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The Evolution of Advertising

January 26, 2011

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“I know I waste half the money I spend on advertising. The problem is, I don’t know which half.”

-John Wanamaker, Department Store Pioneer

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Pre-Industrial Age

Beginning of Recorded History to the Start of the 19th Century

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Merchants hung carved signs in front of their shops. Most people couldn’t read so merchants used symbols, i.e. a boot

– 1275: Chinese Industrialized Age – 1440’s: Gutenberg invented the Printing Press– Low disposable income – Town criers

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Industrializing Age

Mid 1700’s

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• Machinery began to replace animals• Rural, small towns, low income• People left the farms to work in the city• Railroads and Steamships• Advertising was used to inform the

masses about new products• Large mail-order catalog companies

– Montgomery Ward, – Sears Roebuck & Co. (Retailers)

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• Innovative manufacturers use mass-media as a way to stimulate demand for their products.

• 1841, Volney B. Palmer set up an “agency” in Philadelphia. He contracted with newspapers to receive discounts on newspaper space.

• Birth of Mass Consumption

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Industrial AgeIndustrial Age

2020thth Century – 1970’s Century – 1970’s

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• The development of new, inexpensive brands of consumer luxury and convenience goods.

• Focus changed from production to sales orientation

• New product development– Wrigley Gum

– Coco-Cola

– Jell-O

– Kellogg's

– Campbell’s Soup

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• 1929, The Great Depression and advertising expenditure collapsed.

• Daniel Starch, A.C. Nielsen and George Gallup founded research companies to study consumer attitudes and behavior.

• Product Distinction

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Post-Industrial Age Around 1980

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• The period of cataclysmic change. People became aware of the sensitive environment in which we live.– Dependence on vital natural resources– Refrain from using washers and dryers– Reduce electrical consumption on “HOT” days

(California)– Used as a tool against political opponents

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Advertising Time Capsule

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• 1650: First newspaper ad offers reward for stolen horse.

• 1729: Ben Franklin is first to use “white space”and illustration in ads.

• 1844: First magazine ad runs.

• 1869: First Ad Agency, N.W. Ayer & Son

• 1900: Psychologists study the attention getting and persuasive qualities of advertising.

• 1905: First National Ad Campaign for the “Gillette Safety Razor”

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• 1911: First Truth in Advertising Codes (American Advertising Federation)

• 1920: Albert Lasker – Full Color Magazine Ads and “Father of Modern Advertising”

• 1924: NW Ayer produced the first company sponsored radio broadcast for “Eveready”

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• 1930: Advertising Age Magazine is founded.

• 1946: America has 12 TV stations broadcasting to the public.

• 1948: 46 TV stations are on the air.

• 1950: First political ads are used (Governor Dewey of NY)

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• 1984: The Internet (Government controlled since 1973) is turned over to the private sector.

• 2000: The Internet becomes the fastest growing new ad medium with 400 million users.

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Early Advertising

• Volney B Palmer becomes first advertising agent• N.W. Ayer introduced first “full service” advertising

agency and creates first campaign for Uneeda Biscuit for the National Biscuit Company (NABISCO)

• Newspaper, magazine, religious press used

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Consolidation and Growth (20th Century: 1900 to 1965)

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Consolidation and Growth(20th Century: 1900 to 1965)

• Economics:– More jobs and disposable income– Poor labor conditions and business practices lead to

self-examination and regulation• Federal Trade Commission (1914)• Federal Communication Commission (1934)• Wheeler-Lea Amendment to FTC (1938)• Food & Drug Administration (1938)

– Prosperity World Wars Prosperity

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Consolidation and Growth(20th Century: 1900 to 1965)

• Social: Urbanization and improved education system

• Technology:– Automobiles and airplanes– First commercial radio broadcast:

WEAF, New York (1922)– First television program (1941)

• First color TV (1955)

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Consolidation and Growth(20th Century: 1900 to 1965)

• Advertising– American Association of Advertising Agencies (1917)– Advertising defined as “Salesmanship in Print” (1920s)– Creative: Color printing, television– Radio Soap Operas– Marketing Research

• Gallup• Starch

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Early 1950’s TV

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Color 1955• TV becomes second largest medium

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Market Segmentation

• In the beginning, all products talked about Quality, Variety, and Convenience

All things to all people

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Market Segmentation

• Marketers search for unique groups of people whose needs could be addressed through more specialized products.

• (Shift from Product Feature to Brand Image and Personality)

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Positioning Strategy/Brand Separation

Volkswagen “Think Small”

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Positioning Strategy/Brand Separation

7-Up The “Uncola”

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Positioning Strategy/Brand Separation

Avis “We Try Harder”

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Brand Promise

Luxury

Performance

Safety

Freedom

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Principles of Free EconomicsOur economy is based on the notion of competition

– Self Interest • People tend to act in their own self-interest (more-for-less)

– Complete Information • What products are available, quality, price, etc.

– Many Buyers and Sellers• If a company doesn’t meet the consumers need, they’ll go

elsewhere

– Absence of Externalities• Social costs - consumption of a product may benefit or harm

(pollution, tobacco, alcohol)

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Notables in the Business

• Raymond Rubicam• Rosser Reeves• Leo Burnett

• Bill Bernbach• David Ogilvy• Jay Chiat

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Raymond Rubicam

• Founded Young & Rubicam with James Orr Young

• Credited with the “soft sell” approach

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Rosser Reeves

• Premier Creative Director for Ted Bates Agency

• Credited for the “Unique Selling Proposition”– Features that differentiate a product

from its competitors.

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Leo Burnett

»Founded agency carrying his name in Chicago, IL in 1935

• Credited for invention of brand icons (e.g., Tony the Tiger; the Marlboro Man)

and inherent drama in ads

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Bill Bernbach

• Credited for advocacy of advertising as art and unique presentation (e.g., Volkswagen Beetle).

• Advertising is fundamentally persuasion and persuasion is an art.

• Founded agency in Manhattan with

Ned Doyle and Maxwell Dane in 1949 (DDB).

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David Ogilvy

• Founded agency in New York in 1948 under its original name Hewitt, Ogilvy, Benson & Mather

• Credited with fact-based long copy, the merging of hard and soft-sell approaches, and creation of brand personality.

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Jay Chiat

• TBWA/Chiat/Day• Super Bowl® Commercials• Apple, Visa, Absolut, Anheuser-Busch, Pepsi

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Other Notables

• Mary Wells Lawrence– First female founder of an advertising agency (1966)

• Barbara Gardner Proctor– Founder of the first major agency owned and operated by an

African-American woman (1970’s)

• Lionel Sosa, Hector & Norma Orci and Victor Ornelas– Founded major Hispanic agencies in the 1980’s– Check out Association of Hispanic Advertising Agencies (AHAA)

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Why Advertising?

• Serves social needs– United Way, Literacy, Red Cross

• Lowers overall cost of sales

• Information vehicle – Makes us aware of products and services

• Entertainment– Post SuperBowl®, Water Cooler

• Evolving into a 2-way communication vehicle

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Top 10 Ad Icons of the Century

1. The Marlboro Man

2. Ronald McDonald

3. The Green Giant

4. Betty Crocker

5. The Energizer Bunny

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Top Ad Icons of the Century

6. Pillsbury Doughboy

7. Aunt Jemima

8. The Michelin Man

9. Tony the Tiger

10. Elsie

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Honorable Mentions• Look Ma, no cavities!

– (Crest toothpaste)

• Let your fingers do the walking – (Yellow Pages)

• Loose lips sink ships – (public service)

• M&Ms melt in your mouth, not in your hand– (M&M candies)

• We bring good things to life – (General Electric)