Juul Halts Most U.S. Advertising After Spending $104 Million in First Half of 2019

Juul Labs, maker of the industry-leading Juul vape brand, has suspended broadcast, digital and print advertising in the U.S. The company announced the decision today, coinciding with the news that K.C. Crosthwaite is taking over as CEO for Kevin Burns, who stepped down from the role. Crosthwaite formerly served as chief growth officer for Altria (formerly known as Philip Morris Companies), which owns a minority stake in Juul. He has also held roles as president and CEO for Altria's Phillip Morris USA and Altria's vp of strategy and business development. According to Juul's press release he helped lead Altria's expansion into cigarette alternatives such as e-cigarettes. It's unclear to what extent Juul will continue other advertising and marketing efforts in the U.S., whether the halt is temporary or if the company will continue broadcast, digital and print advertising in other global markets. Juul Labs has not responded to Adweek's request for comment. A week ago, CBS, WarnerMedia and Viacom all announced a decision to drop all e-cigarette advertising amid health concerns related to a series of vape-related lung illnesses and concerns over still-rising levels of teen vaping. While TV ads for cigarettes are illegal under the Public Health Cigarette Smoking Act, the law does not apply to e-cigarettes. In its statement, Juul also said it would refrain from lobbying against legislation proposing a ban on the sale of flavored vape products that critics have argued are targeted at underage users. Juul has seen an explosion in its marketing spending over the past two years. The company spent nearly $104 million on measured marketing in the U.S. in the first six months of 2019, up from around $1.4 million over that period in 2018 and more than $75 million in total last year, according to Kantar Media. Juul spent just $20,000 on its measured marketing domestically in 2017, also according to Kantar Media. Over the past year, Juul has reportedly been working with advertising agency holding company Omnicom on its marketing efforts. Although Omnicom has not publicly confirmed its relationship with Juul, sources with knowledge of the holding company's relationships told Adweek that Omnicom first began working on the vaping brand's advertising last summer after an agency review. Instead of tapping one of its agencies to run the account directly, Omnicom assembled a team of talent pulled from several agencies within the company, a source with knowledge of the account told Adweek. Omnicom's work on the brand was primarily focused on a campaign aimed at converting adult smokers to vaping, the source said. Omnicom has not responded to Adweek's request for comment or answered questions related to its relationship with Juul. The leadership shakeup and change in marketing strategy for Juul leave Omnicom's relationship with the client in question. One source speculated that the remainder of the brand's advertising account could move to Leo Burnett, given Crosthwaite's background at Altria and the agency's longterm relationship with Altria's Phillip Morris USA. Phillip Morris first hired Leo Burnett to promote its Marlboro brand in 1954. Leo Burnett's Chicago office reportedly went through a round of layoffs related to changes to the Phillip Morris USA account in February. Juul could also opt to take any remaining marketing in the U.S. in-house or put its account back under review. Leo Burnett declined to discuss any possibility of a client relationship with Juul, saying the agency does not comment on speculation. Prior to the 2018 review, Deutsch reportedly worked with Juul in an advisory capacity on youth smoking-prevention messaging. According to the Center For Disease Control, tobacco industry-sponsored youth tobacco prevention programs in schools are ineffective and may actually promote youth tobacco use. Juul's youth prevention programs came under scrutiny in a House panel on vaping this year and reportedly included a rep from Juul telling students at Dwight School in New York that its e-cigarettes were "totally safe" in an April 2017 presentation where teachers weren't present, as well as the company paying a Baltimore charter school organization $134,000 to teach a five-week "healthy lifestyles" curriculum it developed at a summer camp. "Pulling deceptive ads that manipulate people, including kids, into using their products is ignoring the 800-pound gorilla in the room," Jim Steyer, founder and CEO of Common Sense, an organization dedicated to promoting safe technology and media for children, said in a statement. "These products—not just the ads—need to be immediately banned from the market until they've been approved by the FDA as safe, which they are not, and we are skeptical that the company’s choice for a new CEO, a tobacco company executive from Altria, will prioritize the public’s health over Big Tobacco 2.0 profits." Broadcast advertising for cigarettes was banned in 1970, under the Public Health Cigarette Smoking Act, followed by a drop in the rate of adult cigarette smoking from 40% to 32%, according to Gallup. It's unclear how much of that can be attributed to the broadcast advertising ban, however, as the federal cigarette tax was also doubled in 1983. In fact, while the Fairness Doctrine's impact on broadcast advertising requiring an anti-smoking ad for each smoking ad was followed by a decline in per capita cigarettes smoked, there was actually briefly an increase in that number in the years immediately following the broadcast ad ban, according to the National Center for Biotechnology Information).

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Juul Halts Most U.S. Advertising After Spending $104 Million in First Half of 2019

It's unclear how the decision will impact Omnicom's reported relationship with the client

Erik Oster

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Erik Oster