Broadband Cable Association of Pennsylvania

NewsClips

December 27, 2013

The world's biggest online retailer has mastered the art of talking a lot about its holiday sales, while saying very little. For years, Amazon has blasted out a press release, a day or so after Christmas, filled with a string of tantalizing-sounding factoids about the holidays at Amazon without actually providing a very meaningful picture of its business.

In 2010, Amazon said customers ordered more than 13.7 million items on the site's peak sales day, Nov. 29 - "a record-breaking 158 items per second" - we were told in one typical release from the company. No word on how many of those "items" were paper clips and how many were plasma television sets. The 2013 edition of Amazon's holiday bragfest was surprising because it actually told many of the professionals who follow the company something they actually wanted to know, even if Amazon did it in the most cryptic way possible. In a quote in its press release, Jeffrey Bezos, the chief executive of Amazon, said: "Amazon Prime membership continues to grow, and we now have tens of millions of members worldwide."

Amazon Prime is the company's $79-a-year membership service, which provides people with free two-day shipping and a list of other benefits. By all estimates, it has been a big hit for the company. Still, Amazon has never said how many Prime members it has, leaving Wall Street analysts to make educated guesses about just how many people are paying the annual fee for the service, which is crucial to Amazon's strategy for increasing retail sales, building a video service to compete with Netflix and other ambitions.

Of course, "tens of millions of members" leaves a lot to the imagination. Still, that choice of words clearly implies that Prime membership is north of 20 million accounts, higher than the 16 million to 18 million some analysts had estimated. Amazon also said it added more than a million new Prime customers during the third week of December. Amazon's new spirit of transparency did not, however, extend to its Kindle family of devices, the total sales of which are still shrouded in mystery. How many of the devices did Amazon sell this year? The company said only that "millions of customers unwrapped Kindle e-readers and Kindle Fire tablets this holiday season." New York Times

The electronic-cigarette industry has big television advertising plans for 2014-if they're not snuffed out first.

The Food and Drug Administration is expected as early as January to propose curbs on the battery-powered devices amid calls from politicians and anti-tobacco groups to regulate them like traditional smokes, which haven't been allowed in TV commercials since 1971. Rather than retreat, e-cigarette makers are unleashing a flurry of new TV ads to reach as many consumers as quickly as possible and cement their brands nationally. E-cigarettes turn nicotine-laced liquid into vapor, representing a small but fast-growing alternative to conventional cigarettes. Lorillard Inc. launched two new TV ads for top-selling blu this month and plans to spend more on marketing next year than in 2013, when it spent about $30 million. No. 2 player NJOY Inc. began airing a new TV ad for its eponymous e-cigarette Thursday and is budgeting more than $30 million for U.S. marketing in 2014, triple this year's outlay. Both say TV will command the lion's share. Smaller rivals, including the makers of Fin, Mistic and 21st Century Smoke, have launched inaugural TV ads in recent months, part of a strategy to separate themselves from a pack of more than 200 rival brands pitching "vaping" across the Internet, radio, magazines and billboards. E-cigarette companies already spent more than $15 million on TV ads in the first nine months of 2013, up from $1.1 million in the year-earlier period, according to Kantar Media.

The ads have aired on cable networks including ESPN, Comedy Channel and Spike TV and local affiliates of broadcast networks; NJOY reached about 10 million viewers during this year's Super Bowl. Next year's numbers could be further inflated by the two largest U.S. tobacco companies, which are wading into e-cigarettes. Marlboro cigarette giant Altria Group Inc., which recently launched its MarkTen e-cigarette in Indiana and Arizona, hasn't ruled out e-cigarette TV ads next year. Camel maker Reynolds American Inc. recently aired TV ads in Colorado for its Vuse e-cigarette, a brand it plans to take national next year. There is growing scientific consensus that e-cigarettes are less harmful than traditional cigarettes, which release thousands of toxins through combustion. But critics say e-cigarette ads re-glamorize cigarettes and could trigger a new generation of smokers. Regulators already restrict advertisements for traditional cigarettes to magazines, direct mailings and store displays.

Attorneys general from 40 states urged the FDA in September to rein in e-cigarette marketing, arguing TV is "making it easier for those advertisements to reach children." House Democrats on the Committee on Energy and Commerce also sent a letter to the FDA in November, complaining e-cigarette ads mimic those of traditional smokes from half a century ago, including celebrity endorsements. "How much do we have to close our eyes to history?" said Matthew Myers, president of Campaign for Tobacco-Free Kids, an antismoking group urging tough e-cigarette regulations.

The FDA won't comment on the specifics of its proposal before they're published. E-cigarette companies say they target adult smokers, not youth, and would appeal advertising bans in court if necessary. Blu uses actors Stephen Dorff and Jenny McCarthy in its TV spots but says the ads are aired from 10 p.m. to 2 a.m., with at least 85% adult viewership. "It wouldn't surprise me if the knee-jerk reaction banned [e-cigarette ads] from TV, but we're going to use it responsibly until we're told not to," said Jason Healy, blu's founder. NJOY hasn't used celebrity pitches in its TV ads carrying the tagline, "Cigarettes, you've met your match."

But it has posted an ad featuring singer Courtney Love on the Internet and joined with singer Bruno Mars, who has tweeted about NJOY. The company also handed out e-cigarettes at New York's Fashion Week. "We are denormalizing and deglamorizing tobacco smoking," said Craig Weiss, NJOY's chief executive. E-cigarette companies in the U.S. already aren't allowed to say that their products help people quit smoking or are less harmful than traditional cigarettes. That is the result of a 2010 court ruling allowing e-cigarettes to continue being sold as long as they don't make "therapeutic" claims.

Marketing campaigns are trying to approach the line without crossing it. NJOY's newest TV ad shows a young man trying to persuade his friend to drop smoke for vapor. Instead of using the word "quit," the voice-over intones that NJOY is the only e-cigarette worth "switching" to, adding that "friends don't let friends smoke." In a TV ad for blu, Ms. McCarthy sits in an upscale bar and touts the e-cigarette as a "smarter alternative" without the ash, odor or "guilt" of cigarettes. The latest U.S. ad with Mr. Dorff shows him 'vaping' blu inside taxis and restaurants and atop Machu Picchu. "This country was founded on free will," he tells viewers.

A TV spot launched last month for Ballantyne Brands LLC's Mistic tells viewers a pack-a-day smoker can save $1,800 annually by switching to cheaper liquid cartridges. Recent ads for CB Distributors Inc.'s 21st Century Smoke and by Fin Branding Group LLC tout their e-cigarettes as "life changing" and a route to "independence," respectively. Vuse says its microprocessor delivers the "perfect puff.'' But the maker of LOGIC, the No. 3 brand this year at convenience stores in dollar terms, says it plans to keep sitting out TV and focus instead on store displays, radio spots and ads atop taxis. TV ads "create animosity that at this juncture you don't want to create,'' said Miguel Martin, Logic Technology Development LLC's president. Wall Street Journal

Links