Dr. H. Ronald Moser Cumberland University

1. Kleppner’s Advertising Procedure Dr. H. Ronald Moser Cumberland University

2. Chapter 1 Background of Today’s Advertising Kleppner’s Advertising Procedure, 18e Lane * King * Reichart

3. Learning Objectives – 1 • Identify factors that contributed to the rise of modern American advertising. • Discuss the importance of research and responsibility in advertising’s development. • List the four periods in advertising history. • Describe the relationship between advertising and the development of print media. • Describe the origins of advertising agencies and professionalism.

4. Learning Objectives – 2 Identify two legislative acts that significantly affected advertising. Discuss the role of advertising during World War I and World War II. List four developments influencing advertising during the 1980s. Describe the factors influencing contemporary advertising.

5. Background of Today’s Advertising Despite various criticisms about modern advertising, consumers use it to seek information when making purchase decisions. This chapter touches on the relationship between advertising and consumers; it lays the foundation for understanding advertising’s historical roots and its development in the United States.

6. Forces in the Rise of Modern Advertising Moser's • At the outset, it is necessary to understand that advertising is a communications tool that functions most efficiently in combination with two primary components: • A system of Centralized Exchange • Centralized Exchange is a system of trade and marketing through specialized intermediaries rather than the direct exchange of goods between buyers and producers. • An economy in which supply exceeds demand.

7. Forces in the Rise of Modern Advertising When we look at the role of advertising in an economy saturation where products are scarce but demand is high advertising needs to persuade customers the products and services are available. In the fifty years after the CIVIL War, there were a number of factors that drove the growth of advertising such as: fulfillment of democratic ideals, the impact of the industrial revolution, instant telegraph communication and the introduction of the railroads.

8. Exhibit 1.1. • Does the appeal in this 1863 ad differ from those in contemporary cosmetic advertising? • The appearance of national brands provided the impetus for a sophisticated advertising and marketing structure based on product differentiation and consumer loyalty. • The company generally considered the first national marketer was Quaker Oats.

9. The Creation of the Advertising Industry • The convergence of the availability of: Branded products National distribution system Growing middle class with the income to provide a market for these products had evolved sufficiently by 1920 to support the creation of an advertising industry that demonstrated many of the basic functions found among modern agencies and corporate advertising departments today.

10. Advertising’s Modern Era The two elements missing in most advertising during the early years of the twentieth century were: An ethical framework for creating promotional messages. Valid and reliable research to measure advertising effects. By the late nineteenth century, public opinion shifted to a position calling for greater consumer protection. The initial battleground centered on the regulation of patent medicines. The biggest problem was the lack of benefits patents has to cover their medical expenses.

11. Advertising’s Modern Era Research Responsibility • Critics of advertising during the twentieth century focus concerns on such techniques as subliminal advertising and motivational research.

12. Advertising’s Modern Era • Critics of advertising during the twentieth century focus concerns on such techniques as subliminal advertising and motivational research. • Advertisers pay to put their products into TV shows and movies where the audience will see them. 16-12

13. However, it was not until the 1950s that sophisticated Advertising Research gained widespread acceptance. Exhibit 1.2. • Basic Advertising Research was introduced by the 1920s.

14. Beginnings • In 1614, England passed a law, probably the earliest pertaining to advertising, that prohibited signs from extending more than 8 feet out from a building (longer sign pulled down to many house fronts). • Another law required signs to be high enough to give clearance to an armored man on horseback. • One of the earliest conveyors of advertising-like messages were town criers (people who blow a horn, gather a group and offer samples). • In 1740, the first printed outdoor poster---referred to as a hoarding---appeared in London (see Exhibit 1.3).

15. Exhibit 1.3. • Hoarding refers to the first printed outdoor signs. • The 1896 poster shown in Exhibit 1.3. used marvelous color to demonstrate Thomas Edison’s vitascope.

16. Periods in the History of Advertising Premarketing Era Mass Communication Era Research Era Interactive Era

17. Periods in the History of Advertising Premarketing Era • For most of this period, “media,” such as clay tablets, town criers, and tavern signs, were the best way to reach potential prospects for a product or service. Mass Communication Era • The period was most closely associated with the rise of newspapers and magazines and the use of branding as a means of differentiating products.

18. Periods in the History of Advertising Research Era • Early advertising research emphasized general information concerning broad demographic information such as age, sex, and geographic location of consumers. Today, advertising research includes much more detailed information about the lifestyles and motivations of consumers.

19. Periods in the History of Advertising Interactive Era • In the Interactive Era, control of the communication channel is not in the hands of the media but is in the hands of consumers.

20. Periods in the History of Advertising • One of the most important developments in advertising in the past quarter century is the increased recognition of the significance of fulfilling social responsibility. Many advertising practices that were routine a century ago are universally condemned by the industry today. • In the last twenty years, advertisers have come to realize that a key to successful advertising is keeping the public trust.

21. The Move to Creativity in Advertising • Brand Competition - Serious brand competition was underway by 1900 in a number of product categories such as soap and food. • Product Sales Based on Image Over Utility – The person most associated with the idea of selling products on the basis of style and luxury rather than just focusing on the utility of the product is John Wanamaker. • Influence from Behavioral Research – The father of behavioral research in the field of advertising is John Watson. • Cars as Status Symbols – Alfred Sloan should be thought of primarily as the first to view ownership of particular types of automobiles as a status symbol.

22. Development of Print Media • Newspaper as an Advertising Medium. • Siquis • Penny press • Magazines. • Mass Production. • The Advertising. Agency.

23. Development of Print Media • Newspaper as an Advertising Medium. • Siquis • Penny press • The first American newspaper to carry advertising was the Boston Newsletter.

24. Development of Print Media • Magazines– • Among reasons that magazines did not succeed initially in the United States was poor transportation systems for distribution. • Among reasons magazines began to succeed in the late nineteenth century was articles by major writers. • By the 1920s, magazines became a major advertising media because of their high quality color reproduction.

25. Development of Print Media • Mass Production - • Henry Ford should be considered a visionary for recognizing the success of mass production depended on selling a product in high volume at an affordable price through advertising.

26. Development of Print Media • The Advertising Agency - • Volney Palmer is remembered as the founder of the first advertising agency in the United States. • By the end of the nineteenth century, major agencies were providing creative services, basic research, media placement, and strategy for interactivity.

27. American Association of Advertising Agencies

28. America Enters the Twentieth Century – Advertising’s Coming of Age • The Pure Food and Drug Act (1906). • The Federal Trade Commission Act (1914). • Council of Better Business Bureaus (1916). • Printers’ Ink Model Statute (1911). • Audit Bureau of Circulations (1914).

29. America Enters the Twentieth Century – Advertising’s Coming of Age • The Pure Food and Drug Act (1906) - • This act passed in 1906 was designed to protect consumers by addressing public health issues related to patent medicines. • The Federal Trade Commission Act (1914) – • This act was designed to protect one business owner from the unscrupulous practices of another. • The Wheeler-Lea Act of 1938 allowed the FTC to extend its protections to consumers. This act ensures that advertising claims and sales practices meet reasonable standards for honesty and truthfulness.

30. America Enters the Twentieth Century – Advertising’s Coming of Age • Council of Better Business Bureaus (1916) - • The vigilance committees of the Associated Advertising Clubs of the World today are knows as the Better Business Bureau. • In 1971,the bureaus became part of the National Advertising Review Council, an all-industry effort at curbing misleading advertising. • Stop it!

31. America Enters the Twentieth Century – Advertising’s Coming of Age • Printers’ Ink Model Statute (1911) – • In 1911, Printers’ Ink, the leading advertising trade paper of the day, prepared a model statute for state regulation of advertising, designed to “punish untrue, deceptive or misleading advertising.” • The Printers’ Ink Model Statute has been adopted in its original or modified form by a number of states, where it is still operative. United States

32. America Enters the Twentieth Century –Advertising’s Coming of Age • Audit Bureau of Circulations (1914) – • This is an independent auditing organization that conducts it own audits and issues its own circulation reports. • Most major publications belong to the ABC, and an ABC circulation statement is highly regarded in media circles. • As advertising became internationalized, similar auditing organizations began operating throughout the world.

33. FTC’s Division of Advertising Practices

34. Audit Bureau of Circulations (ABC)

35. Advertising Comes of Age –Major Periods in Advertising History • World War I. • The 1920s. • Great Depression. • World War II. • Post-WWII to 1975. • The 1980s. • The 21st Century.

36. Advertising Comes of Age –Major Periods in Advertising History • Advertising In World War I – Advertising was first used as an instrument for direct social action during World War 1. • Advertising agencies turned from selling consumer goods to arousing patriotic sentiment, selling government bonds, encouraging conservation, and promoting a number of other war-related activities. • Recruitment efforts were enhanced in 1917 with James Montgomery Flagg’s poster featuring Uncle Sam (Exhibit 1.9).

37. Exhibit 1.9. Advertising Comes of Age – Major Periods in Advertising History • EXHIBIT 1.9. Uncle Sam became an icon because of the popularity of this recruitment poster.

38. Advertising Comes of Age –Major Periods in Advertising History • The 1920s – • Despite the devastating depression that closed out the 1920s, during that decade: • Door-to-door truck delivery of products from manufacturers to retailers spurred the growth of chain stores. • Supermarkets appeared. • Passenger car business boomed. • Self-service stores appeared. • In the 1920s, installment purchasing plans allowed most Americans to enjoy the “good life” that included electric refrigerators and washing machines. Moser’s of Lebanon

39. Advertising Comes of Age –Major Periods in Advertising History • The Great Depression of the 1930s – • The rapid growth of advertising was temporarily slowed by the Great Depression, beginning with the stock market crash of 1929 and continuing through much of the 1930s. • Some of the major causes for the Depression, that is, excess industrial capacity, heavy consumer debt, and declining price levels, combined to discourage consumer spending and manufacturing output with a resulting negative impact on advertising.

40. Advertising Comes of Age –Major Periods in Advertising History • Advertising During World War 11 – • Advertising during World War 11 was created to encourage Americans to conserve and volunteer. • During World War 11, advertising found its greater purpose in promoting social, political, and philanthropic causes. • Although there were limited sales of household goods, many companies continued to advertise to keep their brand names before the public as they looked to a future of peacetime normalcy.

41. Advertising Comes of Age –Major Periods in Advertising History • Advertising During World War 11 – The War Advertising Council – • In November 1941, at a meeting of advertising executives, James Webb Young of the J. Walter Thompson advertising agency suggested the idea that … a greater use of advertising for social, political and philanthropic purposes will help immeasurably to remove the distaste for advertising that now exists.” • With the support and cooperation of the government, the War Advertising Council was formed in 1942, and eventually became the Advertising Council.

42. Advertising Council • The Ad Council Retrospective, a look back at historical PSAs is available at AEF website.

43. Advertising Comes of Age –Major Periods in Advertising History • Advertising After World War 11 To 1975: The Word Was Growth • A change in the American consumer market caused advertising to increase in importance in the mid-1950s primarily because companies needed to differentiate their products from competing brands. • American polities changed forever in the 1950 presidential campaign when Rosser Reeves used 60-second TV spots to promote Dwight Eisenhower.

44. Advertising Comes of Age –Major Periods in Advertising History • Advertising After World War 11 To 1975: The Word Was Growth • The following were major governmental changes that affected advertisers in the 30 years following World War 11: • The Department of Justice ruled that advertising agencies could negotiate fees. • The use of outdoor advertising was limited. • The FTC introduced corrective advertising. • Creativity, including humor became hallmarks of advertising.

45. Advertising in the Fragmented 1980s • Let’s discuss some of the major developing the decade of the 1980s: New Technology. Audience Fragmentation. Consolidation. Credit.

46. Advertising Comes of Age –Major Periods in Advertising History • Advertising In The Fragmented 1980s – • Listed below are some major developments during this period: • New Technology – One of the significant developments in marketing and advertising in this new millennium was defining and using new technology to reach prospects. • Cable television, home video recorders, a proliferation of specialized magazines, the success of direct mail and home shopping techniques, and the growth of sales promotion changed the practice of advertising in fundamental ways.

47. Advertising Comes of Age –Major Periods in Advertising History • Advertising In The Fragmented 1980s – • Listed below are some major developments during this period: • Audience Fragmentation – • This period marked the beginning of the end of the traditional mass-market strategies that had dominated American business for almost a century. • Advertisers began to identify customers more as individuals rather than by households or homogeneous groups.

48. Advertising Comes of Age –Major Periods in Advertising History • Advertising In The Fragmented 1980s – • Listed below are some major developments during this period: • Consolidation – • Paradoxically, as media and audiences proliferated, ownership of brands, advertising agencies, and media were consolidated among a few giant companies. • Like their clients, advertising agencies also merged into so-called mega-agencies or holding companies designed to offer greater service to these giant conglomerates, usually on a global basis.

49. Advertising Comes of Age –Major Periods in Advertising History • Advertising In The Fragmented 1980s – • Listed below are some major developments during this period: • Credit – • Perhaps the greatest long-term legacy of the 1980s was the “buy now, pay later” mentality that pervaded every facet of American life from the federal government to the individual household budget.

50. Advertising and the 21st Century Emphasis on defining and utilizing new technology to reach prospects Emphasis on measuring the value of investing in various communication channels