Tobacco Facts.

New legislation that tightens the reins on tobacco marketing is roiling an advertising industry already facing increased government scrutiny and steep declines in ad spending.

Last week, Congress passed the Family Smoking Prevention and Tobacco Control Act, giving the Food and Drug Administration power to control the manufacturing, marketing and advertising of tobacco products. The rules include bans on giveaways of nontobacco items with the purchase of tobacco products and on outdoor tobacco ads within 1,000 feet of schools and playgrounds.

The bill, which President Barack Obama is expected to sign into law, would also impose new limits on magazine advertising, one of the last outposts of tobacco advertising.

Tobacco advertising has been declining since the 1970s, when TV and radio commercials for cigarettes were banned. The industry cut back heavily on magazine ads in 2000, under pressure after placing ads in magazines with many young readers.

Last year, tobacco companies spent $78.4 million on ads in the U.S., with $69.3 million of that in magazines, mostly male-oriented publications including Maxim, Playboy, Men’s Journal and Field & Stream, according TNS Media Intelligence, an ad-tracking firm owned by WPP.

Any further loss of revenue, even the relatively small amount flowing from tobacco, would hit at a particularly hard time for the magazine industry, which saw ad spending drop 21% in the first quarter of 2009 from a year earlier, according to TNS.

The ad industry opposes the legislation, arguing that it violates free speech.

In recent years, ad industry groups have pushed back against the U.S. on a wide range of issues, including prescription drugs and consumer privacy online. The Association of National Advertisers, or ANA, is currently lobbying against a bill that would ban broadcasting of ads for erectile dysfunction drugs during certain times of the day.

Magazines that have “a significant readership of people” under the age of 18 wouldn’t be allowed to run a tobacco ad unless it was black-and-white text only, a “tombstone” in ad-industry parlance. Tombstone ads would command a far lower rate than the colorful print ads that tobacco companies have relied on for decades.

Advertisers argue that their industry can regulate itself and that the legislation could set a dicey precedent for products such as alcohol and fast food. Last week’s legislation would be “the most restrictive advertising bill ever passed in the U.S. for a legal product,” says Dan Jaffe, executive vice president for government relations at the ANA.

A spokeswoman for Reynolds, a unit of Reynolds American, said she can’t give details on its advertising plans for competitive reasons but that the tobacco company “will be in compliance with the law.”

A spokesman for tobacco maker Lorillard said it is “premature to speculate on what the future will hold.” Lorillard plans to spend about $12 million on magazine ads for all of 2008 and 2009.

“Until we see the final form of legislation, we can’t say if or how this bill will affect us,” a Playboy spokeswoman said. A spokeswoman for Alpha Media, publisher of Maxim, declined to comment on the legislation.
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