Media: `Smoke our ciggies and win a free holiday!'

n. But it could be all stubbed out by the new EU directive on advertising , says Meg Carter

Some predicted the fag end of an era. But last week's government U-turn on the proposed ban on cigarette advertising and sponsorship has given the tobacco barons two reasons to be cheerful. Not only has the industry's estimated pounds 100m sponsorship of Formula 1 motor racing been saved, but anti-tobacco lobbyists' hopes for a ban on the tobacco industry's fastest growing form of promotion - direct marketing - now appear to be in jeopardy.

The Government has been relying on a European Union directive on tobacco advertising and sponsorship rather than UK legislation to implement the ban. The trouble is, no one seems to know whether direct marketing is included or not in the latest draft, which will be debated on 4 December. And Britain's proposed exemption of Formula 1 sponsorship can only cloud the issue further.

"Direct marketing was in the first draft of the EU directive, but seems to have slipped out of the latest version," explains one advertising agency executive, who says he is personally opposed to a tobacco advertising ban because it would be "tantamount to censorship". It is a loophole "some would prefer people to keep quiet about", he adds.

Direct marketing covers a multitude of sins - including "junk mail", customer magazines, sampling and price discount promotions. It's the fastest growth area in advertising, providing one-to-one communication with consumers. And it's already proven highly effective for major advertisers such as Tesco, whose Clubcard initiative involves a discount scheme and customer magazines. Faced with a long-standing threat to ban their use of traditional advertising the tobacco industry looked to alternatives. It developed "grey" tactics, such as funding political parties, offering jobs to politicians and civil servants and commissioning positive scientific research. And it significantly increased its investment in direct marketing. All three major UK manufacturers are now sitting on millions of names and addresses they have bought, rented, or collected from replies to special offers and competitions, cigarette coupon gift schemes, and promotional evenings in pubs and clubs. Smokers are now being targeted with glossy lifestyle magazines. Silk Cut has one, and so does Marlboro - a title called Icon, aimed at 18-to-34-year-olds. Embassy, meanwhile, has resurrected the cigarette coupon, and Benson & Hedges has introduced a gift catalogue; smokers can collect points to buy toys, fitness equipment and sportswear. There's also a growing range of tobacco brand extensions - such as the Camel Collection of rugged outdoor wear, the Marlboro Classic range, which even includes Marlboro-branded shops, and, in the US, Silk Cut-branded adventure holidays.

"Tobacco companies are sending coupons by mail with personalised barcodes to track smokers' habits," says Andy Wood, head of European marketing services for NCH Promotions, which has worked on a number of cigarette brands. "The databases they are building are very detailed, providing names, addresses and age as well as brand and product preference, even lifestyle information." They are able to track the brands someone smokes and how loyal they are to these, and, by understanding their other interests, could offer incentives - such as tickets to sports events or weekend breaks, to buy loyalty. Some are even considering new ways of selling - such as delivering cigarettes direct to people's homes.

Tobacco companies are tight-lipped about how well such tactics work. According to Liz Buckingham, a spokeswoman for Imperial Tobacco: "These are activities many believe are effective. Businesses would not be doing them if they couldn't identify a return."

Such activities, however, are governed by a strict voluntary code. Promotional material for cigarettes, for example, can be sent only to people aged 18 or over who have specifically requested them. Meanwhile, anonymous mailings and mailings to under-18s, even if they smoke, are banned. The Department of Health, however, believes such measures don't go far enough. Which is why, it claims, it is "pushing hard" for direct marketing to be included in the EU directive. Not hard enough, it seems. "There is no EU consensus on direct marketing," the Direct Marketing Association claims, adding that it has already addressed concerns raised by other forms of ads about targeting non-smokers and the young. "And already, some are seeing possible exemption of Formula 1 as an indication for the future of direct marketing."

Unsurprisingly, the tobacco industry has responded to all of this with quiet glee. John Carlisle, corporate affairs director for the Tobacco Manufacturers' Association, insists: "The [Formula 1] decision has thrown the European directive into total disarray." He may be right. Whether the British government manages to salvage the situation remains to be seen. But one thing's for sure: as it scrambles to secure at least some kind of advertising ban, the tobacco lobby will have its ear every step of the way. As for direct marketing, well, that appears to be the last thing on its mind.