Advertising and Marketing

Until the 1700s, Americans had little reason to embrace advertising. They didn’t need to broadcast their products and services to large areas, and printing in volume was too expensive to be a viable option. In 1742, Benjamin Franklin was the first to publish advertisements alongside illustrations in his newspaper, the Pennsylvania Gazette. Most of the ads then were about land, transportation, runaways (slaves and indentured servants), or they were lists of merchants’ goods and announcements about newly published books. The content was factual and to the point. By the 1800s, the methods of and reasons for advertising changed, as did the content. Faster and larger steam presses, lithography, improved papermaking techniques, and the development of color reproduction made volume printing cost-effective. America’s growing population and economy also sparked greater interest in news about goods and services, and business and current events. Newspaper publishers realized that advertising was an excellent revenue source, and created the “penny paper” (1 cent rather than the standard 5 or 6 cents) in which to sell large amounts of advertising space. By 1870, magazines were also selling advertising space.

Travel became faster and easier in the 19th century because of developments in the transportation industry. Manufacturers started distributing their goods to more areas and realized they needed sales promotions in those areas. They hired advertising agents to select newspapers that would be most effective for the sales promotions. These agents negotiated rates, selected and guided the printer, confirmed insertions, and handled payments. Newspapers also hired agents to sell space to advertisers. As a result, advertising agencies started to grow, offering not only ad placement services, but also ad writing, and marketing and advertising campaign strategies.

By the late 1800s, New York had become the hub for advertising, with agencies such as N.W. Ayer & Son, J. Walter Thompson, BBDO, and many others setting up shop. Branding started to evolve because people had begun to identify their personal success with material goods. Manufacturers picked up on this attitude and packaged and marketed everything—from cereals and soups to cigarettes and matches—with the message that smart consumers should accept no substitutes. Advertising jobs started to expand as more attention was paid to the copywriting and artwork, and to developing the relationship between clients and ad agency staff. What also developed was the hard-sell style of advertising: straightforward sales copy focused on the reasons why customers should buy the product and merchants should stock it. Advertising was pretty much the Wild West in its early days. Advertisers could say whatever they wanted, without fear of punishment—at least until the government stepped in with regulations in the early 20th century. The Food and Drug Act (1906) created a speed bump by requiring manufacturers to list their products’ active ingredients on labels, and the Federal Trade Commission Act (1914) further controlled ad agencies by restricting practices that were unfair to competitors.

The 20th century brought further changes to the advertising industry. In the 1920s, radio became a new medium for advertisers, and the selling of airtime a new service to clients. After the 1929 stock market crash and the ensuing Great Depression, the advertising industry plummeted, and ad copy became sensationalistic, showing desperation for customers. The government again stepped in and enacted regulations to control the practice of advertising. The economy started to boom again after World War II, which had many ad agencies focusing on luxury products like automobiles rather than packaged goods.

Television was the next big thing in the 1950s, with the big three networks—ABC, CBS, and NBC—producing and transmitting shows, and advertisers controlling the programs. As in radio, advertisers sponsored the TV shows, and commercials were aired live. Full sponsorships were expensive, however, and by the 1960s, the networks were controlling the programs and selling advertising time to multiple sponsors. Boutique agencies started emerging, with art directors and copywriters taking the lead on projects. The youth culture led this change of thinking. Corporations such as Pepsi and Coca-Cola invested heavily in creative ad campaigns during this decade and the next, and ad agencies continued to grow.

In the 1970s, the civil rights movement led to more diversification in ad agency staff, and the feminist movement inspired many women to open their own ad agencies. This decade also brought about the Action for Children’s Television, a group that lobbied the government to limit the amount and content of advertising aimed at children, as well as the Federal Trade Commission and the National Advertising Review Board demanding higher standards of honesty and disclosure in the advertising industry.

Fast forward to the 1980s for the debut of cable television, as well as to VCRs and the laserdisc—technologies that enabled viewers to bypass or fast forward through commercials, and were the forerunners of TiVo and DVRs today. Cable television helped advertisers to pinpoint their target audience, through programming on channels like CNN, ESPN, MTV, and Nickelodeon. Infomercials also caught on as a way to promote products in longer time formats that resembled talk shows. After the 1987 recession, ad agencies started restructuring and consolidating.

The development and growth of computers, laptops, and handhelds, along with the Internet and the Web, has given consumers more options for finding information when and where they choose, and helped advertisers have better insights into consumers’ attitudes and behaviors online. According to Ad Age writer and president-CEO of the Association of National Advertisers Bob Liodice, the top technological developments that have changed the advertising industry are: social media, search engine optimization, Internet-based advertising (behavioral targeting), video on demand, measuring actions versus impressions, interactive TV, brand-specific commercial ratings, mobile advertisements and payments, marketing-mix modeling, and Ad-ID.

Social media has brought consumers and marketers closer together: Marketers can monitor the conversations consumers are having online and engage with them in real time. “Nielsen found that 14 percent of people trust ads, and 78 percent of people trust consumer recommendations.” Liodice pointed out that “social media has shifted the conversation so forcefully that consumers have an unprecedented level of control over brands, rapidly turning themselves into a brand’s best advertisers.”

With search engine optimization (SEO), advertisers can target the consumer more specifically. SEO enables advertisers to attract consumers who are searching online for specific product or service by improving the visibility of the Web site or Web page of the product or service. SEO involves adding to Web sites and pages keywords and phrases that people use in their online search, to move the product and service to the top of their search findings.

 Internet-based advertising, or behavioral targeting, is when advertisers observe and track consumers’ online behavior through their purchases and searches. For instance, if you Google “mountain bikes,” and later open your Gmail and see pop-up ads for sporting goods stores selling mountain bikes, this is behavioral targeting, and it has raised concerns over consumer privacy. Media and marketing trade associations have introduced self-regulatory principles to help protect consumer privacy in online media.

The Web brought with it online video, with sites such as YouTube and Hulu. People now look to the Web for entertainment, and advertisers and brands have redirected dollars to online video due to its low distribution costs and high, built-in sharing capabilities. Advertisers can also measure and target ads through attached text and pre-roll ads.

Advertisers measure actions versus impressions with the cost-per-click model, which is pay that’s based only on how many people engage an ad with a click. Marketers have a clearer idea of the return on investment from consumers who engage with the ads. Action-based systems that have developed include Google AdWords, Yahoo! Search Marketing, and Microsoft AdCenter, and sites like Facebook.

The development of interactive TV (DVRs, TiVo, etc.) initially concerned advertisers because people could fast forward through the ads or skip them entirely. The challenge for advertisers, according to Liodice, was “to introduce interactive TV ads that worked within and in tandem with regular programming. Companies such as BrightLine iTV formed to bring the interactivity of the Web to TV, and Canoe Ventures brought the first clickable ad to ‘receive more info’ to the airwaves...”

The digital realm has given advertisers more precise statistics regarding their ad’s effectiveness, but up until a few years ago, TV ratings were less than precise, still based on the average of the commercials aired with a program. In 2007, the Association of National Advertisers (ANA) started calling for TV ratings that were specific to each commercial rather than to the average of the group. Liodice: “The industry is now starting to see a potential pathway, as a test conducted by Nielsen shows that the move toward brand-specific commercial ratings is clear.”

The proliferation of cell phones, smartphones, and tablet computers has pushed mobile advertising to the forefront. Consumers rely on their smartphones and tablets in their work and personal lives, and the mobile advertising sector is growing faster than expected. An eMarketer report in December 2013 predicted that U.S. mobile advertising spending, which reached $4.36 billion in 2012, would hit $9.60 billion by the end of 2013, up 120 percent. Mobile advertising is still in its infancy, but more ad agencies are strategizing mobile advertising campaigns.

Marketing-mix modeling has helped media planners improve the effectiveness of integrated marketing plans while reducing costs. This type of modeling is based on the weaving together of analyses of consumer sensitivity to a company’s (or brand’s) media platforms. As Liodice said: “Modeling has become more difficult with newer forms of media, the management process for conceptualizing integrated media plans remains the same. This is expected to improve as marketers and agencies better assess consumer sensitivity to digital media platforms.”

In 2003, the American Association of Advertising Agencies and the ANA introduced Ad-ID to the marketplace, a digital identifying code for advertisers. It’s a Web-based system that generates a unique identifying code for each advertising asset across all media, and is meant to improve workflow between agency, advertiser, distributor, and media. Ad-ID is a 12-digit code, of which the first 4 digits are company identification prefixes; it replaces the 8-character ISCI code that had been in use since 1970. According to Liodice, it was created to “bring a higher level of accuracy to the coding process and consistency to advertisement identification, as well as enable the industry for digital convergence…it helped transform the marketing industry for the digital revolution.”

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