Background Of Today's Advertising

Part I – The Place of Advertising

INTRODUCTION To understand contemporary advertising we need to know the context of its origins. Chapter 1 traces 7,000 years of history. Practitioners know that advertising is not a single function but a coordinated collection of promotional tools ranging from the simple to the sophisticated. Chapter 2 examines the variety of media available to advertisers and the factors central to its success. The successful advertising professional is comfortable balancing a variety of responsibilities at the same time.

CHAPTER 1 – BACKGROUND OF TODAY’S ADVERTISING

CHAPTER OBJECTIVES Mass advertising requires a number of economic and social factors. In this chapter we trace the relationship between advertising, development of mass media, a rising middle class, effective transportation, and the growth of mass production in the United States. After reading this chapter you should understand: 1. The background of product exchange. 2. The early period of product promotion. 3. Advertising and the American Industrial Revolution. 4. The fight for responsible advertising. 5. Advertising growth during the post-World War II era. 6. Global advertising and the twenty-first century.

CHAPTER OVERVIEW Advertising has been with man since the dawn of civilization, but the origins of advertising in the U.S. can be traced back to the late 19th and early 20th century. Advertising functions in the social and economic context of its time and is a product of their development. The nature of business and advertising grew in scope and sophistication as the economic and social infrastructure of the country developed.

Many factors contributed to the growth of advertising; the breakdown of localism, a collected audience and concentrated market, an educated citizenry, and oligopoly industrial structure, mass production, growth in per capita income, and a consumption culture. Also, good transportation was essential to the distribution of goods to support national advertising.

During the rise of commerce most trade was limited in scope and many manufacturers lacked the means to distribute nationally, so they were dependent on merchants. Branding changed this by giving consumers independent means to make judgments about the quality of products. The convergence of branded products, national distribution, and a growing middle class provided fertile ground for the growth of advertising. Only two elements were missing.

The first was an ethical framework for evaluating messages, and the second was research to measure its effectiveness. The work of early pioneers such as Claude Hopkins did not gain wide acceptance until much later. Previously advertisers made judgments based on intuition.

The history of advertising may be divided into three broad areas:  premarketing era, prehistoric times to the middle of the 18th century. Communication was primitive at best.  mass communication era, from the 1700s to the early 1900s. Faster communication permitted advertisers to reach large segments of the population. 1  research era, the last fifty years where the improvement of techniques and technology, the narrowing of target markets, etc., drives advertisers closer to the perfect campaign.

Advertising has become a major social force. As a consequence, advertisers are watched closely by regulators and society. There is a growing awareness among advertisers of their social responsibilities due to the influential nature of their discipline.

LECTURE OUTLINE I. Part I, The Place of Advertising A. Mankind has communicated the availability and source of goods from prehistoric times. 1. Advertising is shaped by the economic and social factors of its environment, such as: a) breakdown of localism. b) a collected audience. c) a concentrated market. d) an educated citizenry. e) an industrial oligopoly. f) mass production. g) growth in per capita income. h) consumption culture. 2. Efficient transportation set the stage for 20th century advertising. a) Previously, trade was limited to local or regional areas. 3. Branded, nationally distributed goods reshaped the merchant/customer relationship. 4. By 1920, the above factors gave birth to the advertising industry. 5. Two missing elements; a) an ethical framework and b) research to measure effectiveness. 6. Claude Hopkins was a pioneer in advertising research. His work was not accepted until decades later. 7. Advertisers went by their intuitive feel for the consumer. B. Advertising Eras 1. The premarketing era – product exchange in prehistoric times to the middle of the 18th century. a) Media consisted of town criers, clay tablets, and tavern signs. 2. The mass communications era - the 1700s to the early 1900s. a) Advertisers reached large market segments with faster printing presses and later through broadcast media. 3. The research era – the last 50 years. a) Improved techniques of identifying and reaching narrowly targeted audiences. 4. Advertising has become a major economic and social force. a) The most important change is a sense of social responsibility.

II. Beginnings A. Introduction 1. Advertising dates back 5,000 years, although its significance only dates back to the beginning of the U.S. emerging as an industrial power, about 100 years ago. 2. Earliest known evidence of advertising, around 3000 BC, a clay tablet bears inscriptions for an ointment dealer, a scribe, and a shoemaker. 3. The early Egyptians used papyri (a writing material from the papyrus plant) to offer rewards for the return of runaway slaves. 4. The Greeks relied on town criers to chant the arrival of ships (public announcements) and to announce what cargoes they carried. 2 5. The Roman merchants used signs engraved in stone or terra cotta to advertise what they were selling. 6. The Pompeians used wall signs to sell their wares. 7. Outdoor advertising has proved to be one of the most enduring forms of advertising. It also is one of the first media forms to be regulated.

III. Origins of Newspaper Advertising A. Introduction 1. The newspaper is the most enduring medium, and it was the offspring of Johann Gutenberg’s invention of printing from movable type. 2. William Caxton of London printed the first ad in English about 40 years later. 3. 1525 - The first ad in any language printed in a disseminated sheet appeared in a German news pamphlet. 4. 1622 - The first printed English newspaper was the Weekly Newes of London. 5. 1625 - The first ad appears in an English newspaper. B. Siquis - Tack-Up Advertisements 1. The forerunner to want ads. Used to find clergy. a) si quis meant if anybody. 2. These siquis were usually handwritten announcements that were posted for public notice. 3. Ads in English papers tended to feature personal and local announcements. C. Advertising Comes to America 1. Pilgrims arrived in America before the Weekly Newes of London was first published. So it wasn’t until later that colonist became acquainted with newspapers. 2. The Boston Newsletter was the first American newspaper to carry ads in 1704. It was an ad offering a reward for the capture of a thief. 3. By the time the United States was formed (1776) the colonies had 30 newspapers. 4. Most early American newspaper advertising consisted of what we call today local and classified ads.

IV. Three Momentous Decades: 1870 to 1900 A. Introduction 1. The history of advertising in the U.S. is unique because it came into being at a time of great growth. 2. Advertising helped American transition from an agrarian economy with European marketing traditions to an industrial power with its own system of distribution. B. Transportation 1. Railroad trackage increased from 35,000 miles in 1865 to over 190,000 miles by 1900. 2. Three major railroad lines crossed the Mississippi and ran from the Atlantic to the Pacific. 3. Never since has so vast a market without a trade or language barrier been opened. C. People 1. The population of the United States increased from 38 million in 1870 to almost 80 million in 1900. 2. 30 percent of the new population were immigrants and they were very mobile. D. Inventions and Production 1. The end of the 19th century was marked by many significant inventions, all of which dramatically impacted society. a) The electric motor. b) Alternating-current power transmission. c) The internal combustion engine. 3 d) The automobile. 2. Faster communications. a) The telephone. b) The telegraph. c) The typewriter. d) The linotype and high-speed presses. 3. Patents - In 1860 there were 7,600 patents filed. By 1900 there were over 42,000. 4. Steel production increased from 20,000 tons to over 10,000,000 tons by 1900. 5. Power availability increased from 3 million horsepower to over 10 million horsepower by 1900. E. Media 1. Newspapers a) The first colonial paper, Publick Occurrences was published in Boston in 1620 and was immediately banned. b) By 1800 every major city in the U.S. had several newspapers. c) In the 1830s the penny press emerged, along with Richard Hoe’s rotary press, which provided inexpensive news to the public and advertisers. d) By 1835 the Herald was founded, ushering in the beginning of mass media. (1) Blending stories of sex, gore, and murder and muckraking. (2) During the Civil War it achieved a circulation of 135,000. (3) It demonstrated the power of the media to influence public opinion. e) Newspapers initiated advertising, which was to become its financial mainstay. 2. Religious Publications a) For a few decades after the Civil War religious publications were the most influential medium, with over 400 separate publications and a combined circulation of over 5,000,000. b) 75 percent of all religious publication advertising was for patent medicine. 3. Magazines a) Most early magazines lasted less than six months. b) They consisted primarily of book extracts, pamphlets, essays, and other communications of little importance. c) Modern magazines developed after the 1870s. d) Increased literacy, railroads carrying mail, printing innovations and the establishment of low second-class postal rates greatly increased the climate for the growth of magazine circulation. e) The rotary press, and the use of halftones made magazines cheaper and more attractive. f) Literary magazines for the upper middle class did not take well to advertising. g) By the 1890s, popular magazines for entertainment, fiction, and advice formats sprang into being, the forerunners of women’s and general magazines of today. By 1902 some magazines had very large circulations. (1) Munsery’s, circulation 600,000. (2) Cosmopolitan, circulation 700,000. (3) Delineator, circulation 960,000. (4) Ladies’ Home Journal, 1 million circulation. h) Magazines brought nationwide advertising into being since they made possible the nationwide sale of products. F. Patent-Medicine Advertising 1. By 1870, patent-medicine manufacturers were the largest category of advertisers. 2. Most of the advertising claims of the patent-medicine advertisers proved to be false, and as a result, gave all advertising of that period a bad name. 4 G. National Advertising Emerges 1. Legitimate manufacturers saw the market for consumer products growing. 2. Railroads could transport goods from the Atlantic coast to the Pacific coast. 3. Manufacturers could now package their own products with their own trademarks. 4. Magazines now allowed the manufacturer to advertise nationally. H. Mass Production Appears 1. Early automobiles were virtually handmade. 2. By 1913, Henry Ford introduced automobiles made from standardized parts on an assembly line belt. Mass production had begun. 3. Mass production needs mass selling to be successful, i.e., advertising. I. The Advertising Agency 1. The Advertising Agency concept began with people selling advertising space on a percentage basis for out-of-town newspapers. Later they planned, prepared, and placed the ads and rendered further services. 2. The advertising agency is closely tied to the growth and development of advertising in the U.S.

V. America Enters the Twentieth Century A. Introduction 1. Laissez-faire was the predominate moral attitude after the Civil War. 2. High government officials were corrupted, the public was swindled in the stock market, etc. 3. Advertising contributed to the immorality of current business practices with its patent medicine ads. B. The Pure Food and Drug Act (1906) 1. In 1865 the New York Herald-Tribune raised public conscience regarding these types of ads. 2. In 1892, the Ladies’ Home Journal banned all medical advertising. 3. Public outrage motivated Congress to act in 1906 to pass this bill, the first federal act passed to control advertising. C. The Federal Trade Commission Act (1914) 1. This act was passed to protect one business owner from the unscrupulous behavior of another business owner. a) Oil companies had worked deals with the railroads to gain rebates on their own and competitors’ shipments, thereby being able to undersell competitors. b) Today, such action would violate anti-trust laws. 2. Congress eventually extended the power of the FTC to protect the public from misleading and deceptive advertising. 3. Nevertheless, the advertising industry remains a target for criticism about its social effects.

VI. America Comes of Age A. Introduction 1. Around 1905 there emerged a class of advertising executives who saw the need for advertising legitimate products. They gathered together and formed advertising clubs. 2. These clubs became the American Advertising Federation. a) In 1911 they launched a campaign for truth in advertising. b) In 1916 they formed the basis of what was to become the Council of Better Business Bureaus. c) In 1971 the CBBB joined the National Advertising Review Council.

5 3. 1910 - The Association of National Advertising Managers was formed. Its purpose was to improve the effectiveness of advertising from the viewpoint of the advertiser. Over 75% of all national advertising is placed by a member. 1917 - The American Association of Advertising Agencies was formed to improve the effectiveness of advertising and the advertising agency operation. 4. 1911 - Printers Ink, the leading advertising trade paper of the time, prepared a model statute for state regulation of advertising, designed to "punish untrue, deceptive or misleading advertising." 5. 1914 - The Audit Bureau of Circulations (ABC) was formed, which conducts its own audits and issues its own reports of circulation. Up until this time publishers were rather carefree about their circulation numbers. The ABC is now highly regarded. 6. 1916 - President Wilson addressed the Associated Advertising Clubs of the World. He was the first President to give public recognition to the importance of advertising. B. Advertising in World War I 1. This was the first time advertising was used for social action. Advertising agencies turned from selling consumer goods to arousing patriotic sentiment. 2. Advertising efforts of these agencies were coordinated by the Division of Advertising of the Committee of Public Information, a World War I propaganda office. 3. Advertising was shown to be a useful tool in communicating ideas as well as in selling products. C. The 1920s 1. The 1920s began with a mini-depression and ended with the great crash. 2. The country changed as producers converted from war goods production to consumer goods production. 3. The need for advertising was significant. 4. The introduction of radio did not immediately expand the domain of advertising. a) Invented in 1895, it was largely little used or used by hobbyists until the 1920s. b) Westinghouse set up KDKA, the first radio station, in order to promote the sale of radio sets. c) Radio quickly caught on. d) Today, Americans average more than five radios per house. e) Advertisers spend $11 billion a year in radio. D. The 1930s Depression 1. The stock market crashed. Millions of people were out of work, businesses failed, banks closed, and there were social services nets to help people in their time of need. 2. The government created the Works Progress Administration (WPA) in order to put people back to work. 3. There were three major developments from this time period that still affect advertising today: a) Radio emerged as a national advertising medium. Radio addresses by President Roosevelt used the power of radio to move a nation toward recovery. In the 1930s there were 612 stations and 12 million sets, which grew to 814 stations and 51 million sets. b) In 1936 the Robinson-Patman Act was passed to protect small merchants from unfair competition from the big store with its huge buying power. c) In 1938 the Wheeler-Lea Act was passed to give the Federal Trade Commission more direct and sweeping power over advertising. In 1938 the Federal Food, Drug and Cosmetic Act was passed to give the Government authority over the labeling and packaging of these products.

6 E. Advertising During World War II 1. The demand for consumer goods was reduced as war goods were produced and rationing prevailed. 2. Advertising for consumer goods was greatly reduced but companies turned to public service advertising in order to maintain good will and keep their image before the public. F. The War Advertising Council 1. Created by business, media, and advertising leaders, its mission was to build morale and communicate the necessity of civilian sacrifice. 2. The advertising industry had just moved into public service advertising so there was a good fit. 3. The Council sponsored projects like; victory gardens, buying war bonds, etc. 4. The movement of women into the workplace necessitated the “Rosie the Riveter” campaign to overcome bias and stereotypes in the workplace, with great success. 5. By the end of the War, the Council had encouraged advertisers to donate over $1 billion in space and time. 6. The Council was so successful that President Franklin encouraged its continuance in peace and it was renamed the Advertising Council in 1945. G. Advertising after WWII to 1975: The Word was Growth 1. The U.S. experienced massive growth as war time industries converted to consumer goods literally overnight. 2. Between 1940 and 1950 advertising expenditures doubled and television became a social institution. 3. By the 1960s, videotape, color programming, and better production techniques made television the major medium. Television had an insatiable appetite for programming. a) Sports b) Politics c) Entertainment 4. Television actually shaped the formation of sports leagues. 5. The television spot emerged from early 1960s political election campaigning. 6. This was a time of growth in the U.S. a) The population grew by 38%. b) New housing grew by 47%. c) Use of telephones grew 221%. d) Disposable income grew by 327%. e) Etc. 7. Advertising contributed to this economic growth while growing from $5,780 million in 1950 to $28,320 million in 1975. 8. There were also significant changes that affected advertising during this period: a) In 1956 the Department of Justice ruled that advertising agencies could negotiate fees with clients rather than adhere to the then-required 15% commission placed on all media. b) The voice of the consumer became more powerful. c) Congress passed an act which limited outdoor advertising alongside interstate highways. Congress banned cigarette advertising from TV. d) The Federal Trade Commission forced companies to do corrective advertising if false or misleading claims had been made. e) General audience magazines began to disappear from the marketplace, and special interest magazines became more popular. f) Newspapers saw their readers move to the suburbs. g) Radio took a dive when TV came along. 7 h) Direct marketing soared from $900 million in 1950 to $8 billion in 1980. i) The two biggest developments to emerge were television and electronic data processing. TV changed America's life as well the world of advertising. Syndicated research services have revolutionized the entire marketing process and the advertising-media operation. H. Advertising in the Fragmented 1980s 1. Advertising has never been a stable business. In the 1980s there were four major changes in American society that had a significant impact on advertising. 2. New Technology – Changes and diversification in technology used for communication. The development of cable TV, video recorders, specialized magazines, direct mail and home shopping, and the growth of sales promotion have changed advertising. Most advertising practitioners are marketing generalists rather than specialists. 3. Audience Fragmentation – The 1980s marked the end of the traditional mass market. Markets are being segmented and identified by demographics rather than household size. The expansion of television, newspapers, and now computers let the consumer read what he/she wants to. 4. Consolidation - Ownership of brands, ad agencies, and media was consolidated among a few giant corporations. So too, media were increasingly controlled by fewer people. 5. Credit - Perhaps the greatest long-term legacy of the 1980s was the buy now and pay later mentality. By the 1990s as things slowed, advertising dollars became hard to find. I. Advertising and the Twenty-first Century 1. There are two areas where there is a great deal of potential in the future of advertising, global marketing and one-on-one communication. 2. As companies expand their global efforts, those efforts will be tailored more and more to the local country or region of the world. 3. Second, technology will increase one-on-one communication. Print will be tailored to specific audiences, broadcast media will continue to fragment, totally free television will probably disappear. 4. People with VCRs are circumventing advertisers by renting movies. 5. The continuing mergers between cable, telephone, and programming services points to growth in interactivity. 6. The Internet and on-line computer links along with television shopping shows where interactivity is going in the future. 7. The cost of reaching potential buyers will continue to increase, squeezing already narrow margins for advertising agencies and suppliers.

VII. Summary 1. The history of advertising is unfolding. 2. Fundamental changes to mass communication are coming. 3. The future practitioners reading this text right now will shape the future of the industry.

CHAPTER QUESTIONS 1. What are some of the social and economic conditions necessary for advertising to be successful? Suggested answer - Many factors contributed to the growth of advertising; the breakdown of localism, a collected audience and concentrated market, an educated citizenry, and oligopoly industrial structure, mass production, growth in per capita income, and a consumption culture. Also, good transportation was essential to the distribution of goods to support national advertising.

8 2. Briefly discuss the three broad periods of advertising development. Suggested answer - The pre-marketing period, prehistoric to the middle 18th century, was characterized by primitive communication that was largely intended to let others know that goods were available. Methods such as criers and tavern signs were later examples of this period. The mass communication period, 1700s to 1900s, ushered in the first methods of printing and allowed sellers to communicate with larger and more dispersed audiences. The research era, the last fifty years, brought increasingly sophisticated methods of audience identification and insight into purchase motivations.

3. Define the following terms:  Hoarding – The first printed outdoor poster.  Siquis – These were the forerunners to want ads, they were used to find clergy. Si quis meant if anybody. These siquis were usually handwritten announcements that were posted for public notice.  Printers Ink Model Statute - The Statute was the first widespread recognition that local advertising needed strong legislation to protect consumers in the same manner as earlier federal laws had sought to encourage ethical business practices.  Audience fragmentation - brought about by new technology that provided individual (as contrast to mass) media and also brought the public more individual communication. Advertisers benefited by being able to reach more narrowly defined audiences without the waste circulation associated with earlier vehicles.

4. Discuss the role of the emergence of the railroad in supporting advertising. Suggested answer - The railroad opened the country to relatively fast transportation of goods. In order to control distant markets, manufacturers began to sell goods throughout the country under the same brand name and, of course, promoted these goods with national media--which until 1920 meant magazines.

5. Briefly describe the development of the mass magazine during the 19th century. Suggested answer - Modern magazines developed after the 1870s. Increased literacy, railroads carrying mail, printing innovations and the establishment of low second-class postal rates greatly increased the climate for the growth of magazine circulation. The rotary press, and the use of halftones made magazines cheaper and more attractive. By 1902 some magazines had very large circulations. Munsery’s circulation 600,000, Cosmopolitan, circulation 700,000, Delineator, circulation 600,000., Ladies’ Home Journal, 1 million circulation. Magazines brought nationwide advertising into being since they made possible the nationwide sale of products.

6. What are some of the major changes in advertising resulting from the introduction of radio? Suggested answer - The introduction of radio did not immediately expand the domain of advertising. Invented in 1895, it was largely little used, or mostly used by hobbyists until the 1920s. Westinghouse set up KDKA, the first radio station, in order to promote the sale of radio sets. Radio quickly caught on. Today, Americans average more than five radios per house. Advertisers spend $11 billion a year in radio.

7. What was the purpose of the War Advertising Council? Suggested answer - The Council was formed by a group of media and advertising executives to promote American interests during World War II. Its efforts were so successful that after the war the Advertising Council continued the work of making the public aware of various social issues.

9 CLASS PROJECTS AND EXERCISES 1. Bring three advertisements to class from a magazine of your choice and discuss what the advertisements communicate about the designated products or services and what they communicate about the target audiences that they are intended for. How did you determine the target audience?

2. Using your library and interlibrary loan process, find books and articles on the history of the U.S. Read about the development of the railroads, the robber barons, or growth of early radio and television broadcasting. Choosing one element, prepare a brief report on its influence and involvement in early advertising.

3. Go to the library and examine back issues of Advertising Age magazine. [Consider looking through microfilm for older editions of other magazines, Cosmopolitan, Look, Life, etc. Look at advertisements from the 1960s, 1970s, 1980s, and the 1990s. In a short paper (3 pages) analyze what you see that is similar and what you see that is different in these four decades.

4. As a way of examining the history of advertising, collect advertisements from historical advertising books, early mail order catalogs, early twentieth century magazines, historical reference books, or books on historical posters. From the collection write a short paper (3-5 pages) analyzing the content of the material. Compare and contrast the content to present day advertisements.

5. Advertising Campaign---develop an advertising campaign for a business of your choosing, for a specific time period and a specific budget. The business chosen generally decides the budget and the timeframe, but sometimes they give the students the choice to determine these. A variation is to give students a specific product to develop a campaign for. Use an existing product. Use chapter 22 to develop guidelines for the project.

This project will help students utilize the information in the entire text and is vitally important in giving students hands-on experience in developing advertising and experiencing the problems of working within budget limitations and still getting the maximum amount of return from the advertising dollar spent. In addition, this project can give the students insight into retail advertising (since most students choose a retail firm).

As a group project, students will also learn something about group dynamics and some of the problems in trying to get anything done in a group. A group critique is encouraged after the project is completed to insure that equal effort was forthcoming.

It is generally best to suggest to students that they choose a smaller organization, possibly a retail outlet or a small restaurant, even a church daycare center is possible. It is up to the students to get solid information about the organization, very realistic budgets, etc., so a smaller organization would definitely be easier for them to handle. Many firms call during the year asking for this type of assistance and a file can be maintained of potential clients.

Though this project may be begun early, the first several weeks should be spent in developing their contact with the firm and organizing themselves. Lastly, have the students present their results to the entire class and the owner of the designated firm. This makes the exercise more realistic and ensures hard work.

10 6. Advertisement Collection Over the course of the semester or quarter the student should collect and display advertisements from all the mass media. The number of advertisements is up to the instructor; however, the number should be sufficient to illustrate the media forms. The collection could also have a theme such as humor, sex, demographic group (e.g., youth, the X generation), international, or psychological themes. In addition, the student can be asked to comment on the nature of the advertisements, themes, creative appeals, cost, media selection, and target markets. This project can provide the opportunity to not only constructively analyze advertisements, but see how their form changes from one media category to another. Grading should be on depth of insight, not just shear volume of advertisements collected. The collection should be shown to the entire class so collective learning can be accomplished.

Formal written statements can describe what the ad represents, what the intended message is, what is actually said, how the ad projects the concept, whether it is effective or not, how it might be improved, and any relevant thoughts that the student might have.

7. Begin to develop resources of research projects on advertising. Visit Advertising Age’s Web site. This specific URL will take you to their “History of TV Advertising” site. Use the links on this site to fully explore the resources available through Advertising Age. http://www.adage.com/news_and_features/special_reports/tv/1990s.html.