ADVERTISING

ADVERTISING. Whether trying to alter spending patterns or simply alert buyers to a firm's existence, business has for centuries turned to advertising. As the type of media has changed, so too has advertising's form. But aside from a fundamental post–World War I shift in the perception of advertising's power, its function is the same today as it was in 1700: Advertising aims to boost sales.

Buyers purchase a product presumably because they perceive a need or desire for it. They decide from whom and what brand to purchase. Awareness of their choices and an evaluation of which option is "best" influences their decisions. Until the twentieth century, advertising sought only to convey information. But modern advertising seeks to "create demand" by influencing buyers' perceived needs or desires.

Before "Modern" Advertising

In the American colonial period, advertisements were primarily signboards on inns, taverns, coffeehouses, and the like. Travelers needed information about inns, but locals did not need advertisements in order to find the blacksmith.

The first newspaper to appear continuously, the Boston News-Letter, was established in 1704. It contained sporadic advertisements. Real estate advertisements, rewards for runaway apprentices, and notices of slaves for sale were all common, as were announcements of sale of cordage, wine, and cloth. These advertisements were limited to text; they contained no photographs or drawings.

Benjamin Franklin founded the Pennsylvania Gazette in 1728. The Gazette included more advertisements than did any other colonial newspaper, with up to half the pages devoted to advertising. Franklin is credited with introducing the use of large-point headings, using white space to separate the advertisements from the text, and, after 1750, including illustrations.

Over the next century, there was little subsequent change in advertising. Advertisements provided information about goods for sale, arrivals and departures of ships, and stagecoach schedules. Print advertisements were confined primarily within column rules; advertisements spanning more than one column were yet to come.

In the 1860s, newspaper circulation increased, and magazine and periodical advertising began. Advertising volume increased markedly. Multicolumn display advertisements were designed; their first use was to call attention to the transcontinental railroad bonds that were being sold to the public. By the 1870s, multicolumn advertisements were common.

Along with advertising, publicity also works when it comes to boosting sales. The similar effects of advertising and free publicity were illustrated in the 1870s by American showman P. T. Barnum, who sought new patrons for his circus show. Barnum owned a field near railroad tracks over which passenger trains passed. To attract the attention of train passengers, he put an elephant to work plowing the field. Newspapers ran articles about the elephant. The publicity generated such enthusiasm for his show that others sought to emulate his free-publicity-as-unpaid-advertising success.

Industrialization and Advertising

Diffusion of steam power in the 1850s paved the way for a wave of technological change in the 1870s and 1880s. The American system of mass production characterized much of American manufacturing by 1890. Increased mechanization generated increased fixed costs, creating an economic incentive to build large factories that could enjoy economies of scale in production but which were dependent on mass demand. The transcontinental railroad allowed relatively low-cost shipment of goods, making regional or national markets economically feasible. Telegraph wires allowed low-cost and fast nationwide transmission of information. Manufacturers created brand names and sought to familiarize buyers nationally with their product. Where a housewife had once ordered a pound of generic baking powder, now she was encouraged to insist on known quality by requesting only Royal Baking Powder. Similar national advertising campaigns were undertaken in the 1880s and early 1890s by, among others, Corticelli Best Twist Silk Thread, Quaker Oats Company, and Procter & Gamble's Ivory soap.

Manufacturers believed that buyers were primarily interested in the quality of the product; competition by price was uncommon. National firms included drawings of sprawling factories and factory owners in their advertisements; the larger the factory and thus the more successful the firm, the higher quality the merchandise could be presumed to be. Singer Sewing Machines, Steinway Pianos, and McCormick Harvesters and Reapers all produced advertisements of this sort.

Following industrialization, seasonal or cyclical declines in demand could drive firms to bankruptcy because the now high fixed costs continued unabated even when sales and production dropped. The need to maintain demand became especially apparent during the 1893–1897 economic depression. Many businesses failed; many more came close. Businesses needed methods to insulate themselves from cyclical downturns in sales and production. Advertising was one tactic they employed.

The U.S. population increased from 31 million in 1860 to 76 million in 1900. Only 20 percent of the population lived in urban areas in 1860, increasing to nearly 40 percent by 1900. The need for easy provision of consumer goods increased as more people therefore lived divorced from the land. Standardized production and transportation improvements further contributed to the development of the department store. Stores such as R. H. Macy and Company of New York City, John Wanamaker's of Philadelphia, and Marshall Field of Chicago, all established by 1870, advertised regularly in newspapers. Rural families turned to mail-order catalogs—in essence, large books filled cover-to-cover with advertisements. Montgomery Ward's first catalog was issued in 1872; Sears, Roebuck and Co. entered the field in 1893.

By 1900, advertising in newspapers was supplemented by advertising on streetcars, on billboards, and in magazines. Full-page advertisements, especially in women's magazines, sought to influence women's choices. Ladies' Home Journal, established in 1883 by Cyrus H. K. Curtis, led the way. The Crowell Publishing Company founded Women's Home Companion. William Randolph Hearst began Cosmopolitan, Good Housekeeping, and Harper's BAZAAR. Between 1890 and 1905 the monthly circulation of periodicals increased from 18 million to 64 million.

Development of Advertising Agencies

Advertising agents were middlemen in 1850: they bought advertising space from newspapers and resold it at a profit to a company seeking to place an advertisement. Beginning in about 1880, N. W. Ayer and Son of Philadelphia offered its customers an "open contract" under which Ayer would be the company's sole advertising agent and, in exchange, would price advertising space at cost plus a fixed-rate commission. The idea caught on. Manufacturers were soon blocked from buying advertising space without an agent. In 1893, the American Newspaper Publishers Association agreed to not allow discounts on space sold to direct advertisers. Curtis Publishing Company, publishers of Ladies' Home Journal, inaugurated the same practice in 1901, and other magazine publishers soon followed suit. The cost-plus-commission basis for the agency was accepted industry wide in 1919, with the commission standardized at 15 percent.

Until the 1890s, conceptualization and preparation of advertising copy were the responsibility of the firm placing the advertisement. But as companies followed N. W. Ayer & Son's cost-plus-commission pricing policy, agents could no longer compete with each other on price; they needed some other means of distinguishing their services from those of competing agents. Advertising agents—soon to be known as advertising agencies—took on their modern form: writing copy; creating trademarks, logos, and slogans; and overseeing preparation of artwork. Ayer hired a full-time copywriter in 1892; Procter and Collier of Cincinnati did so by 1896; Lord & Thomas of Chicago did so by 1898. By 1910, advertising agencies were universally characterized by the presence of full-time copywriters and artists.

Advertising slogans that lasted nearly 100 years came from these advertising specialists. Ivory soap's slogan "99-44/100% Pure" appeared in 1885; Prudential's "Rock of Gibraltar" started in 1896; and N. W. Ayer and Son suggested the brand name "Uneeda" to the National Biscuit Company (later Nabisco) in 1900. Trademarks such as the Morton Umbrella Girl made famous by Morton Salt did not become common until after 1905, when federal legislation allowed the registration of trademarks for a period of 20 years with provision for renewal.

Advertising men were widely seen as no better than P. T. Barnum's sideshow barkers falsely hawking two-headed freaks rather than professionals presenting dignified, honest, and compelling images of bath soap. One step in convincing others that advertising was a profession to be taken seriously was the 1917 formation of the American Association of Advertising Agencies. The Association crafted broadly defined industry standards. Thereafter, the industry was quickly afforded the respect it desired. In 1926, President Calvin Coolidge addressed the Association's annual convention. For its ability to create mass demand, he credited advertising with the success of the American industrial system.

Modern Advertising

Modern advertising—advertising with the goal of creating desire for a product where none previously existed—began in the early twentieth century. With the blessing of leaders in the advertising industry, academic psychologists had begun applying principles of psychology to advertising content in the late 1890s. In 1901, psychologist Walter Dill Scott, speaking on the psychology of advertising, addressed a gathering of businessmen. His book The Theory of Advertising appeared in 1903. Advertisers were initially skeptical of Scott's thesis that psychological principles, especially the concept of suggestion, could be effectively applied to advertising.

An ongoing conflict thus arose in the early twentieth century between two types of advertising: "reason-why" and "atmosphere" advertising. Dominant in the late nineteenth century, reason-why advertising consisted of long, detailed discourses on the features of a product. Atmosphere advertising reflected psychology's influence; it emphasized visual imagery that evoked emotions. The conflict between the two types of advertising was especially intense in the decade before World War I (1914–1918). In 1909, the advertisers of Colgate toothpaste took the conflict directly to consumers, giving them the opportunity to decide "Which Is the Better Ad?"—the one that offered a detailed explanation of the health advantages of Colgate toothpaste, or the one that used illustrations to associate the use of Colgate with a happy family life.

Most practitioners and advertisers were won over by about 1910. Psychologists were judged correct; advertising could change needs and desires. After 1910, most advertising copy emphasized buyers' needs and desires rather than the product's objectively described characteristics. Advertising's success during World War I fully settled the issue. American advertisements sounded a patriotic pitch as they sought to sell Liberty and Victory Bonds, raise money for the Red Cross, and more. Some advertising historians even credited the industry with shortening the war.

By the mid-1920s, the two types of advertising peacefully coexisted. Reason-why copy was deemed appropriate for industrial advertising where decision-making rested on a "rational" profit motive. Atmosphere advertising dominated consumer goods advertising; with increasing standardization of consumer products eliminating many of the real differences between brands, the emphasis of advertising shifted to the "imagined" advantages.

A number of advertising textbooks appeared in the 1920s, authored by professors of psychology whose academic affiliations were often with schools of business. Surveys sought to ascertain the fundamental wants or desires of human beings. A typical list would include appetite, love, sexual attraction, vanity, and approval by others. Atmosphere advertisements emphasized how a product could satisfy these desires.

Advertisers increasingly looked upon themselves as quite set apart from the consumers who saw their ads. Copywriters were male. Consumers were female. Roland Marchand, author of Advertising the American Dream (1985), found that advertisers in the 1920s and 1930s were predominantly male, white, Christian, upper-class, well-educated New Yorkers who frequently employed servants and even chauffeurs, and whose cultural tastes ran to modern art, opera, and symphonies. They saw their audience as female, fickle, debased, emotional, possessing a natural inferiority complex, having inarticulate longings, low intelligence, and bad taste, and being culturally backward. The copy and visual imagery created by these advertising men often emphasized the woman's desire to be loved or her desire to be a good mother.

Ironically, just at the time advertisers sought increased respect through formation of their own professional association, the advertisements they were writing conveyed ever more disrespect for their readers. Many advertising historians note the post–World War I change in advertising's tone. Frederick Lewis Allen, author of the renowned history of the 1920s Only Yesterday (1931) wrote:

"[In the 1920s], no longer was it considered enough to recommend one's goods in modest and explicit terms and to place them on the counter in the hope that the ultimate consumer would make up his or her mind to purchase.… [T]he copywriter was learning to pay less attention to the special qualities and advantages of his product, and more to the study of what the mass of unregenerate mankind wanted—to be young and desirable, to be rich, to keep up with the Joneses, to be envied. The winning method was to associate the product with one or more of these ends, logically or illogically, truthfully or cynically. …" (pp. 141–2)

Advertising is often charged with creating a culture of consumerism in which people define themselves by the goods they buy. Certainly the first big boom in advertising volume and the rise of consumerism are coincidental: Consumerism first characterized the United States in the early twentieth century; advertising volume increased at an annual rate of nearly 9 percent between 1900 and 1920. Moreover, it was in this period that advertising first began emphasizing the ability of goods to meet emotional needs and, more to the point, first began its efforts to create needs where none had previously been felt.

Television and Beyond

The function of advertising has remained constant since the advent of modern advertising but its form has evolved as new forms of media have appeared. Radio broadcasting began in 1922 and with it, radio advertising. By 1930, 40 percent of households owned a radio; more than 80 percent owned one by 1940. Radio advertising expenditures doubled between 1935 and 1940 to $216 million in 1940.

Television began in the 1950s and quickly found its way into almost everyone's living room: 11 percent of households owned a television in 1950 but 88 percent owned one just a decade later. Television advertising expenditures increased nearly tenfold between 1950 and 1960, reaching __BODY__.6 billion by 1960.

Outdoor advertising increased with paved mileage. In the decade after World War II (1939–1945), outdoor advertising expenditures, adjusted for inflation, increased 5 percent annually as paved mileage in the United States increased 3 percent annually. One of the more famous billboard campaigns, begun in 1925, was for Burma-Shave, a brushless shaving cream manufactured by the American Safety Razor Company. Their jingles appeared one line per sign over the course of a mile or more, always ending with the name of the product:

If you think

She likes

Your bristles

Walk bare-footed

Through some thistles

Burma-Shave

The introduction of the videocassette recorder (VCR) led to more changes in advertising. New in 1980, by 1990 over two-thirds of U.S. households owned a VCR. Viewers could fast-forward through commercials when watching taped shows, presenting a new challenge to advertisers. "Product placement" was the result. Firms now paid to have their products used in television shows and films. The practice was spurred by one phenomenal success: the use of Reese's Pieces candy in the 1982 film E. T. The Extra-Terrestrial had increased candy sales by over 65 percent. By 2000, product placement was pervasive.

TABLE 1

The most recent media development, the Internet, was advertisement-free until the first banner advertisements were sold in 1994. Ownership of computers and use of the Internet are both increasing rapidly; by 1999, 34 percent of adults nationwide claimed access to the Internet or an online service. Internet advertising increases apace.

Consumer objections to advertising and its tactics have resulted in legislation, lawsuits, and voluntary restraint. The 1914 Federal Trade Commission Act empowered the Federal Trade Commission (FTC) with the authority to regulate "unfair methods of competition." The 1938 Wheeler-Lea Amendment extended the FTC's powers to "unfair or deceptive acts or practices." The detrimental effects of billboards on the countryside inspired the federal Highway Beautification Act in 1965, which regulated placement of billboards near interstate highways. The "Joe Camel" campaign for Camel cigarettes introduced by R. J. Reynolds in the 1970s resulted in a 1990s federal lawsuit because of the campaign's alleged attempt to hook kids on smoking. A voluntary ban on television advertising by the Distilled Spirits Council of the United States was just one part of its Code of Good Practice regarding marketing and advertising, first adopted in 1934. Political advertising, with the goal of swaying voters rather than consumers, enjoys First Amendment protection but does face some constraints under state laws and under the Federal Communications Commission's Equal Access Law as well as the Federal Election Campaign Act.

Advertising Statistics

Data on advertising expenditure and employment in the industry is summarized in the annual Statistical Abstract of the United States, available online and in any reference library. As seen in Table 1, advertising expenditure has had several periods of rapid growth: the 1910s, 1950s, and 1980s. Advertising volume in 2000 was just over 2 percent of gross domestic product. Over 400,000 people worked in advertising in 2000, a nearly threefold increase since 1980. Approximately 40,000 establishments provided advertising and related services in 2000, about one-third of which had paid employees.

What constitutes an advertisement has changed over time: a name on a wooden signboard; an information-packed display in a newspaper; a full-color glossy advertisement in a magazine; a beautiful blonde singing about a new Chevrolet; candy scattered in a wood for an extraterrestrial alien; logos on the side of coffee mugs; Nike swooshes on professional sports team uniforms; pop-up advertisements on the Internet. The changes will continue as media opportunities develop.

BIBLIOGRAPHY

Fox, Stephen. The Mirror Makers: A History of American Advertising and Its Creators. New York: Morrow, 1984.

Laird, Pamela Walker. Advertising Progress: American Business and the Rise of Consumer Marketing. Baltimore: Johns Hopkins University Press, 1998.

Marchand, Roland. Advertising the American Dream: Making Way for Modernity, 1920–1940. Berkeley: University of California Press, 1985.

Norris, James D. Advertising and the Transformation of American Society, 1865–1920. New York: Greenwood Press, 1990.

Pope, Daniel. The Making of Modern Advertising. New York: Basic Books, 1983.

Presbrey, Frank. The History and Development of Advertising. Garden City, N.Y: Doubleday, 1929.

Scott, Walter Dill. The Theory of Advertising: A Simple Exposition of the Principles of Psychology in Their Relation to Successful Advertising. Boston: Small, Maynard and Company, 1903.

Martha L. Olney