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THERE may be too much advertising today. There may be too much advertising by retailers, too much advertising by bankers, too much advertising by manufacturers. Anyone, however, can say that there is too much merely because it is large in quantity. We have unfortunately no standard by which to determine the amount of advertising which might be done usefully and in excess of which advertising represents waste. It is idle therefore to merely rail against volume of advertising. It is necessary for us to study the objectives of the various kinds of advertising in order to determine whether advertising in whole or in part serves a useful purpose.
Now, the economic consequence of national advertising, of what is here called high pressure advertising, differs from the economic consequences of retail advertising, of financial advertising, of industrial and of trade advertising.
High pressure advertising does not answer to the definition of advertising to be found in the dictionary: "To inform or apprise; to make known through the press."
The immediate objective of national advertising is to secure brand specification--to create consumer demand or consumer acceptance of the advertisers' brand. The definition of national advertising should be: to create brand specification by consumers through the medium of printed statements.
That advertising served a useful purpose when a merchant printed the fact that he was in receipt of a shipment of New Orleans molasses or of Scotch ginghams, no one can possibly question. This was information of value to the public a hundred years ago and similar information is of value to the public today. Advertisements which describe the goods which a retailer has on sale and the prices at which he is selling perform a useful service. The retailer's advertisements, it is true, are probably not performing that service at maximum efficiency, and he may for that reason spend more for advertising than is really necessary. But if he makes that mistake, he pays for it, since competition with other stores prevents him from raising prices on his merchandise to cover his inefficient advertising.
The situation as to the national advertising of manufacturers is very different.
The purpose for which the manufacturer advertises is not primarily to "inform or apprise." "Such a conception of advertising is now not only inadequate, but false and misleading," says George French. ("Advertising," George French.) "It is now one of the minor functions of advertising to announce or give notice. Its major function is to persuade."
Selling merchandise to the consumer by the use of national advertising is selling merchandise in a very different way from that which prevailed in less strenuous times. Then merchants used to assemble goods and await the demands of the public. Both the makers and the storekeepers supplied the necessities of the public, but permitted the public itself to develop its own needs and propensities to purchase. Customers went to the stores because necessities, rather than artificially created desires, had developed in their lives. They bought goods when their pantry shelves were emptied or their clothes were worn out. The new things they bought were needed principally to replace those which had been consumed.
The end sought through national advertising is the reverse of that which the dictionary describes and that which still forms the theme of most of the advertising of merchants today. The object of national advertising is to create desire. It ignores the question of the necessity for the goods and tries only to succeed in persuading the public to buy what the advertiser offers. At the best, the needs of the people form but one of the smaller considerations in the plans of the manufacturer who advertises. He bends his energies to the task of persuading people to buy his trademarked goods, and he has no occasion to concern himself about their utility in economic life. He often not only manufactures the goods, but through his advertising, manufactures the demand for them. He creates, as George French says, a necessity in the lives of the people that has no economic or moral basis in fact.
Surely, if one of the ablest thinkers upon the subject of advertising characterizes consumer demand created by national advertising as having "no economic or moral basis in fact," we may term the business created by a manufacturer in this way as artificial demand.
During the year 1925 the probable expenditures of national advertisers for creating this artificial demand was around $1,000,000,000.
Year by year the expenditure has been increasing.
It is difficult to estimate accurately the rate of increase, but if we assume it to be substantially the same as the rate of increase of the advertising inserted in leading magazines of the country, we shall probably come very near the actual rate.
In 1915, advertisers spent $38,737,336 in 76 monthly and weekly magazines, women's publications, and farm journals. In 1916, they spent $51,867,803 in 77 publications; in 1917, in the same number of publications, $57,793,628; in 1918, in 72 publications, $61,312,888; in 1919, it was $97,208,791; in 1920, it was $132,414,799.
This would indicate that the expenditure was more than trebling itself every five years. As, however, the year 1921 (the year of deflation), showed a reduction in advertising in these publications to $95,439,236, this rate would be too high.
A very conservative estimate based upon these figures would be that the expenditure more than doubles itself every five years.
This means that if the expenditure for national advertising was $1,000,000,000 in the year 1925, it will be $2,000,000,000 in 1930; $4,000,000,000 in 1935; $8,000,000,000 in 1940, and so on ad infinitum to the advertising millennium.
Even those who have carefully observed the growth of national advertising and who have noted from year to year the growth of the circulations of the national mediums, the increases in the amount of advertising in them, and the sizes of spaces used by individual advertisers, find it difficult to visualize the magnitude of the industry which may ultimately be devoted to national advertising. It is already an industry that has attracted thousands of the ablest minds of the country, and diverted from other more productive industries great armies of workers in paper making, printing, engraving and allied fields. The raw materials used in the industry, the pulp wood, coal, lead, copper, zinc, represent great drafts upon the natural resources of the earth.
By combining the figures issued by the Crowell Publishing Company, of New York, giving the expenditures of leading national advertisers in thirty magazines with the estimated volume of advertising by national advertisers in newspapers prepared by the Bureau of Advertising of the American Newspaper Publishers Association, we get the following table:
1924 EXPENDITURES (IN NEWSPAPERS AND MAGAZINES ONLY
BY LEADING NATIONAL ADVERTISERS
In Newspapers In Magazines
(See Note 1) (See Note 2) Total
1. Victor Talking Machine Co..... $ 1,900,000 $ 1,184,310 $ 3,084,310
2. Ford Motor Company............ 2,000,000 651,250 2,651,250
†3. Chevrolet Motor Car Company... 1,650,000 552,065 2,202,065
*4. Postum Cereal Company......... 875,000 1,274,830 2,149,830
*5. Procter & Gamble Company...... 510,000 1,409,050 1,919,050
6. American Tobacco Company...... 1,600,000 298,691 1,898,691
7. Dodge Brothers ............... 1,200,000 641,600 1,841,600
8. Colgate & Company............. 450,000 1,158,455 1,608,455
9. Congoleum Company ............ 400,000 1,181,900 1,581,900
*10. Campbell Soup Company ........ ........ 1,519,200 1,519,200
11. Liggett & Myers Tobacco Co.... 1,500,000 ........ 1,500,000
12. Standard Oil Co. of Indiana... 1,500,000 ........ 1,500,000
13. Calumet Baking Powder Co...... 1,400,000 ........ 1,400,000
14. Pepsodent Company ............ 800,000 561,303 1,361,303
15. Willys-Overland Co. .......... 500,000 859,550 1,359,850
16. Lever Brothers Company........ ....... 1,339,350 1,339,350
*17. Wm. Wrigley, Jr., Company..... 1,250,000 ....... 1,250,000
18. Corn Products Refining Co..... 800,000 384,300 1,184,300 -
19. H. J. Heinz Company........... 600,000 527,970 1,127,970
20. Palmolive Company ............ 300,000 785,270 1,085,270
21. Buick Motor Company........... 635,000 435,500 1,070,500
22. United States Rubber Company.. 750,000 309,410 1,059,410
23. Hupp Motor Corporation........ 750,000 295,980 1,045,980
24. Paige-Detroit Motor Car Co.... 1,000,000 ....... 1,000,000
25. Sun-Maid Raisin Growers Assn.. 465,000 518,050 983,050
26. Quaker Oats Company .......... 400,000 532,580 932,580
27. Andrew Jergens Company........ 150,000 777,875 927,875
28. Lambert Pharmacal Company..... 150,000 769,039 919,039
*29. Borden Sales Company, Inc..... 380,000 503,000 883,000
*30. Vacuum Oil Company............ 125,000 752,000 877,000
*31. Armstrong Cork Company........ 400,000 423,700 523,700
32. Eastman Kodak Company......... 250,000 566,845 516,845
33. Hart Schaffner & Marx......... 500,000 284,775 784,775
34. Swift & Company............... ....... 763,960 763,960
35. Metropolitan Life Insurance Co 125,000 594,945 719,945
†36. Oakland Motor Car Company..... 700,000 ....... 700,000
37. B. F. Goodrich Company........ 700,000 ....... 700,000
38. American Radiator Company..... ....... 667,685 667,685
39. Clicquot Club Company......... 650,000 ....... 650,000
40. Pond's Extract Company........ 200,000 445,100 645,100
41. General Cigar Company......... 600,000 ....... 600,000
42. Valentine & Company........... ....... 595,500 595,500
43. Cudahy Packing Company........ ....... 592,000 592,000
44. Union Pacific System ......... 570,000 ....... 570,000
45. General Electric Company...... ....... 562,140 562,140
46. Rickenbacker Motor Company.... 560,000 ....... 560,000
47. Radio Corp. of America........ 250,000 303,460 553,460
48. Fels & Company................ ....... 539,350 539,350
49. Cream of Wheat Company........ ....... 525,400 525,400
50. Simmons Company .............. 210,000 308,960 518,960
51. Macfadden Publications ....... 510,000 ....... 510,000
*52. Lehn & Fink, Inc.............. ....... 504,410 504,410
53. Fleischmann Company .......... ....... 503,560 503,560
54. Atchison, Topeka & Santa Fe RR 500,000 ....... 500,000
55. Literary Digest .............. 500,000 ....... 500,000
56. Standard Oil Co. of California 500,000 ....... 500,000
57. Calif. Fruit Growers Exchange. 180,000 313,550 493,550
*58. Coca-Cola Company ............ 170,000 322,650 492,650
59. Royal Baking Powder Company .. 175,000 312,990 487,990
60. California Packing Company ... ....... 484,860 484,860
61. Bon Ami Company .............. ....... 462,350 462,350
*62. International Silver Co....... ....... 459,690 459,690
63. Jell-O Co., Inc............... ....... 458,200 458,200
64. Southern Cotton Oil Trading Co 175,000 280,776 455,776
65. Canada Dry Ginger Ale, Inc.... 450,000 ....... 450,000
66. Famous Players-Lasky Corp..... 150,000 298,500 448,500
67. Pro-phy-lac-tic Brush Co...... ....... 413,181 413,181
68. Brunswick-Balke-Collender Co.. 400,000 ....... 400,000
69. Edna Wallace Hopper .......... 400,000 ....... 400,000
*70. Texas Co...................... ....... 395,500 395,500
71. Fuller Brush Company ......... ....... 392,450 392,450
72. Hudson Motor Car Co........... ....... 387,270 387,270
73. Oneida Community, Ltd......... ....... 385,575 385,575
74. Pompeian Laboratories ........ ....... 382,250 382,250
75. Gold Dust Corp................ ....... 379,570 379,570
76. Packard Motor Car Co.......... ....... 354,425 354,425
77. Salada Tea Company ........... 350,000 ....... 350,000
78. Shredded Wheat Company ....... 350,000 ....... 350,000
79. Crane Company ................ ....... 342,600 342,600
80. National Carbon Company ...... 340,000 ....... 340,000
81. Cadillac Motor Car Co......... ....... 338,870 338,870
82. R. L. Watkins Co.............. ....... 335,452 335,452
83. Libby, McNeil & Libby ........ ....... 335,100 335,100
84. Maxwell Motor Corporation .... ....... 325,500 325,500
85. Du Pont de Nemours & Co., Inc. ....... 325,240 325,240
86. Firestone Tire & Rubber Co.... ....... 324,800 324,800
87. Hoover Co. ................... ....... 323,700 323,700
88. Fisher Body Corporation....... ....... 320,100 320,100
89. Standard Oil Co. of New York . ....... 311,505 311,505
90. Armour & Co................... ....... 301,200 301,200
91. Anheuser-Busch, Inc........... 300,000 ....... 300,000
92. Auto Strop Safety Razor Co.... 300,000 ....... 300,000
93. Cheek-Neal Coffee Company .... 300,000 ....... 300,000
94. Hurley Machine Co............. 300,000 ....... 300,000
95. Portland Cement Association .. 300,000 ....... 300,000
96. Union Oil Co. (Los Angeles) .. 300,000 ....... 300,000
97. General Motors Co............. ....... 288,300 288,300
98. Kroehler Mfg. CO.............. ....... 283,900 283,900
99. Zonite Products Co............ ....... 282,870 282,870
100. Chrysler Motor Corporation ... ....... 281,100 281,100
101. Nordyke & Marmon Company ..... 280,000 ....... 280,000
102. Washburn-Crosby Co............ ....... 279,250 279,250
103. E. R. Squibb & Son ........... ....... 278,460 278,460
104. International Magazine Co..... 275,000 ....... 275,000
105. Aluminum Cooking Utensil Co... 250,000 ....... 250,000
106. Barrett Company .............. 250,000 ....... 250,000
107. C. F. Mueller Company ........ 250,000 ....... 250,000
108. National Biscuit Company ..... 250,000 ....... 250,000
109. New York Central Lines ....... 250,000 ....... 250,000
110. Parker Pen Company ........... 250,000 ....... 250,000
111. Maytag Company ............... 225,000 ....... 225,000
112. Boyce & Veeder Company ....... 220,000 ....... 220,000
113. Associated Oil Co.(San. Fran.) 200,000 ....... 200,000
114. Certain-teed Products Co...... 200,000 ....... 200,000
115. Johns-Manville Company ....... 200,000 ....... 200,000
116. Phenix Cheese Company ........ 200,000 ....... 200,000
117. Royal Typewriter Company ..... 200,000 ....... 200,000
118. Vick Chemical Company ........ 200,000 ....... 200,000
119. Alfred H. Smith Co.(Djer-Kiss) 200,000 ....... 200,000
120. Williamson Candy Company. .... 200,000 ....... 200,000
121. Calif. Prune & Apricot Growers 180,000 ....... 180,000
122. A. Stein & Company............ 180,000 ....... 180,000
123. W. & J. Sloane................ 170,000 ....... 170,000
124. Cunard Line .................. 160,000 ....... 160,000
125. W. L. DouglaSho Company ...... 160,000 ....... 160,000
126. Holland Furnace Company ...... 165,000 ....... 165,000
127. Northern Pacific Railway Co... 160,000 ....... 160,000
128. Bauer & Black ................ 150,000 ....... 150,000
129. Dairymen's League Co-op. Assn. 150,000 ....... 150,000
130. W. A. Sheaffer Pen Cc......... 150,000 ....... 150,000
131. American Express Company...... 125,000 ....... 125,000
132. French Lick Springs Hotel Co.. 125,000 ....... 125,000
133. Phoenix Hosiery Company ...... 125,000 ....... 125,000
134. The Western Company .......... 125,000 ....... 125,000
135. C. Brandes, Inc............... 100,000 ....... 100,000
136. Florida Citrus Exchange ...... 100,000 ....... 100,000
†137. Indian Refining Company ...... 100,000 ....... 100,000
138. Lalance & Grosjean Mfg. Co.... 100,000 ....... 100,000
139. McCall's Magazine ............ 100,000 ....... 100,000
140. Shell Oil Co. (Los Angeles) .. 100,000 ....... 100,000
Grand Total ............... $43,530,000 $39,166,352 $82,696,352
Note 1: Estimates compiled by the Bureau of Advertising of the American Newspaper Publishers Association.
Note 2: From a statistical study of 30 magazines by Crowell Pub. Co.
* For names indicated in this manner, Printers' Ink has on its records the amount of the original advertising appropriations. The records show the first appropriations made by the companies thus indicated to be as follows: Armstrong Cork Company, $3,000. Borden Sales Company, Inc., $513.75. Campbell Soup Company, $4,264. Clicquot Club Company, $10,000. Coca-Cola Company, $73.96. Hupp Motor Corporation, $100.68. International Silver Company, $10,000. Lehn & Fink, $5,000. Postum Cereal Company, $1,669.84. Procter & Gamble Company, $11,543. Texas Company, $8,000. Vacuum Oil Company, $90,000. Wm. Wrigley, Jr., Company, $32.
† Dealers' advertising included in these newspaper figures.
This compilation does not, of course, include the total advertising expenditure of the concerns listed. It represents their expenditures in only thirty magazines to begin with, and includes none of their expenditures in the other general magazines, farm papers, theater programs, direct-mail, window-displays, novelties, premiums, motion pictures, slides, directories, signs, and other mediums.
An excellent statement concerning the purposes for which all this money is spent is made in an advertising trade paper: (Advertising and Selling Fortnightly, February 25, 1925, p. 27.)
In the statement to its stockholders issued recently by The American Sugar Refining Company, we find this statement:
"Formerly, as is well known, household sugar was largely of bulk packing. We have described the sale of package sugar and table syrup under the trade names of 'Domino' and 'Franklin' with such success that the volume of trade-mark packages now constitutes roundly one-half of our production that goes into households.
"This package development necessitated very large changes both in equipment and in refineries. The advantage of this business is its direct contact with the consumer. "
There are two significant points in this brief statement. First, that the advertising and sales effort put behind this company's packaged sugars has resulted in selling approximately half of its volume in package form, whereas only a few years ago all sugar was sold in bulk. Second, that although the packaging operation involved a large outlay for equipment and changes in plant, this has been compensated for by the greater control the company has over its business through direct contact with the users of its product.
These facts should be of vital interest to any executive who faces the problem of marketing a staple product that is hard to control because it is sold in bulk.
Twenty years ago the sale of sugar in cardboard cartons under a brand name would have been unthinkable. Ten years hence this kind of history will have repeated itself in connection with many other staple commodities now sold in bulk, both to the householder and to the industrial consumer.
Perhaps the most authoritative brief statement of the manner in which brand specification has attained its present proportions is contained in the report of the Joint Commission of Agricultural Inquiry on Marketing and Distribution, (Page 116, "Marketing and Distribution," Report of the Joint Commission of Agricultural Inquiry.) and follows here:
Under liberal governmental laws, fostering educational opportunity, monthly and weekly magazines and papers of wide circulation came into existence about 1880 and increased rapidly in number until about 1910. These magazines offered an opportunity for wide exploitation of manufactured goods. However, to realize a profitable return on advertising, it was necessary for the makers of goods to identify their products and guarantee satisfaction.
This led to increased branding and trade-marking of goods and packaging of foodstuffs. With the opportunity offered through widespread circulation of advertising mediums, there developed broadcast distribution of goods and a competition between manufacturers of parallel articles for national markets. This competition reflected itself in a further effort on the part of manufacturers to improve methods of manufacture and secure economies of large volume production. Competition was not confined, however, to production, but extended to the purchase of more advertising space in a larger number of publications and an increased selling effort of most intensive character.
In addition to the usual selling organizations calling upon the wholesalers, manufacturers organized specialty selling, in which they employed men to call upon retailers, distribute samples, and utilize such devices as would tend to compel retailers to purchase goods through the wholesaler. Each new selling device was adopted by competitive manufacturers, with the result that the distribution of manufactured goods became a competition of spending, until it developed a burden of distributive costs in excess of the value of the commodities distributed. However, consideration should be given to the fact that in the competition of identified goods there has developed a greater excellence, uniformity, convenience, hygienic protection of foodstuffs and a radical change in the living habits of the American people. It is apparent, however, that these advantages do not sufficiently compensate for the disproportionate cost of the distribution of necessities.
Brand specification, as the term is used by advertising men, describes the habit of buying by specifying a brand. Standard specification, on the other hand, may be described as the specifying of established standards in buying. Brand specification is so easily confused with standardization and standard specification that it comes as somewhat of a shock to realize that they are really diametrically opposed.
There is a difference between the branding of a product and what advertising men call brand specification.
Brand specification is really an abuse of branding.
Branding itself is merely a means of making it possible to identify the maker of a product. When used on products manufactured to standard specifications, it makes it possible for the buyer to determine what makers conform or fail to conform to standard. But when branding is used primarily to make it possible for a manufacturer to create brand specification through national advertising, it serves fundamentally to enable the manufacturer to evade or lessen price competition.
An excellent illustration of how brand specification lifts a product out of competition is furnished by one national advertiser of a basic material. In 1914 the American Rolling Mill Company started national advertising to persuade the users of a certain kind of iron to specify "Armco," as the iron to be used in their castings. An article describing this campaign was very suggestively entitled, "Advertising Lifts Armco Iron Out of Rut of Raw Materials." (Printers' Ink, February 25, 1915.) This article describes the reactions of dealers to this campaign, and among others, it quotes the remark of one buyer as follows: "We do not care a continental about your product, although it is all right no doubt, but we do care about your advertising." In other words, the campaign to bring about brand specification in this iron resulted in making this dealer ignore the intrinsic value of the merchandise and to buy it merely because the customers he served were specifying "Armco."
Quite without regard to whether this particular manufacturer took advantage of the opportunity to exploit the market for his product, in so far as price is concerned, it is necessary to recognize that such an opportunity existed. Human nature being what it is, few manufacturers refuse to take advantage of such opportunities. Hundreds of manufacturers who have succeeded in persuading the public to specify their brands have taken advantage of it. Higher prices have enabled them to meet the cost of the national advertising, the excess cost of high pressure marketing as compared with ordinary marketing, and earn profits over and above those normal in the field in which they operate.
It is evident therefore that what distinguishes national advertising economically from retail advertising and from other kinds of advertising such as financial advertising, industrial advertising, and trade advertising, is the fact that by enabling the manufacturer to create an artificial demand for his particular brand, the manufacturer can secure higher prices than he could command if his product were sold purely and simply as merchandise at prices fixed by the fluctuations of supply and demand.