Power

Vape trick: bringing old school tobacco marketing back

The industry’s new ad model is the one cigarette companies threw out years ago.
Power

Vape trick: bringing old school tobacco marketing back

The industry’s new ad model is the one cigarette companies threw out years ago.

There was a time when smoking was one way to get a cool new jacket. Back in the 1990s, cigarette brands like Camel and Marlboro supplemented their addiction-based business plan with collectible points, which smokers could spend on products featured in catalogs or magazines. There were Marlboro branded hats, backpacks, thermoses, and pocket knives, and Camel pendants, earrings, clocks, and portable beverage coolers. It was an incredibly successful incentive strategy, until the industry was publicly rebuked for its advertising practices and gave up on those programs.

But today, tobacco rewards plans are making a comeback, though they look a little different from the swag-based models of yesteryear. Vape shops across the country are encouraging the 12.6 percent of adults who have tried an e-cigarette or other vaping device to spend more on the flavored liquids and vape products the same way your favorite smoothie shop might: by plying their repeat customers with discounts, freebies, and “cash back.”

The tobacco industry’s advertising and rewards programs seem taboo. Branded gear by these companies, which is now somewhat collectable, feels ironic when everyone knows that “smoking kills.” But vaping, which gained popularity after it was introduced in the U.S. around 2006, is perceived to be less dangerous than cigarettes (though the industry doesn’t make health claims and the jury’s still out, with evidence on either side ) and its purchase rewards programs have so far escaped criticism.


I started thinking about nicotine marketing after I stumbled upon a Marlboro-branded Atari Lynx, complete with motorcycle racing game. It’s an item from one of the two most popular rewards programs — Marlboro Miles — which like Camel Cash allowed consumers to collect proof of purchase slips on cigarette packets and redeem them for branded stuff.

Apart from tapping into people’s desire for stuff that they can perceive as free, these rewards programs had an aspirational bent. One Camel ad in Vibe, featuring a Breckin Meyer look-a-like, suggested the potential to win up to $300,000 in prizes, including a “28-foot cigarette boat,” a year’s supply of hair gel, three months in Malibu, and a VIP nightclub treatment. Collect enough Marlboro Miles, and you might be able to get everything you need for a campsite or kayaking adventure. But to obtain the merchandise from these catalogs, smokers had to pay hundreds, if not thousands of dollars, since in 1993, cigarette packs sold for about $1.70, according to the Bureau of Labor Statistics. Each Marlboro pack had five “miles,” which means you needed to consume 100 packs to get a backpack valued at 500 Miles. (To compare, a Jansport backpack of similar quality cost as little as $30 in 1995.) Likewise, each pack of Camels came with a single C-Note; you needed to consume 350 packs, at a cost of roughly $595, to get a Camel denim jacket.

Marlboro branded merchandise, like this bag, was a perk of collecting proof of purchase slips in the 1990s.

Marlboro branded merchandise, like this bag, was a perk of collecting proof of purchase slips in the 1990s.

Academic papers on cigarette marketing from this era note that merchandise distributed through these programs often appeared to target specific demographics, like teenagers (through heavily branded clothing or jewelry) or women of lower socioeconomic status (through cookbooks with simple language). So, at a time when nearly a third of Americans below the poverty line smoked, according to the Centers for Disease Control and Prevention (CDC), it was easy to see why such an approach might draw scrutiny, and in 1998, regulators enacted the Tobacco Master Settlement Agreement, which neutered the programs by limiting the ways that large-scale cigarette manufacturers could sell their products. Companies could no longer include their logos on the prizes or actively target children. The agreement didn’t kill the programs on its own — the companies simply stopped branding the rewards — and by this point they already had enormous mailing lists to use for other marketing. In the end, though, regulatory pressure may have killed the programs anyway. By the time Camel and Marlboro retired their respective rewards programs in 2006, an average pack cost more than $4, according to the Campaign for Tobacco-Free Kids. The taxes were intended, of course, as a deterrent, but they had a side effect: A Marlboro Mile simply didn’t go as far.

In 2007, Philip Morris was sued for abruptly ending the Marlboro Miles program, leading to a 2009 federal appeals court ruling that debated whether the points, which had no expiration date, could be considered gift certificates and therefore needed to be honored by the company. (The court found that they couldn’t.) A separate 2009 class-action lawsuit against R. J. Reynolds for terminating Camel Cash led to a legal dispute that ended in 2016 — with consumers allowed to redeem their decade-old C-Notes.


As cigarette companies retired their mail-order programs, brick and mortar retailers were growing more sophisticated with their own rewards programs. Early programs, like Subway’s fraud-laden Sub Club, slowly gave way to more sophisticated initiatives, starting with the Starbucks Card, which launched in 2001 and eventually became the best-known program of its kind. In recent years, the rewards model has gained a Silicon Valley veneer: mobile-driven startups like Belly have helped put these kinds of rewards programs in tiny retail outlets, while big-name firms like Uber and Airbnb grew to multi-billion-dollar valuations on the backs of online referral programs that offered discounts every time a new customer downloaded and used the app.

These retail and online programs made the tobacco industry’s own programs, at the time of their sunset, look outdated and kind of complicated. And they came to prominence just as e-cigarettes and vaping devices were gaining popularity in the early aughts. The e-cigarette industry began using rewards to drive sales of e-cigarettes, vaporizers, and especially e-liquids. For example, V2, a manufacturer with a wide convenience-store base, has a rewards program that offers redeemable points for customer referrals, purchases of V2 products, and signing up for its marketing channels; so, too, does VaporFi, a company with both a significant online presence and its own national chain of stores. Blu, the American e-cigarette maker owned by the U.K.-based Imperial Tobacco Group and noted for its television ads, encourages its customers to become a part of bluNation, a points program that promises to “save you money” on purchases of future devices, accessories, and e-liquids — and notably emphasizes it is not currently offering branded merchandise.

Avail Vapor, which calls itself the largest chain of vape shops in the country, with 102 locations, uses a two-pronged approach to attracting new customers through marketing programs. One program, Avail Life, offers $10 in store credit for every $100 spent. Additionally, the company offers a robust referral program that promises “50 AVAIL bucks for each new friend who makes a $40 or more purchase,” along with a $10 reward to any existing customer who refers two new friends.

“Through market research, we’ve learned that the majority of our customers [come by] word of mouth,” Maggie Gowen, Avail’s marketing director, said of the company’s strategy in a phone interview. “They’re the ones that were our biggest advertisement.” She added that the company, which recently received an investment from Philip Morris’ parent company Altria, took direct inspiration from big-box chains, though not revealing which ones. And if Avail was inspired, it wouldn’t be alone. Vaping blogs often study the business models of retailers in similar lines of business — like movie theaters, which tend to structure their reward programs around lower-end items, like small bags of popcorn and 2D movie tickets.

There are, however, some regulations being imposed on this relatively new industry. In October, the FDA created new guidance, as part of broader recommendations on “free samples,” that limit how vape shops can dole out rewards. For one thing, you can get tobacco as a reward through a vape shop’s program—but only as long as that reward is directly the result of buying another tobacco product. “Distributing a ‘free’ tenth vial of e-liquid with either the ninth or eleventh purchase would not violate the free sample ban because it would effectively amount to a discount that is part of a sales transaction requiring monetary payment, not a free sample,” the FDA guidance states.

Gowen said that these regulations actually shaped the Avail Life program, which offers many of the same rewards of its competitors, but costs $1 to join, a nominal fee that allows customers to sample unlimited products in stores. (In other words, there’s sampling, but it’s not free.) She emphasized that the company has tried to keep ahead of FDA decisions — there are more expected in the coming months — and has a director of regulatory affairs on staff. “We knew the FDA was going to regulate this industry — it wasn't a matter of if, it was when,” she noted.

The regulatory situation certainly could have been worse for the industry. Last July, the FDA announced it would take a less aggressive approach with e-cigarettes for now as it researches the industry, a softening of the stance that came before the Trump era.


Rewards programs are, of course, about behavioral psychology — in effect, rewards are a form of operant conditioning, a way to encourage behaviors that help a company financially while discouraging those that bring customers in the door less often.

These programs have the potential to, over time, build a return consumer base around a habit with a slightly better reputation than tobacco. About 3.6 percent of working Americans used e-cigarettes between 2014 and 2016, according to a survey by the CDC . That’s somewhat small compared to the 15.4 percent who smoke cigarettes, but the trend is growing, especially among those aged 18 to 24, who in 2014 used e-cigarettes at twice the rate of those over age 25, according to a 2016 Surgeon General report. Vapers tend to skew younger and male, an attractive audience marketers struggle with. Additionally, the CDC findings make clear, vapers tend to fall into lower income brackets, an issue also prevalent with smoking, but the rewards programs are still successfully encouraging consumers to spend.

Researchers say that e-cigarette users spend an average of $50 to $75 in vape shops, which have begun to offer discount-based rewards programs.

Researchers say that e-cigarette users spend an average of $50 to $75 in vape shops, which have begun to offer discount-based rewards programs.

These programs are affordable to run, and remain aboveboard, which is good for companies trying to work within the narrow confines of the law. But lawful as they are, the lingering stigma of tobacco may keep some doors closed for vaping companies.

Last year, Apple rejected a vaping app because of its nicotine content. While there are apps dedicated to vaping on the U.S. App Store, such as the shopping app Vape Block, they appear to have not been updated in many months; others, like the store directory Vape Boss, appear to have been removed from the App Store, though they’re still available on Google Play. That could pose a problem for rewards programs borrowing cues from Starbucks, like Avail’s. Gowen says Avail is working on an app for its rewards program, which the company hopes to launch in February, and hasn’t heard anything that suggests it might get rejected.

Whatever the case, the legacy of tobacco and the controversial marketing of its past hang heavy over vaping, and some limitations do exist regarding what companies can say. “I’d say from a marketing standpoint, we’ve had to be very… creative in our approach and how we reach our customers and talk about vaping, and educating,” Gowen added.

It’s hard not to wonder if, at some point, the “creative” approach that vape companies have adopted will eventually be seen as inappropriate and manipulative, the way the swag programs are. Maybe these programs aren’t exactly the same as earning a Marlboro Mile, but they serve the same goal: To win over a captive audience — potentially for a lifetime — and in the end, vape users won’t even have a novelty backpack or cap to show for it.

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