firm worked with a foundation that opposed the category.

Blu Cigs, another major player, works with Resound Marketing, but is unable to market using search tools from Google, Bing or Yahoo because of anti-tobacco policies. And many large PR firms, including Edelman and Burson-Marsteller, have said they would not consider taking an e-cigarette account.

For Blu, part of the long-term objective is to reach Washington via the consumer, said President Jason Healy. He said it’s an effort to curb legislation that could grant the FDA greater regulation. In the next few months, the company will seek to communicate its product’s attributes, such as having U.S. ingredients, among the 80% of the population that doesn’t smoke. “A lot of smokers understand nicotine and compare it to caffeine,” he said. “Nonsmokers have associated it with cancer.”

It’s an issue that in part mirrors the reasons the Transportation Security Administration and airlines had banned the products, said Mr. Anise. “It’s not because of health concerns, but because they didn’t want to police whether it’s a real cigarette or not.”

Blu expects to at least triple its marketing spending over the next 12 months, targeting the core 30-to-55-year-old smoker. Like NJOY, the company steers clear of making indirect health claims and telling people to quit. Instead, it created a concept around the idea of freedom. It also continues to run some ads with a racier lifestyle approach hearkening back to male-targeted cigarettes in earlier years. One that runs in magazines such as Rolling Stone and Maxim depicts a leather-clad blonde in bed with a guy smoking an e-cigarette and the tagline, “No regrets.”

But a spokesman said the company will focus more on benefits such as freedom moving forward. “We’re coming close toward legislation in the next two years, so it’s time to establish the brand even stronger,” said Mr. Healy. “The tack with everyone here is to stay constantly aggressive.”

Spire’s Mr. Hill has already experienced this kind of regulation and gotten creative in his consumer-marketing approach. When he tried to sell the Spire on government military bases — smokers active in the military are a main target, along with college students — he said that the FDA expressed concern. So he heightened his focus online with a direct-sales model that incentivizes consumers to promote the brand via outlets such as Facebook and earn commission on sales. He’s working on a similar program on college campuses including a major PR campaign around graduation in the spring. “We’re not selling in the conventional way,” he said. “It’s new-age marketing.”

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