ADVERTISING: BACKGROUND INFORMATION
Directions: Read the following background information.
Early developments in American advertising
Advertising has existed since 3000 B.C., when ancient Babylonian shop owners hung outdoor signs carved in stone and wood so
customers could spot their stores. By A.D. 900, many European cities featured town criers who called out the news of the day and
directed customers to various stores. Early ads were in the form of handbills, posters, and broadsides (long newsprint-quality
posters). As early as the 1470s, English booksellers were printing brochures and bills announcing new books, and in 1622 print ads
began appearing in the first English newspapers. The first newspaper advertisements in colonial America appeared in the Boston
News-Letter in 1704. Most early magazines refused to carry advertisements, but by the mid-1800s they changed their policies, and
most magazines began to contain ads. Eighty percent of early advertisements covered three topics: land sales, transportation
announcements, and runaway slaves.
The first advertising agencies
Until the Industrial Revolution, little need existed for elaborate advertising. Few goods and products were available for sale, and
demand for products was low because 90 percent of Americans lived in rural areas and produced most of their own tools, clothes,
and food. National advertising, which initially focused on patent medicines, didn't really begin until the 1850s. The first advertising
agencies were newspaper space brokers, or individuals who purchased space in newspapers and sold it to various merchants. These
brokers, who paid up front for ad space, were welcomed by newspapers, which were accustomed to a 25 percent nonpayment rate.
The first ad agency was opened in Boston in 1841 by Volney Palmer — he sold newspaper space to advertisers for a 25 percent
Advertising in the 1800s
N. W. Ayer, the first so-called modern ad agency, opened in Philadelphia in 1875. The agency worked primarily for advertisers and
product companies instead of newspapers, and it helped create, write, produce, and place ads in selected newspapers and
magazines. The payment structure of nineteenth—century ad agencies is still in use today — the typical agency collects a fee from
its advertising client, keeps 15 percent of this fee, and passes on the rest to the appropriate media.
While some historians claim that the Industrial Revolution generated so many products that national advertising became necessary
to sell these goods, others believe that advertising developed on a national scale in order to control the prices manufacturers
charged for goods. Manufacturers came to realize that if their products became associated with quality, customers would ask for
them by name, and manufacturers could then dictate prices without worrying about being undersold by generic products or bulk
items. Nineteenth-century ads for patent medicines and cereal created the impression of difference among products when very few
differences actually existed, and because ads created brand-name recognition, stores had to stock the desired brand. Some of the
earliest brand names include Smith Brothers (cough drops since the early 1850s), Quaker Oats (1877), Ivory Soap (1879), and
Eastman Kodak film (1888). Many of these companies packaged their products in small quantities, distinguishing them from generic
bulk products sold in bins. This packaging also enabled manufacturers to add preservatives and to claim more freshness than could
be found in loose food barrels. Product differentiation associated with brand-name packaged goods represents the single biggest
triumph of advertising. Today, the high price of many products (such as designer jeans) results from advertising costs.
Patent medicines and department stores dominated advertising by the end of the 1800s. During this period, one-sixth of all print ads
came from patent-medicine and drug companies. Patent medicines were often made with water and concentrations of ethyl
alcohol. One even included morphine. The alcohol and drugs in these medicines explained why people felt "better" after taking
them, but they also triggered addiction problems for many customers. Some contemporary products originated as medicines, such
as Coca-Cola, which was initially sold as a medicinal tonic and contained traces of cocaine before the drug was replaced by caffeine
in 1903. Patent medicines made outrageous claims leading to increased public cynicism, and as a result advertisers began to develop
industry codes to restore customer confidence. In part to monitor patent-medicine claims, the Food and Drug Act was passed in
1906. In addition to patent medicines, department-store ads were becoming prominent; by the early 1890s, more than 20 percent
of ad space was devoted to these stores and their product lines. Department stores, which purchased items in large quantities, could
sell the same products as smaller stores for less money. Also, increased volume and less money spent on individualized service
allowed large department stores to put more of their profits into advertising.
The companies that produced the first inexpensive packaged consumer goods during the Industrial Revolution were also some of the
first to advertise, and they remain major advertisers today. These companies include Procter & Gamble, Colgate-Palmolive, Heinz,
Borden, Pillsbury, Eastman Kodak, Carnation, and American Tobacco. Some firms, such as Hershey's Chocolate, did not advertise
initially yet rose to national prominence through word-of-mouth reputation. Because such companies clamored for advertising
space in newspapers, the ratio of copy to advertisements was drastically changed. By the early 1990s, more than half of the space in
daily papers was devoted to advertising — a trend that continues today, with about 60 percent of the space in large dailies
consumed by ads.
Promoting social change and dictating values
American advertising contributed to major social changes in the twentieth century. First, it significantly influenced the transition
from a producer-directed to a consumer-driven culture. Second, advertising promoted technological advances by showing how new
machines like vacuum cleaners, washing machines, and cars could improve daily life. Third, advertising encouraged economic growth
by increasing sales.
By the early 1900s, advertisers believed that women controlled most household purchasing decisions. This is still the fundamental
principle of advertising today. However, more than 99 percent of the copywriters and ad executives at the time were men, primarily
from Chicago and New York. They emphasized stereotypes they believed would appeal to women, and early ad copy feature tales of
"heroic" cleaning products and household appliances.
Though ad revenues fell during the 1930s, the business received a shot in the arm during World War II when, for the first time, the
federal government bought large quantities of advertising space to promote America's involvement in the war. Also during the
1940s, the industry established the War Advertising Council to promote a more positive image of itself. The Council was a voluntary
group of agencies and advertisers that organized war-bond sales, blood-donor drives, and the rationing of scarce goods. The Ad
Council, as it became known as when it continued its efforts after the war, has been praised over the years for the Smokey the Bear
campaign, fund-raising for the United Negro College Fund, and the "crash dummy" spots for the Department of Transportation.
Television dramatically altered advertising, and with the new medium, ads increasingly intruded on daily life. As the industry
appeared to be dictating American values as well as driving the economy, criticism of advertising grew. Critics discovered that some
agencies used subliminal advertising — hidden or disguised print and visual messages that allegedly register on the subconscious
and fool people into buying products — though research suggests that such ads are no more effective than regular ads.
Early ad regulation
In the early 1900s, revelations of fraudulent advertising practices and the emerging clout of ad agencies led to the formation of
several watchdog organizations. The Better Business Bureau was created in 1913; by the 1990s it had more than two hundred offices
in the United States., Canada, and Israel. The Audit Bureau of Circulation (ABC) was created in 1914 and tracked newspaper
readership, guaranteeing that papers would not overcharge agencies and their clients. In 1917, the American Association of
Advertising Agencies (AAAA) was established. It tried to minimize government oversight by imploring ad agencies to refrain from
making misleading product claims.
The shape of U.S. advertising today
Up until the 1960s, most ads focused around a slogan, a phrase attempting to sell a product by capturing its essence in words. One
example of a slogan is Clairol's "Does she or doesn't she?" and "Only her hairdresser knows for sure." However, through the
influence of movies, television, and European design, images and visual style began to dictate American print advertising.
The influence of visual design
During the 1960s and 1970s, the postmodern design phase developing in art and architecture also began to influence advertising.
Part of this visual revolution was imported from European schools of design, and some ad-rich magazines like Vogue and Vanity Fair
hired European designers who were less tied to word-driven advertising as art directors. By the early 1970s, images and words were
granted equal status in the creative process. In the mid-1980s, the visual aesthetic promoted by MTV's rapid edits, creative camera
angles, compressed narratives, and staged performances began to heavily influence advertising. The popularity of the music channel
also started a trend in licensing hit songs for commercial tie—ins - a trend that is very much in evidence today. By 2002, the work of
Sting was used to promote Jaguar cars, Fatboy Slim's music was used for Mercedes—Benz, and Britney Spears and Shakira songs
were used to promote Pepsi.
Large, full-service advertising agencies emerged during the twentieth century. Most recently, the trend has been toward mega-
agencies, large ad firms formed by merging several individual agencies that maintain worldwide regional offices. Many of these
agencies operate in-house radio and TV production studios in addition to providing advertising and public relations services. One of
the largest mega-agencies and the leading communication service group in the world is the London-based WPP Group. In 1987, WPP
purchased both J. Walter Thompson, the largest U.S. ad firm at the time, and Hill and Knowlton, a large public relations agency. It
added Ogilvy & Mather Worldwide in 1989 and acquired Young and Rubicam in 2000. The mega-agency trend has stirred debate
among consumer and media watchdog groups. One concern is that large agencies are a threat to smaller, independent firms;
another is that a few firms now control the distribution of ad dollars globally and that the cultural values represented by American
and European ads may undermine the values and products of developing countries.
The boutique agency
The visual revolution of the 1960s elevated the status of those designers and graphic artists who became closely identified with
particular ads. Many of these creative people formed small boutique agencies and began to work with a handful of select clients. The
boutiques prospered as they offered more personal services and innovative ad campaigns. One example of a successful boutique
agency is Weiden & Kennedy from Portland, Oregon. They made a name after winning the Nike sneaker account in the 1980s and
developing the slogan "Just do it." One of their recent successes is the series of "Nike Freestyle" commercials featuring unknowns
skillfully handling basketballs to a hip-hop beat.
The structure of ad agencies
Ad agencies, regardless of size, are generally divided into four departments: market research, creative development, media
selection, and account services. A separate administrative unit pays employee salaries, pays each media outlet that runs ads, and
collects the agency's fees.
The market research department assesses the behaviors and attitudes of consumers toward particular products before any ads are
created. It studies everything from possible names for a new product to the size of the copy for a print ad. Researchers test new
ideas and products on groups of consumers to get feedback, and some researchers contract with outside polling firms. The earliest
type of market research, demographics, documented audience members' age, gender, occupation, ethnicity, education, and income.
Today, demographics is much more specific, making it possible for advertisers to locate consumers by zip code. In the 1960s and
1970s, as television greatly increased ad revenue, advertisers expanded research to include psychographics. This approach attempts
to categorize consumers according to attitudes, beliefs, interests, and motivations, often using focus groups, or small-group
interviews in which a moderator leads a discussion about a product or an issue. In 1978, the Stanford Research Institute (SRI)
instituted its < and>or VALS strategy, which divided consumers into clusters based on how they think and feel about products. In the
late 1980s, VALS 2 was introduced, which not only classified people by values and lifestyles but also considered the ways consumers
achieve the lifestyles to which they aspire. Agencies and clients have relied heavily on VALS to determine the best placement for TV
and magazine ads, and even though VALS researchers do not claim that most people fit neatly into one category, many agencies
believe that VALS research can give them an edge.
The creative development department of an advertising agency is made up of teams of writers and artists. For print ads, the creative
department develops words and graphics, and outlines rough sketches for newspaper, magazine, and direct-mail ads. For radio, this
department prepares the working script and generates ideas for everything from narration to sound effects. For television, the
creative department develops a storyboard, or a blueprint for the potential ad. The cost of advertising grows higher all the time. For
example, a typical thirty-second national television ad cost $343,000 to produce in 1999, almost twice the production costs ten years
earlier. The Superbowl remains the most expensive program for purchasing television advertising, with thirty seconds of time costing
$2 million in 2002. Despite the high cost, both creative and research departments know that ads work best by slowly creating brand-
name identities, associating certain products over time with quality and reliability in the minds of consumers.
The media selection department in an ad agency is staffed by media buyers - people who choose and purchase the types of media
that are best suited to carry a client's ad. For example, media buyers who are trying to place ads for household products might buy
television spots during TV shows viewed primarily by women, whereas they might encourage a company advertising beer to spend
its money on cable and network sports programming, sports magazines, or evening talk radio. Advertisers often add incentive
clauses to contracts with agencies, raising the fee if sales goals are met and lowering it if goals are missed. These types of clauses
often encourage agencies to conduct saturation advertising, where a variety of media are inundated with ads aimed at target
audiences. The Miller Lite beer campaign ("Tastes great, less filling") was one of the most successful saturation campaigns in history,
running from 1973 to 1991 on television and radio, in magazine and newspaper ads, and on billboards and point-of-purchase store
The account services department of an agency is composed of account executives, or individuals responsible for bringing in new
business and managing the accounts of established clients. Account executives also work as liaisons between the advertiser and the
creative team, and they coordinate activities between their agency and a client's in-house personnel. This department oversees new
ad campaigns in which several agencies bid for business. Clients often evaluate an existing ad agency's campaign in an account
review. They also occasionally invite new agencies to submit new campaign strategies, which may result in the product company
Persuasive techniques in contemporary ads
While ad agencies and product companies maintain that the main purpose of advertising is to inform consumers about available
products, most consumer ads merely tell stories about products without revealing much information about how a product was
made, how it compares with similar brands, or what the price is.
Conventional persuasive strategies
There are several persuasive techniques that advertising agencies use to sway consumer opinion. One is the famous-person
testimonial, where a product is endorsed by a well-known person. One example of this is former Star Trek actor William Shatner
touting the benefits of Priceline.com. Another technique, the plain-folks pitch, associates a product with simplicity, as in the case of
General Electric's "We bring good things to life" campaign. The opposite of plain-folks, the snob-appeal approach attempts to
persuade consumers that using a product will maintain or elevate their social station. The bandwagon effect points out in
exaggerated claims that everyone is using a particular product and that consumers will be left out (or they are not hip) if they ignore
these products. The hidden-fear appeal plays on consumers' insecurities. Deodorant, mouthwash, and dandruff-shampoo ads point
out that only a specific product could relieve embarrassing personal hygiene problems. Irritation advertising is used more often in
local TV and radio campaigns. This technique creates product-name recognition with ads that are annoying or obnoxious, such as
local car dealers who yell at the camera or dress in outrageous costumes.
The association principle
The association principle is a persuasive technique used in many consumer ads. It associates a product with some cultural value or
image that has a positive connotation but may have little connection to the actual product. For example, many ads displayed visual
symbols of American patriotism in the wake of the September 11th tragedies of 2001 in an attempt to associate products and
companies with national pride. Over the years, the most controversial use of the association principle has been the linkage of
products to stereotyped caricatures of women. Women have been portrayed as sex objects or as clueless housewives. Another
strong association used often in advertising is nature. Marlboro often links its cigarettes to nature, using the image of the rugged
cowboy, the Marlboro Man, to convince consumers to associate smoking with images of roping calves, building fences, or riding
through pristine landscapes.
In response to corporate mergers and public skepticism toward large impersonal companies, the disassociation corollary has
emerged as a recent trend in advertising. As an advertising strategy, disassociation links new brands in a product line to eccentric or
simple regional places rather than to the image conjured up by giant conglomerates. This concept was pioneered by the wine
company Gallo, which established a dummy corporation, Bartles & Jaymes, to sell jug wine and wine coolers. Using two low-key,
grandfatherly spokesmen to represent "co-owners" and ad spokesmen for the new company, Gallo was able to avoid the corporate
image in ads and on its bottles. Miller Brewing Company and General Motors have both successfully used the disassociation
corollary to launch new products.
In our technology-dependent world, modern societies have come to value products that claim affiliation with the real and natural,
though these terms are almost always used in advertising to describe processed goods. For example, Coke sells itself as "the real
thing." Ads are most effective when they create attitudes and reinforce values. Although we realize that ads create a fictional world,
we get caught up in their stories and associations — regardless of whether they provide information about the product.
Commercial speech and regulating advertising
Whereas freedom of speech refers to the right to express thoughts, beliefs, and opinions, commercial speech — any print or
broadcast expression for which a fee is charged - refers to the right to circulate goods, services, and images in the marketplace of
products. The many new forms of commercial speech that have appeared of late include cable television home-shopping networks,
late-night television long-form commercials, and infomercials. Although the mass media have embraced these new forms of
commercial speech, they have also refused certain controversial, issue-based advertising that might upset traditional advertisers.
One example of this is the Media Foundation, which has had difficulty getting airtime for its "uncommercials," such as a spot
promoting the Friday after Thanksgiving as "Buy Nothing Day."
Critical issues in advertising
While consumers have historically been regarded as dupes, research reveals that the consumer mind is not as easy to predict as
some advertisers once thought. For example, in the 1960s the Scott paper company thought its disposable clothing line would
challenge traditional apparel, but despite heavy advertising, this never happened. Similar stories from other companies abound.
Between 75 and 90 percent of new consumer products fail because they are not embraced by the buying public. Despite public
resistance to many new products, advertising has made contributions to our society, including raising the standard of living and
supporting most media industries. However, serious concerns over the impact of advertising remain.
Because children and teenagers influence up to $500 billion a year in family spending, they are increasingly targeted by advertisers.
For years, groups like the Action for Children's Television (ACT) worked to limit advertising aimed at children, in particular thirty-
minute cartoon programs such as G.I. Joe, My Little Pony, and Pokemon, developed for television syndication to promote a line of
toys. Also, parent groups have worried about the promotion of products like sugar-coated cereals during children's programs.
Congress, faced with the protection that the First Amendment offers commercial speech, has responded weakly.
One of the most controversial developments in advertising in recent years was the introduction of Channel One into thousands of
schools during the 1989-90 school year. Offering "free" video and satellite equipment in exchange for a ten-minute package of
current events programming that included two minutes of commercials, Channel One was available in more that twelve thousand
junior high and high schools by 2002, reaching a captive audience of eight million students. While over the years organizations like
the National Dairy Council have also used schools to promote products by offering free filmstrips, posters, magazines, and folders,
Channel One is viewed as more intrusive because it crosses the line between an entertainment situation (commercial television) and
a learning situation (school). Some school districts have banned Channel One, as has the state of New York.
Historically, many companies have capitalized on consumers' unhappiness and insecurity by promising relief or the kind of body that
is currently in fashion, and advertising has a powerful impact on the standards of beauty in our culture. The long-standing trend in
advertising is the association of some products with ultrathin female models — some so skinny that critics began referring to the
style of these ads as "heroin chic" because the models look like victims of prolonged drug use. In addition to criticism for promoting
skeleton-like beauty, the advertising industry has been taken to task for promoting alcohol and tobacco consumption. Despite the
fact that each year four hundred thousand Americans die from diseases related to nicotine addiction and an additional one hundred
thousand die from alcohol-related diseases, staggering amounts of money are spent each year on advertising to encourage these
habits. Many ad campaigns over the years have appealed to teenagers, such as the Joe Camel cartoons to promote Camel cigarettes.
Cigarette companies have also targeted groups such as young women (Eve and Virginia Slims cigarettes) and African Americans
(Uptown cigarettes). In 1998, after it had been revealed that some tobacco companies had known that nicotine is addictive as early
as the 1950s and had withheld that information from the public, the tobacco industry agreed to an unprecedented settlement after
four states won against the tobacco industry and the remaining states threatened still more expensive lawsuits. The settlement
included a ban on cartoon characters in advertising and ended outdoor billboard and transit advertising. It also banned tobacco-
company sponsorship of concerts and athletic evens, and limited other types of tobacco-company sponsorship. Many of the
complaints regarding tobacco advertising are also being directed at alcohol ads. One example is the criticism of the cartoonish
Budweiser frogs, which appear to be appeal to younger viewers. Alcohol ads have also targeted minorities and college students.
Both Coors and Miller still employ student representatives to notify brewers of special events that might be sponsored by the beer
Watching over advertisers
Hard-liquor ads had been banned from radio since 1936 and from television since 1948. In 1996, however, Seagram, a Canadian
liquor company, defied the ban and began testing regional TV ads in Texas. Execs at Seagram called the ban "obsolete" and pointed
to other countries that featured liquor ads on television. Following Seagram's lead, the Distilled Spirits Council, the liquor industry's
trade association, voted in 1996 to lift the voluntary ban on broadcast ads. However, at the time the major networks refused to
carry the ads nationally, citing efforts to promote responsible drinking and the threat that liquor advertising posed to their beer and
wine ad revenues.
In addition to pushing for legislation aimed at controversial products such as hard liquor, groups such as the Better Business Bureau,
the National Fraud Information Center, and the Federal Trade Commission (FTC) monitor deceptive and false advertisements.
Professions like medicine and law have also often tried to limit ads through their professional organizations. For example, bar
associations tried to prohibit lawyers from advertising until a 1978 ruling in which the Supreme Court ruled that lawyers have a First
Amendment right to promote their services.
For years it was considered taboo for an advertiser to mention a competitor by name in its ads — industry guidelines discouraged
the practice and TV networks prohibited it, believing that comparative ads would result in name-calling. In 1971, however, the FTC
began encouraging comparative advertising because the agency thought this practice could help consumers by providing more
product information. Since then, comparative advertising has been common, particularly in the food industry, with battles such as
Burger King vs. McDonald's and Pepsi vs. Coke.
In most advertisements, a certain amount of exaggeration and hyperbole is expected and has been permitted, though when a
product claims to be "the best," "the greatest," or "preferred by four out of five doctors," the FTC often asks for supportive
evidence. Also, when the FTC discovers deceptive ads, it usually requires advertisers to change their ads or remove them from
circulation. One example of deceptive ads were the Campbell Soup spots that used marbles in the bottom of a soup bowl to push
more bulky ingredients to the surface.
Advertising's threat to journalism
Advertising wields power that is often subtle and difficult to monitor. The interaction between advertising and journalism can be
particularly troublesome. One problem is that as many dailies faced financial difficulties in the 1990s, some editors looking to keep
advertisers happy did not run controversial business stories. The Portland Oregonian, for example, killed a real-estate story and
destroyed thousands of copies of a Sunday edition because its advertising department complained to the editors. Newspapers do
not always bow to such pressure. The Seattle Times refused to back down from a story criticizing Nordstrom's labor difficulties, even
after the large department store reduced its advertising in the paper. Local news outlets are also subject to advertiser pressure. A
2000 survey by the nonprofit Project for Excellence in Journalism found that one-third of television news directors had been
pressured by advertisers or station management to do positive stories, or kill negative stories, about advertisers.
Advertising and the Internet
The Internet is a very attractive medium for advertisers because of its unique ability to record and track online users. Internet
advertising climbed from $1 billion in 1998 to between $8 and 10 billion by 2000, and it is expected to become a $28 billion market
by 2005. The banner ad, typically a rectangular ad that loads at the top of the Web page, was the most common style of advertising,
though these ads were losing favor by 2001. To achieve higher click-through rates, the Interactive Advertising Bureau agreed on
seven new, larger "skyscraper" and "large rectangle" ad formats. Still other forms of Web advertising are less obvious and have
blurred the lines between advertising and editorial content. For example, search engines regularly give top billing in search result
lists to companies that pay for prominence, and many Internet games double as advertisements.
One of the most innovative ad campaigns in recent history was created by the American Legacy Foundation as one of the provisions
of the government's multibillion-dollar settlement with the tobacco industry in 1998. The nonprofit foundation worked with a
coalition of ad agencies, a group of teenage consultants, and a $300 million budget to create a series of stylish, gritty print and
television ads using teen voices and actors to deconstruct the images that have long been associated with cigarette ads. The
commercials show teens dragging, piling, or heaving body bags across the beach or onto a horse, and holding up signs saying, "What
if cigarette ads told the truth?" The ads reference the Foundation's Web site, thetruth.com, which offers statistics, discussion
forums, and outlets for teen creativity.
Advertising, politics, and democracy
As advertising has become more pervasive and consumers more discriminating, advertisers have searched for new ways to work ads
into social and cultural fabric. Products now act as props or even "characters" in TV shows and movies, and almost every national
consumer product has its own Web site. Some advertisers try to transform the political and cultural message of popular music to sell
their products. Some examples of this are the use of the Beatles' "Revolution" to promote Nike shoes and the use of David Bowie's
"Heroes" to promote Microsoft software. Political advertising is a more straightforward form of cultural blending, using ad
techniques to promote a candidate's image and persuade the public to adopt a particular viewpoint. Politicians often use powerful
visual images and attack other candidates in their ads, which distract viewers from the real campaign issues. In the late 1980s, a
research team at the University of Pennsylvania's Annenberg School of Communication developed a method to critique political
advertisements, which the major networks picked up on in the early 1990s in a news segment called Ad Watch. As a result of Ad
Watch, media consultants began paying more attention to the veracity of their ads. Because political advertising is big business for
television stations, broadcasters have long opposed free time for political campaigns. This raises serious questions about political
ads. Can serious information on political issues be conveyed in thirty-second spots? Do repeated attacks on a rival's character
undermine citizens' confidence in the electoral process? How will alternative political voices, which are not so well financed, be
Though as individuals and as a society we may sometimes be uneasy with advertising, a number of factors have allowed for the
industry's largely unchecked growth. Americans tolerate advertising as a necessary evil for maintaining the economy, and many
dismiss advertising as trivial. Because we are willing to downplay its centrality to global culture, many citizens do not think
advertising is significant enough to monitor or reform.