The Advertising Industry Heyday

by | March 31, 2009

Many of the images traditionally associated with the advertising business were created in the 1950s and 60s. That was when "Madison Avenue" truly became synonymous with the business, and well-paid advertising executives discovered the fabled (and now extinct) three-martini lunch. The concept of the art director and copywriter creative team, now standard, was first conceived in the 1950s by the newly formed Doyle Dane Bernbach agency. Darren Stevens, the gray-flannel-suit-wearing creative/account executive from the television program Bewitched, embodied an American ideal though his character was not exactly reflective of agency reality. The yes-man part was right, but in the real world, underappreciated creatives were called "wrists," and were not even involved with strategy development.

Ad spending tripled between 1945 and 1956. So with the 15 percent standard commission, agencies were bringing in a veritable king's ransom. Faced with pressure from the IRS, agencies spent the excess cash on any and everything. They built libraries and research facilities, test kitchens, and packaging studios; they hired statisticians, jingle writers, and "bullpens" of artists. Clients became increasingly intolerant of these "bloated" agencies, and in 1956, the U. S. Department of Justice ruled that clients could demand rebates on commissions left over at the end of campaigns.

~In the 1960s, the advertising industry picked up on lessons from the rest of the business world. Ogilvy and Mather was the first agency to handle major accounts on a fee basis a practice that would become commonplace by the 1990s. Going public was all the range, a trend that set the stage for the rash of takeovers during the 1980s. Several agencies expanded overseas, and industry icon Marion Harper began an acquisition spree the result of which was the first advertising conglomerate, Interpublic. Meanwhile, ad spending slowed at the onset of the Vietnam War, and worsened when tobacco advertising was banned from broadcast media in 1969. By 1970, Harper had been ousted, and the ad business took on an industry-wide initiative to cut excess staff and amenities.

In the early 1970s, the country faced an oil embargo, an energy shortage and a recession. Needless to say, ad budgets were not a main priority. In 1976, however, the recession lifted. It was a presidential election year and the nation's bicentennial. The GNP rose 10.9 percent, and ad spending soared to $33.3 billion. Despite high fuel prices and rising interest rates, ad spending continued to grow in the early 1980s, and was further bolstered by industry deregulation airlines, hotels and resorts invested heavily in promotions to fill seats and rooms.

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