Behind Philip Morris’s entreaty to agencies

Earlier this month, Campaign reported that a company under McCann Worldgroup in Japan, Thirteen, was to begin working on an assignment for Philip Morris International’s (PMI) smokeless tobacco brand IQOS. The move was significant for a number of reasons, not least because McCann Worldgroup parent IPG is known for its significant healthcare business and has not worked with tobacco companies for a long time.

The advent of ostensibly less dangerous products by firms such as PMI stands to change the relationship between advertising agencies and tobacco by removing some of the stigma attached to the sector. PMI has taken deliberate steps to appeal to agencies and what it defines as the “creative community” as a whole, including hosting a large beachfront space alongside tech companies at Cannes Lions in June.

To understand what PMI is trying to achieve with its outreach, Campaign spoke to the company’s global director of communications for smoke-free products, Tommaso Di Giovanni. 

Di Giovanni said heat-not-burn (HNB) products have been in development for 20 years at PMI and represent the first major innovation in the history of the tobacco industry. But he said perceptions of the sector have yet to change.

To be sure, regular cigarettes are still very much a fact of life. IQOS is available in 40 markets, but penetration of HNB and e-cigarette products in most emerging markets is still low.

“There are more than enough smokers in the world. Not only do we not need more smokers, we don’t want them."
—Tommaso Di Giovanni, PMI

As smoking has declined across the developed world, it has increased steadily in poorer regions. Aggressive marketing tactics for cigarettes in countries where regulations around the promotion of tobacco are less stringent can be seen as a major driver. According to a World Health Organization report from March 2018, 80% of the world’s 1.1 billion smokers are in low- and middle-income countries. With around 70 million smokers, Indonesia, for example, is among the world’s biggest tobacco markets.

Di Giovanni claimed PMI’s long-term goal is for smokeless products to render old-style cigarettes obsolete. “We want 30% of all our sales to be smoke-free products by 2025, equivalent to 250 billion units,” he said. “The idea is that by then, 40% of revenue will be represented by those products.” He said the aim with IQOS is not to attract new tobacco users, but to convert existing ones.

“There are more than enough smokers in the world,” he said. “Not only do we not need more smokers, we don’t want them. It wouldn’t be the right thing to do. [Converting people] has the opportunity to benefit society at large, and that makes good sense for our business.”

But if people are truly concerned about the impact of smoking on their health, they should quit altogether, he said. Those who don’t quit should be encouraged to switch to “less harmful alternatives”. He added that there’s “no such thing as a safe product”.

The positioning seems at odds with PMI’s current marketing strategy. An investigation by the NPO Tobacco-Free Kids and Netnografica published today documented over 100 social-media campaigns by tobacco companies in which social-media influencers were reportedly paid to promote cigarettes to their online followers (predominantly young people) without disclosing the nature of their commercial agreements.

A further factor that throws doubt on PMI’s stated goal is the fact that smoke-free products are more expensive than cigarettes, putting them out of reach of many smokers in poorer countries.

Either way, to set any meaningful shift in motion, Di Giovanni said it is necessary to change regulations on tobacco marketing to accommodate these new products. “We’re trying to mimic the experience of cigarettes,” he said. “But it’s never exactly the same as a cigarette. For smokers to switch, you need to explain the benefits of the products, and most legislations don’t allow you to do that. They were often drafted in the early '90s and don’t take into account products like IQOS.”

Appeal to creatives

Both lobbying for change and finding ways to market effectively within existing frameworks requires more engagement with people in the communications industry, Di Giovanni said.

“We believe the creative community has an important role to play,” he said, explaining the reason for setting up a presence at Cannes Lions. “They are always at the forefront of societal changes. That’s why we asked them to join us. We were looking at them as partners we want to work with because it’s a significant challenge to change people’s minds and to encourage smokers to switch, because they’re used to [regular cigarettes].”

Campaign understands that various agency and holding company heads held talks with PMI at Cannes, where the organisers of the event played down the company’s presence. Di Giovanni said some who were sceptical about the intentions of the tobacco industry relaxed their stance in light of the level of investment in smokeless product R&D ($4.5 billion since 2008 according to PMI) and the involvement of a large number of scientists (PMI says around 300) in the project.

But it is still unclear how open agencies are to PMI’s entreaty. IPG’s global spokesperson did not respond to Campaign’s request for comment. Omnicom Group agencies are known to have largely steered clear of tobacco clients in recent years, unlike Publicis and WPP, which have longstanding relationships with PMI and British American Tobacco, respectively. Joanne Trout, SVP of communications for Omnicom Group, said the holding company does not have an official policy preventing its agencies from working with tobacco companies, but declined to comment further on the topic.

“We’ve been approached, but simply can’t use our powers to promote something that is so obviously bad for people. The smokeless innovation question is an interesting one… I doubt it would change anything, but we’d be interested in hearing the pitch.”
—An independent-agency head

At an individual agency level, feelings are mixed. The head of an international agency under a major holding group in Tokyo, where IQOS debuted and regulations are relatively loose, said he was not against working on such an account in principle, but said the risk of deterring prospective clients in other sectors due to the negative connotations of tobacco would likely lead him to turn it down.

The head of an internationally renowned independent agency in the market said according to company policy, they would not consider working with a tobacco firm. “We’ve been approached, but simply can’t use our powers to promote something that is so obviously bad for people,” he said, but added: “The smokeless innovation question is an interesting one… I doubt it would change anything, but we’d be interested in hearing the pitch.”

Toru Fumihara, managing director of United Entertainment Group, a sports and entertainment agency that recently launched in Japan, was more positive. He said he would be open to it and did not see a conflict of interest with handling sports-related work. He described IQOS as “an interesting product to market” that required creative thinking to promote within the given restrictions.

Clients in conflict?

It’s also unclear whether working on accounts such as IQOS stands to jeopardise relationships with healthcare companies. They seem reluctant to discuss the issue. Campaign asked global representatives at the eight largest pharmaceutical companies for comment. Of these, only Bayer offered a broad explanation as to the selection process of third-party service providers. Roche, Merck and Pfizer declined to comment, while Johnson & Johnson, Novartis, GSK and Sanofi did not respond.

Eliana Clausius, communications business partner at Bayer, said in an emailed statement: “When choosing our suppliers we focus on security of supply, financial contributions and qualitative requirements while acting in accordance with ethical, environmental, social and economic principles… Sustainability in supplier management aims to ensure that the way we conduct business with our suppliers is in line with environmental, social and ethical standards… As [for] how the advertising agencies we work with define their specific customers and/or industry portfolio is beyond our knowledge.”

With opinions on smokeless products still forming, PMI has a way to go in proving itself to potential partners.

“We understand the scepticism,” Di Giovanni said. “We are happy to be scrutinised, but ultimately we hope any decision will be based on science and facts, with smokers at the core of the decision.”

This article has been updated to correct Tommaso Di Giovanni's title.