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amJTobacco-controlLegislation, PublicHealth and SportSponsorshipRobert Sparks

Associate ProfessorLeisure and Sport Management ProgramSchool of HUDlan KineticsUniversity of British ColUIDbia, Canada

ABSTRACT

This paper examines the interna­tional development of regulationsrestricting tobacco sponsorshipand assesses their effects ontobacco marketing and publichealth. Several factors are foundto compromise the effectivenessof sponsorship regulations,including the transnational struc­ture of the tobacco industry,growing opportunities for tobaccomarketing and sponsorship inter­nationally, and the developmentof new media technologies - suchas virtual billboards, DirectBroadcast television and theWorld Wide Web - that facilitateregulatory compliance at the sametime that they enable global reachfor sponsorship programs. Analternative regulatory approach isproposed that requires 'equaltime' for anti-smoking advertise­ments as for tobacco-sponsorshipadvertisements.

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INTRODUCTION

Tobacco-control restrictions on sport sponsorship areintended to assist governments in reducing overalltobacco consumption by curtailing the use of spon­sorship as a form of brand-related tobacco advertis­ing. Such restrictions are now an endemic feature ofsport marketing in 23 countries throughout the world,including five in the Western Pacific region, ten inEurope, three in Africa, one in Asia and four in theAmericas. While in global terms this number is quitesmall, a much larger number of countries presentlyimpose restrictions on tobacco brand advertising, andthe expectation is that more sponsorship restrictionswill follow. According to World Health Organisation(WHO) figures, of 96 countries with tobacco-controllegislation in 1996, 86 enforced restrictions on tobac­co advertising.! For people watching the sponsorshipindustry, it is this second figure that has capturedattention, as advertising restrictions have generallyled the way for sponsorship restrictions. This paperreviews the development of legislative action torestrict sponsorship, covering both its rationale andinstitutional forms, and assesses a series of conditionsthat limit the force of this legislation, including thetobacco industry's ability to innovatively workaround national sponsorship regulations.

BACKGROUND: THE TOBACCO INDUSTRY

AND SPORT SPONSORSHIP

In the middle 1960s, when broadcast tobacco adver­tising was first curtailed internationally - voluntarilyin countries such as Canada (1964) and the UnitedKingdom (1966), and through legislation in theUnited States (1971) (see Walker, 1991; Warner,1986) - the transnational tobacco industry increasedits investment in other media, including the sponsor­ship of sports and cultural events. Major tobaccocompanies such as Philip Morris, R. J. Reynolds andthe British-American Tobacco Co. (BAT) sought outsponsorship properties that would enable them to pre­serve their essential brand-positioning strategieswhile extending the image and exposure of the spon­soring brands through association with sports.Maintaining television coverage was a key part of thisstrategy, but not the only part, since sports events alsoallowed promotional extensions such as on-siteadvertising, product sales and corporate hospitalitythat were important to brand strategies. The infusionof tobacco-industry money and marketing expertiseinto the event and sponsorship fields that followedhelped to make these fields what they are today(Cornwell, 1995; Otker and Hayes, 1987).

Sponsorship has emerged from this time as an impor-

tant marketing discipline and a global industry.According to International Event Group estimates(lEG, 1994), worldwide sponsorship spending was$10.9 billion in 1994, with US corporations account­ing for $4.2 billion, European corporations $3.4 bil­lion, Pacific Rim $2.2 billion and other countries $1.1billion (all figures US dollars). Sports properties con­stitute the major part of sponsorship investment inmost areas of the world. Figures vary by country, butUS data are representative of experience elsewhere.lEG estimates for the 1995 US market put sports at65% of total, festivals, fairs and annual events at10%, entertainment tours and attractions at 10%,cause-related sponsorship at 9% and sponsorship ofthe arts at 6%. Within the core group of major com­panies that sponsor sports, tobacco companies contin­ue to be prominent. Philip Morris ranked highest inoverall sponsorship in the US in 1994 ($100-115 mil­lion) and R. J. R. Nabisco fifth ($40-45 million), astanding they have held for a number of years. InCanada, the tobacco industry annually invests C$60million in sponsorship of sports and arts, which hasan estimated economic impact of C$250 million and4000 equivalent full-time jobs (Ross, 1997). InAustralia, before the Tobacco Advertising ProhibitionAct 1992 went into effect, the tobacco industry annu­ally spent A$20 million on sport sponsorship, aninvestment that comprised fully 30% of the total pri­vate-sector expenditure on sport sponsorship(Furlong, 1994, p. 160).

Despite the positive economic and promotional bene­fits the tobacco companies, sports and local commu­nities receive(d) through these sponsorships, there isevery indication that the regulatory climate is chang­ing and that strictures on tobacco sponsorship are setto increase. After years of failed attempts at industryself-regulation in the UK, the new Labour govern­ment recently announced plans to table legislationlate in 1997 that will ban tobacco sport sponsorship(Hall and Millward, 1997). Similarly, PresidentClinton's administration in the US is in the process ofdeveloping legislation that will ban tobacco brandsponsorship of sports under Food and DrugAdministration (FDA) regulations (Associated Press,1997). Canada recently passed a new Tobacco Act(1997) that closes out what many in the health fieldsaw as sponsorship 'loopholes' in the preceding legis­lation (Tobacco Products Control Act, 1988). Thenew Act's prohibitions on television broadcasts andrestrictions on event signage and poster and magazineadvertisements may make sport sponsorship uneco­nomical for the tobacco companies when it takeseffect on 1 October 1998. These are the same threecountries that were first to join the fray in the 1960s,which would seem to indicate that we are now enter-

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ing a new era of sponsorship regulation. Why this istaking place and what the consequences are likely tobe for tobacco marketing and continued tobacco­industry support of sports are strategic questions forsport marketers, public health officials and govern­ment policy-makers.

PuBLIC HEALTH CONCERNS:

THE TOBACCO EPIDEMIC

It is important to understand that the sponsorshiprestrictions noted above have been undertaken main­ly within the framework of health legislation, notindustrial legislation (such as advertising regula­tions). Tobacco-control legislation generally takes itsline of authority from a Ministry of Health or similargovernment agency. Its purposes are to restrict thedistribution, promotion and sale of tobacco productsin such manner as to minimise the collective healthdamages caused by tobacco use. The single mostimportant factor in the development of this legislationin most countries has been the mounting record ofepidemiological, clinical and experimental evidenceagainst tobacco as a product category. The RoyalCollege of Physicians' report published in 1962(Walker, 1991), and the US Surgeon General's reportin 1964 (Public Health Service), were the first to for­mally summarise the negative health consequences oftobacco use and were catalysts for the advertisingbans undertaken in the 1960s. Since that time, healthorganisations around the world have collected mortal­ity and morbidity statistics relating to tobacco use,although the most complete records has been kept inthe developed nations. According to the World HealthOrganisation (WHO), more than 3 million peoplenow die each year of tobacco-related diseases world­wide (Roemer, 1993), a rate which makes tobacco usethe number one cause of preventable death (includingaccidents and all other chronic diseases) in the devel­oped world, and a rising cause of disease and mortal­ity in the developing world. WHO projects thattobacco-related deaths for the world population alivein 1989 will rise to 10 million per annum by the year2025, more than three times present rates, if there areno changes in the number of young-adult (youth)users.

Without overstating the case, these kinds of figuresobviously pose a problem (practical and moral) forthe tobacco industry and for sports and culturalgroups that rely on tobacco monies. Barring someunforeseen event such as the development of a tar­free cigarette (see Hilts, 1996, pp. 210-215, onresearch at R. J. Reynolds), the health problems asso­ciated with tobacco use will not diminish, and, corre­spondingly, government controls and industry disin-

centives will only increase. The two main challengesto the tobacco industry to date have been in the formof class action suits, in countries where such litigationis permitted, and legislation to curb tobacco market­ing. This paper focuses on the latter.

THE CHANGING PICTURE OF TOBACCO­

CONTROL LEGISLATION

In Resolution WHA24.48, set down in May 1971(Roemer, 1993, p. 254), the World Health Assemblycalled for action to strengthen 'health education activ­ities, including (the) production, dissemination andexchange of educational materials to discourage thehabit of smoking' and 'to produce a code of practicethat (could) guide governments in the formulation oflegislative action relevant to the health consequencesof smoking' (emphasis added). This call for legisla­tive action was the beginning of a concerted interna­tional effort to respond to the rising mortality ratesfrom tobacco use in the developed nations and to ris­ing smoking rates in the third world that would in tumyield higher mortality rates in the years ahead. Walker(1991) notes that by the mid-1970s, health authoritieswere already working on a comprehensive range ofstrategies for dealing with smoking control. Amongthese she lists interventions proposed by theInternational Union Against Cancer (from Gray,1977, paraphrased in Walker, p. 392):

the cessation ofall forms oftobacco promotion,health warnings on packets, manipulation oftobacco taxation, restrictions on smokingopportunities, encouragement of the rights ofnon-smokers, the encouragement of non-smok­ers to remain non-smokers, and public infor­mation programs. (Emphasis added.)

The World Health Assembly put forward a similar listof strategies in Resolution WHA31.56 in May 1978(Roemer, 1993, p. 257), urging Member States to'adopt comprehensive measures to control tobaccosmoking, inter alia by providing for increased taxa­tion on the sale of cigarettes and restricting as far aspossible all forms ofpublicity for promotion ofsmok­ing' (emphasis added).

It is one thing, however, to understand the epidemio­logical risks of smoking and quite another to designan effective program of intervention, particularlywhen the legislative control of a legally sanctionedindustry is involved. Practically speaking, the world­wide ban on tobacco (and smoking) promotion calledfor in these proposals has not yet come to pass. Anumber of conditions, obvious in hindsight, served toslow the process of institutional and legislativechange, including the successful lobbying activities

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Sponsorship Restrictions & Prohibitions(R) =Restricted; (P) =Prohibited; (ND) =No details

Argentina 31 Jul1986 '" (P) Advertising associated with practice of sport.

Brazil 25 Aug 1988 '"(R) Name & logo of sponsoring company only;cannot be in program.

Bolivia 15 Mar 1982 '" (P) Advertising associated with sporting activities.

25 Apr 1997 (R) Corporate name & logo bottom 10% of ads &Canada

(In force 1 Oct 1998) '" signage; on-site exposure and adult premises &magazines only; not in program; no broadcast.

Finland

France

Iceland

Ireland

13 Aug 1976 '"10 Jan 1991 '"18 Apr 1971 '"

Act: 1988Regulations:23 Feb 1990

(P) Sponsorship of sports personalities.

(P) Total ban on tobacco sponsorship.

(P) Total ban. Note: Fl has no brand names.

(P) All advertising and promotion.

(R) Only events with contracts prior to I May1986; amount set at 1985 expenditures plusinflation adjustment; event age-limit over 18years; event ads in newspaper & magazine, on-site& inside retail premises; sponsor's name &corporate emblem only; no brand name or logoon participants, assistants or equipment.

Lithuania 20 Dec 1995

Luxembourg 24 Mar 1989

Norway 18 Oct 1989 '"Portugal 30 Sep 1980 '"

United KingdomVoluntary Industry

Code

Australia 24 Dec 1992

French Polynesia 18 Feb 1982

Hong KongTelevision code

Dec 1990

New Zealand 28 Aug 1990

Singapore 31 Mar 1993

("')

(P) Sponsorship of events intended for children.

(P) Sponsorship of events for children or minors.

(P) Use of name or logo in sponsorshipof sports or cultural events.

(P) Advertising in national media.

(P) Use of name or logo in sponsorship of sportsor cultural events. Note: Fl has no brand names.

(R) Print advertising permitted for exemptedinternational cultural & sporting events; accidentalor incidental broadcast permitted.

(ND)

(R) Event advertising permitted with corporate namellogoprovided does not stand out, lettering is uniform, noproduct attributes, no slogans, and broadcaster is notpaid for placement.

(P) Organising, promoting, making financialcontribution to any organised activity in NZwhere activity involves use of tobacco trademark;exemption for specified international events.

(R) Exemptions for advertising specifiedevents, provided ads do not directly orindirectly promote smoking.

Table 1. Countries with tobacco-sponsorship restrictions, 1996 (Roemer, 1993; WHO).2

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of the tobacco industry, the reluctance of Westerntobacco-producing countries to deflate their domesticand overseas markets, state ownership of tobacco pro­duction in countries such as China and the formerSoviet Union, the low priority of tobacco control inmany developing nations, and the Western printmedia's continued commitment to tobacco-advertis­ing revenue and self-censorship on tobacco issues(Crompton, 1993; Cornwell, 1997; Nath, 1986; Hilts,1996). Nevertheless, Roemer (1993, p. xi) reportssteady increases in the number of countries withtobacco-control legislation in each of the three yearsshe carried out legislative surveys: 1982, 57 coun­tries; 1986, 72 countries; 1993,91 countries. My fig­ures put the present count at 96 countries in 1996, 28of which had complete advertising bans (Roemer,1993; WHO, 1993-1996). Table 1 lists countries byWHO region that have enacted restrictions on spon­sorship. Nine of the 23 countries have complete banson advertising, and 13 have advertising restrictions, inaddition to restrictions and/or prohibitions on spon­sorship.

What is perhaps most noteworthy about this list is thenations that are missing. Not surprisingly, countriesthat have domestic cigarette industries, such asGermany, Denmark, Greece and the Netherlands,have yet to institute any restrictions on tobacco spon­sorship, even though they limit advertising. They alsohave not supported European Community proposalsfor advertising bans that would prohibit sponsorshipof sports (Cornwell, 1997). Several countries, includ­ing Brazil, Canada and Ireland, have attempted to cur­tail the promotional effects of tobacco sponsorship byrestricting allowable brand-features to the brandname and logo in sponsorship-linked advertising.Hong Kong has similar restrictions, but it is not clearwhether Hong Kong's regulations will remain intactnow that it is a political territory of China. NewZealand, Australia and Singapore allow certain eventsto be exempt from the tobacco advertising bans, ineach case at the Minister's discretion, and providedthey meet particular criteria, mainly an internationalevent that would go elsewhere were it not exempted(New Zealand and Australia) and an event that doesnot directly or indirectly promote smoking(Singapore). Four countries have total bans on spon­sorship: Finland, France, Iceland and Mongolia. Theindustry code adopted in the UK prohibits the broad­cast of tobacco sponsors' logos and names, as part ofa general ban on broadcast tobacco brand advertising.Six countries have specific prohibitions againsttobacco sponsorship of sport: Mauritius, Nigeria,Argentina, Bolivia, Austria and Norway. Four coun­tries have specific sponsorship restrictions concern­ing children or underaged youth: Canada, Ireland,Lithuania and Luxembourg.

TOBACCO INDUSTRY RESPONSE TO

INCREASED SPONSORSHIP RESTRICTIONS

The health controversy is not new to the tobaccoindustry, and tobacco companies are not inexperi­enced at dealing with tobacco-control legislation. Inthe past, the tobacco industry has used every availablelegal means to challenge legislation as it has comeforward, and exploited every marketing opportunityleft open (see Miles, 1982; Walker 1991;Cunningham, 1996; Hilts, 1996). There is no reasonto believe that this process will not continue in future.As legislative pressure builds, based on past perfor­mance, tobacco companies are likely to engage threeessential strategies with respect to sponsorship: (1)defence of existing sponsorship programs, (2) inte­gration of new media and modes of communicationinto sponsorship-linked brand communications, and(3) expansion (extension) of their brand marketingand sponsorship programs into less regulated interna­tional markets. I will consider each of these in tum.

Defending Sponsorship-linked BrandInvestments

The tobacco industry has too much invested in spon­sorship-linked brand image development to give upits successful contracts without a struggle, failing,that is, some other reason such as wanting to retire orreposition a brand. Other things being equal, it can beexpected to defend and build its successful sponsor­ships, and to exploit the respective segmentation, pen­etration and communications strengths of extant con­tracts for as long as regulatory conditions permit. Iftobacco brand sponsorship becomes prohibited bylaw, then it will have little choice but to redirect itsbrand communications into other media (than spon­sorship) and/or possibly to expand into other geo­political areas. I discuss these two points below.However, only four countries have total bans at pre­sent, and even though an additional six have prohibi­tions against sport sponsorship, it is likely there willcontinue to be a range in the degree and kind of spon­sorship restrictions in the international community,just as there is now in the other 13 countries listed inTable 1 and the remaining 74 (of 96 total) countrieswith tobacco-control legislation today. This will leadto various strategies to accommodate national differ­ences, a condition that is foreshadowed in FormulaOne auto racing today, in the reconfiguration oftobacco logos on cars and crew to comply with host­nation laws.

It is likely that a similar range of regulatory contextswill prevail in future as at present. As a result, issuesabout the efficiency of sport sponsorship for tobacco

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companies will likely surface only in the most restric­tive countries. The key consideration in sponsorshipcontract decisions in the latter case will be the relativevalue of sponsorship with respect to other availablemeans of brand communication. If most other meansare effectively closed out, such as traditional mass­media brand advertising, then sponsorship may stillbe economical even if brand associations with thesport cannot be leveraged through sponsorship­themed advertising itself. This is a slippery slope,however, and at some point sponsorship simplybecomes uneconomical. For example, if event broad­casts are prohibited and only on-site corporatesignage is allowed, it is hard to see how this wouldsuffice for the tobacco companies. No matter whattheir eventual decisions might be, the ability of thetobacco companies to marshal brand image andawareness in target groups through media exposurebeyond the sports event context itself will be a keyfactor in the balance. Exploiting both new and oldmedia and modes of communication will be theirsecond main strategy for responding to legislation.

Using Extant and New Media Effectively

In an environment of increasing regulatory controlof traditional brand and sponsorship-linked brandcommunications, one can expect activity in allnon-regulated or relatively less-regulated areas tointensify. Properly conceived and carried out, a cam­paign emphasising media 'loopholes' and 'left-overs'stands to be quite effective.

This can be best illustrated by a case. In a very effec­tive point-of-sale campaign during the 1996 Surfer'sParadise Indy Carnival in Australia, where tobaccobrand advertising is prohibited, Marlboro used card­board replicas of its Team Penske-Marlboro car(approximately one metre in length and with aMarlboro carton on each side) to advertise its spon­sorship of the event. The cars were prominently dis­played in windows and on counters in shops wherecigarettes were sold, including the duty-free store atthe international airport in Brisbane. Marlboro pack­ages were centrally arranged on sales counters anddominated the display cases and cabinets, and stringsof Marlboro race pennants were hung overhead.·Thiswas an effective use of traditional point-of-salemethodology and media, and shows how these ele­ments can be employed competitively and advanta­geously to leverage public awareness even in the faceof restrictive advertising regulations.

Point-of-sale displays, packaging and branded smok­ing paraphernalia (matches and lighters as brandextensions) are likely to be exploited in support ofsponsorship communications objectives to whatever

extent they are not strictly regulated. Likewise, tradi­tional public relations and media relations practiceswill be used to maintain brand and sponsor profilethrough news coverage in the mass media, targetedsports magazines and the trade press. Books aboutathletes and sports, commissioned artwork andlicensed goods such as posters, apparel, pins, modelsand kits, and collectibles, that are usual in sport mar­keting, are also likely to be exploited by the tobaccocompanies unless specifically restricted, as are filmand television show appearances (of sponsored ath­letes) and product placements.

Further to these traditional forms of sponsorship com­munication, the industry has access to a considerablearray of new information and communications tech­nologies that can substantially enhance its ability totarget and reach consumers. This includes databasetechnology and interactive and narrowcast mediasuch as the World Wide Web, Internet, DirectBroadcast (subscription) and pay-per-view television.The integration of these new technologies into extantsponsorship and brand communications programswould give tobacco sponsors considerable adaptiveand synergistic potential, and could blunt some of theforce of sponsorship restrictions. In markets wheresponsorship is not prohibited, the objective would beto use these technologies to extend the reach andinteractivity of traditional media campaigns. In prohi­bitionist markets, the goal would be to replace andcompensate for lost media access and sponsorshipopportunities.

Direct Broadcast (DB) and pay-per-view televisionstand to increase the overall capacity of the sportscommunications system, and to offer a greater rangeof options for advertisers and sponsors. Among theseoptions, for example, is the possibility of a tobacco­sponsored event being aired in a program restricted toadult subscribers. It is not clear how this capabilitywould fit into a regulatory regime that disallowsbroadcasts of tobacco sponsorships. However, incountries with sponsorship prohibitions directedspecifically at protecting underaged youth - such asCanada, Ireland, Lithuania and Luxembourg - itmight constitute an area warranting an exemption,provided the sponsor and broadcaster could guaranteethat only adults would be able to see the coverage(such as by restricting reception to bars and pubs).

The World Wide Web has arrived as a global technol­ogy, and has the potential to become a highly target­ed form of interactive and televisual communication.Televised sports programs are already available inWeb simulcasts. There are no formal regulatoryobstacles (Web-specific) to prevent a Web-site ownerfrom creating an event broadcast and taking it on the

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Web anywhere in the world, just as there is nothing(except an occasional fee) to prevent individual con­sumers from intercepting television simulcasts off theWeb or congregating at tobacco-sponsored Web sites.Some of the countries with total bans on tobaccoadvertising and sponsorship, such as Finland, France,Iceland and Mongolia, may be able to thwart the useof the Web and the Internet as advertising and promo­tional vehicles for domestic tobacco firms. However,it is less clear how they could outlaw event simulcastsemanating from tobacco-sponsored sites outside oftheir respective territorial jurisdictions, or contraveneuser-initiated interactive communications by their cit­izens at such sites.

Case law concerning the Web is still developing, andat this juncture it is impossible to tell how these kindsof issues will be resolved. Court rulings on legal juris­diction for Web-based copyright and trademarkinfringements have been inconsistent. Some decisionshave defined the Web site as a place of commercialactivity, such that jurisdiction can be found over anoverseas site owner where the only contact with thecountry wherein legal remedy is sought is the Website itself. Others have limited jurisdiction to thehome of record and immediate ('intended') marketarea of the Web-site owner, and have failed to findjurisdiction when the site owner is not located in thecountry (or state) originating the action (Retsky,1997, p. 14). The latter makes more sense, but onlytime will tell how these issues will be decided.

As yet, the primary use of the Web by the tobaccoindustry seems to be for retail sales. Only a few tobac­co sponsors have developed sponsorship-specificWeb sites, and these have tended to be informationaland non-interactive. As the tobacco industry comesunder more regulatory pressure, however, moretobacco companies can be expected to look to newtechnologies as a means to cope with the changingstrictures of regulation.

For example, Player's, an Imperial Tobacco Co. brandin Canada, is an industry leader in the interactivemedia field, and is already well down the road to inte­grating Web and database technology into its spon­sorship program. Player's has a 36-year associationwith Canadian motorsport through sponsorship ofdomestic auto racing events, racing teams and driverdevelopment (Player's, 1996a). In June 1996, thecompany launched a sophisticated Web site (whichhas since won Microsoft's Best of the Best Award)that enables fans to check in and chat with thePlayer's drivers, obtain up-to-the-minute race infor­mation and even watch a simulcast of some events(Player's, 1996b). To get on the site, you have to reg­ister, which means giving your date of birth and

address, including an e-mail address. I am registeredat the site and I now receive regular e-mails updatingme on forthcoming events. Based on my experienceswith the site, I am struck that this would be a veryhard medium to regulate, as it borders on being a 'pri­vate' communication that I have initiated and con­sented to. In addition, the site's home page specifies itis intended for persons aged 19 years and older, andlists five different software solutions (Net Nanny,CyberPatrol, Surf Watch, CyberSitter and Safe Surf)for controlling access of underaged users. Libraries,schools, community centres and parents that provideInternet and Web access for children are thereby fore­warned and advised of how they can technologicallyprohibit access to the tobacco-sponsorship messageson the site.

A final technological development that stands to shiftthe market dynamics of tobacco advertising and spon­sorship is 'virtual billboards'. These systems enable abroadcaster or rebroadcaster to insert signage into livesports coverage or to over-write existing signage(Wallace, 1997). Advertisements can be added, delet­ed or tailored to audiences in different countries orregions. For example, a Marlboro sign at a motorsportevent in Germany could be broadcast in France with­out the brand name to comply with French regula­tions, or it could be substituted with another sponsorin the Philip Morris corporate family, such as a KraftGeneral Foods product, for a country with a total ban.The systems are not yet widely accepted. TheEuropean Union of Broadcasters (representing state­owned networks), recently voted against using thetechnology, partly out of fear of losing control ofadvertising revenue. Some private broadcasters alsohave misgivings, and some sponsors have expressedconcerns about the possibilities of being ambushed byanother sponsor in the same product category. Virtualbillboard systems are not sufficiently sophisticated toreplace logos on small moving objects such as cars,drivers and athletes. Yet, the technology has potentialadvantages for the tobacco industry. One way the sys­tem could be used is by allowing on-site tobacco sig­nage at a sports event to be carried in televised relaysto age-restricted venues (such as bars and pubs),while eliminating or replacing the signage in generalconsumption broadcasts.

Expanding International Operations

The third major course of action for the tobacco com­panies in response to increasing regulation is to movetheir sponsorship investments out of restrictive areas.There are still many regions with significant marketsand no or few sponsorship regulations (Asia, Africa,South America and parts of Europe). There are still

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many opportunities for using global media reach fromthese regions to enter restricted markets, as well as tobuild brand awareness in new markets overseas.International trade relations and agreements are suchthat most countries will have great difficulty stem­ming the flow of information about tobacco­sponsored sports events and personalities in the glob­al media, even if they prohibit domestic media fromcarrying such messages. International magazines andnewspapers have considerable freedom in crossingborders, and most countries do not prohibit domesticcarriage of sports coverage originating overseas. InNew Zealand, for example, where tobacco sponsor­ship of sports is disallowed in domestic markets, SkyTelevision regularly carries Formula One and IndyCar (Championship Auto Racing Teams) feeds on thedomestic Sky Sport channel.

The tobacco industry is well positioned international­ly to take advantage of these opportunities. In 1993,five transnational tobacco conglomerates controlled35.8% of the global tobacco market. These werePhilip Morris with 12% of global market share, BATwith 9.9%, R. J. Reynolds with 5.8%, Japan Tobaccowith 5.2%, and Rothman's with 2.9% (Cunningham,1996, p. 213). Philip Morris cigarettes are presentlysold in over 170 countries, and BAT brands in some180 countries and duty-free markets (p. 213). Themajor brands worldwide are Marlboro (PhilipMorris), Mild Seven (Japan Tobacco), Winston andCamel (R. J. Reynolds). The top two brands accountfor 10.7% of sales worldwide with global marketshares of 8.4% (Marlboro) and 2.3% (Mild Seven)(Marketing, 1997). It will be noted that these are thesame corporations and brands that have been and con­tinue to be highly visible in sport sponsorship inter­nationally. For example, Philip Morris' sponsorshipof women's international tennis (Virginia Slims) andFormula One and Indy Car (CART) racing(Marlboro) has afforded these brands enviable televi­sion exposure around the world.

What is less obvious about this group of companies isthat they also invest heavily in sport sponsorshipthrough their subsidiaries. Imperial Tobacco inCanada is a wholly owned subsidiary of Imasco, aholding company, which is 41 % owned by BAT.Imperial's top two brands, Player's and DuMaurier(with 59% of the domestic Canadian market), bothhave well-established sport-sponsorship programsthat give them significant media coverage. As nation­al brands they compete for marketshare with otherCanadian brands with well-developed sponsorshipprograms such as Craven 'A' and Belvedere, whichare owned by Rothmans, Benson & Hedges, a 60%­owned subsidiary of Rothman's Inc. that is a sub­sidiary of Rothman's International, a transnational

conglomerate headquartered in the Netherlands(Cunningham, 1996, p. 22).

The role of the national brands in the portfolios ofthese transnational companies is to increase overallcorporate profitability through better penetration ofnational markets. In bold terms, this is accomplishedby positioning the domestic brand through advertis­in?, sponsorship and other elements in the marketingmIX to appeal to national identities, sensibilities andtastes better than a global brand might be able to do.Despite the distinctly transnational character of thepar~n~ corporations, overall profitability in the systemtradItIOnally has been contingent on the domesticmarket performance of each family of national brandsin the corporation's stable.

This is not a static system, however, and obviouslynot all national brands need to remain restricted todomestic markets. There is plenty of latitude andopportunity for the transnational parent companies toshift strategies. For example, increased regulation insome regions might eventually lead to brand consoli­dation in these markets and/or to the expansion (per­haps even relocation) of brands into foreign markets.Overseas investment by the tobacco conglomerateshas been going on for more than four decades and cer­tainly will not abate (Nath, 1986; McGowan, 1995;Cunningham, 1996). As a result, global brands andoverseas national brands stand to become moreimportant in the long run, although national brands inthe restricted markets will still be expected to com­pete for marketshare.

Sponsorship is only one element of brand marketings~ategy, and the flow of tobacco-sponsorship moneyWIll tend to follow these overall brand strategies.Tobacco sponsorship of sports will not disappear inthis scenario, although it might assume new forms.Some sports, such as Formula One auto racing, whichis. already sponsored by pre-eminent global brands,WIll probably not be affected much at all, at least notfor some time to come.

COMMENTS AND OBSERVATIONS:

REVISITING REGULATION

I have tried to be as objective as possible in analysingthe tobacco industry's response to regulation, and notto be lured by the primacy of one sort of evidenceover another. The conclusion that I have reached isthat tobacco sponsorship of sports will continue overthe next while, although not without interruptions andpossibly some relocations. This conclusionineluctably, means that the international legislativ;action to curb tobacco advertising will not have suc­ceeded during this same period, because the success

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of tobacco sponsorship denotes the failure of the leg­islative strategies of WHO and other health organisa­tions to stop it. I have mixed feelings about this result,particularly about the way that health legislationseems to have ended up as a zero-sum game.

The health community seems to have assumed, otherfactors being equal, that tighter regulatory control oftobacco advertising and sponsorship will result indiminished tobacco promotional activity, which intum will contribute to a related, although not equallyprecipitous, decline in tobacco consumption. The evi­dence I have presented suggests that several factorsconfound this process, in particular, the changingtechnological context and competitive structure('transnationalisation') of the global tobacco market­place and the tobacco industry's ability to adapt toregulations in the face of these conditions (also, seeMiles, 1982; Cunningham, 1996; McGowan, 1995).

It is a natural question to ask, therefore, whether amore workable option for some countries might benot to try to censor the tobacco industry, but to allowa restricted flow of tobacco brand communicationsthat can be monitored (such as sponsorship communi­cations that are restricted to brand logos and names),and to balance these with anti-smoking interventions.Furlong (1994), in a careful review of the evidentiarycase supporting the sponsorship ban in Australia, con­cluded that other options for reducing smoking rateshad not been adequately considered:

It is arguable that it has not been conclusivelyshown that a comprehensive strategy, involvingthe restriction of tobacco promotion, is neces­sary for the problem (of smoking) to bealleviated. It is submitted that educationalprogrammes, cessation services, anti-smokingadvertising and sponsorship and the generalinforming of the public of the effects of smok­ing, while still allowing tobacco advertisingand sponsorship, may achieve the same effect,without depriving the economy, and sport inparticular, of the contribution of the tobaccoindustry. (p. 180)

Her remarks are worth taking seriously. Parallel argu­ments have been made supporting anti-smoking cam­paigns as more consistent with the system of rightsand freedoms of Western democracies than the prohi­bition of commercial speech, and as potentially moreefficacious (Mize, 1995; Locke, 1994). The continueddownward trend of tobacco consumption in devel­oped nations such as Australia, Canada, Sweden andthe US that still allow tobacco sponsorship of sports,albeit in restricted form, speaks to the importance ofthese alternative measures.

The experience in the US, in particular, adds weightto these arguments. The greatest reduction in smokingrates in the US occurred during the period 1967 to1970, before the broadcast advertising ban of 1971.Under the 'Fairness Doctrine', a previously little-usedfederal law, US radio and television broadcasterswere forced to allocate free time to anti-smokingcommercials in order to accept tobacco advertise­ments. The result was an exposure rate of one anti­smoking commercial for every 4.4 tobacco commer­cials (Federal Trade Commission, 1969, cited inMiles, 1982, p. 44), and an average drop in smokingrates of approximately 4% per year over 3 years(Warner, 1978, cited in Miles, p. 265). After thebroadcast advertising ban, when anti-smoking mes­sages were no longer carried, smoking rates climbedback at a rate of roughly 4.5% per year, in the absenceof any broadcast cigarette commercials (Warner,1978). Barring the rather unusual circumstances ofthe case, it invites consideration of a more moderate'middle-path' strategy that would allow some formsof tobacco-sponsorship communications, albeit regu­lated and restricted in form and content, and in returnrequire a media investment in anti-smoking messagesor free airtime for such messages.

The main limiting factor in such a plan is how itwould affect children. This is not an insignificantpoint. One of the most trenchant social and ethicalproblems for sports properties with tobacco sponsor­ship is that children and adolescents end up having asignificant level of exposure to and awareness of thesponsoring brands (Cornwell, 1997; Hoek, Gendalland Stockdale, 1993; Ledwith, 1984; Aitken, Leatharand Squair, 1986). In many ways, this issue (of tar­geting children) is for tobacco sponsorship what ETS(environmental tobacco smoke) was for smokers'rights. There was tolerance of smokers until non­smokers found out cigarette smoke is democraticabout who it affects. Similarly, many adults were tol­erant of tobacco sponsorship of sports until theyfound that the message does not respect age barriers.Youth smoking is a global issue. Even though smok­ing is taken up differentially in developed versusless-developed regions, youth are universally the pop­ulation that initiates smoking and the populationtherefore most at risk (Nath, 1982; US Department ofHealth and Human Services, 1994; Roemer, 1993;Pan American Health Organisation, 1992; ToxicSubstances Board, 1989). Until recently there was nota clear behavioural link between exposure to adver­tising and adolescent smoking. However, a recentmeta-analysis by Pollay et al. (1996) found thatadolescents have a threefold higher sensitivity toadvertising than adults, when investment in brandadvertising is correlated with brand market share in

ASIA-AUSTRALIA MARKETING JOURNAL, VOLUME 5, NO.1

the affected age groups. It is not clear that sponsor­ship messages have the same effect as advertisingmessages. Carson (1993) found no significant corre­lation between adolescent smoking and interest insports. However, the robustness and direction ofPollay et aI.'s findings are not reassuring, and moreresearch clearly needs to be done.

The success of a 'middle-path' solution would be con­tingent on developing effective legislation to restrictand channel tobacco brand communications into afew controlled contexts and on instituting a system ofanti-smoking measures that included 'equal-time'provisions in all media carrying tobacco advertising.This kind of approach is not unlike the prohibition­with-international-exemptions legislative frameworkseen in Australia, New Zealand and Singapore or thelimited-media-and-message conditions in Ireland,Brazil and Canada. In these approaches, some spon­sorship messages are let through in some media. Thepoint would be to ensure that these messages sharetime and space with anti-smoking advertising. Thispotentially could have advantages over a total ban,although I do not want to overstate this case, and bansmay well be the most effective and efficient approachto take in some or even most countries.

In some national communities, however, benefitsmight be derived from a more moderate approachsuch as reducing the 'forbidden fruit' appeal thatinheres to cultural practices like smoking when they(and messages about them) are prohibited. This is par­ticularly an issue among adolescents, for whomsmoking is already a forbidden ('adult') activity.Anti-smoking advertisements targeted at adults andfamilies in mainstream media potentially could be auseful complement to the anti-smoking messagespresently aimed at children and young people in manycountries, as could sport sponsorship by health pro­motion agencies, such as is presently done in WesternAustralia (Healthway) and New Zealand (Smokefree)(Holman et aI., 1997; Health Sponsorship Council,1994; Ashton, 1991). New communications technolo­gies such as electronic billboards, pay-per-view andthe Web could be used constructively in such a pro­gram, both to restrict the flow of tobacco sponsorshipmessages to adult audiences and to deliver targetedanti-smoking messages to youth. Smoking reductiontargets could be set for youth which, if not met, wouldresult in tighter controls on the tobacco industry.

As a final observation, Leiss (1997) has recentlywarned that the entire framework of legislative actionto date has been flawed because it has followed a'rational-informed' consumer choice model, whichsimply does not work in cases of addictive sub­stances. The key to responding effectively to the

smoking epidemic, in his view, is to use an addiction­management approach. This would entail regulatingtobacco as a controlled substance and restrictingtobacco product sales to specially licensed premisessuch as liquor stores initially and prescription phar­macies eventually. This kind of an approach is notincompatible with what I am proposing, and couldprovide the framework for a revised legislative strat­egy, whether in individual countries or international­ly, in accordance with national values, standards andcustoms.

ENDNOTES

The sponsorship figures reported in this paper have beencompiled using Roemer's (1993) summaries and recentlegislative listings in the International Digest for HealthLegislation (WHO, 1993-1996). There is always a risk incombining separate reports in this manner, and I take fullresponsibility for any errors or omissions that may haveresulted.

2 I have used the terms 'prohibited' and 'restricted' based ontwo criteria: (1) as per the original wording of the legislation,where I was able to obtain it, or of the WHO summaries ofthe legislation, (2) where these terms were absent from thedocumentation, I have used them in a relative sense todistinguish an activity that was banned ('prohibited') fromone that was merely curtailed ('restricted').

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