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A Brief History of Advertising – And Its Inevitable Decline

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It was spring in New York, at the height of the Roaring Twenties. Thousands of spectators lined the sidewalks of Fifth Avenue, watching a parade. A group of fashionable women in flapper dresses and bobbed hair hidden under cloche hats walked in the parade. But unlike the crowd, they were not there just to celebrate. They were part of a publicity stunt staged by a rising young public relations man named Edward Bernays. He was the nephew of Sigmund Freud, and, having read his uncle’s work, was keen to learn whether the theories of psychology could be applied to the practice of mass marketing.

Why was Bernays involved in the Easter Parade? Because the giant American Tobacco Company was having a hard time figuring out how to get more customers for its cigarettes. Since the booming of the industrial age, the problem was no longer mass-producing its products but creating more smokers.

At that time it was not acceptable for women to smoke in public. George Washington Hill, the president of the American Tobacco Company, realised that if he could make smoking attractive to women, he would have a vast number of new customers. A year earlier he had said, „It will be like opening a gold mine right in our front yard.“ To increase the number of women smokers, Hill hired Edward Bernays to find out how to develop the potential of this market.

Bernays wanted to create a sensation. He found the perfect opportunity in the annual New York Easter parade, a gala social event. He appropriated the term „torches of freedom,“ which had been used by Abraham Arden Brill, the first psychoanalyst to practice in the United States, to describe the desire women felt to smoke in public. By linking the torch from the Statue of Liberty to women holding another torch – the cigarette – Bernays made it the clarion call of the tobacco industry. Who could be against freedom? And would the analogy work? In a carefully planned scheme that many would now say was highly cynical, Bernays hired the attractive women to march up Fifth Avenue in the Easter parade and publicly smoke their „torches of freedom.“ The planted smokers were filmed and photographed. Of course the press had already been alerted to what was going to happen in advance – by Edward Bernays.

The images of the women smoking cigarettes were splashed across many newspapers in the country and in the newsreels shown in many movie theaters. It was a new form of marketing campaign that no one had ever carried out before.

And it worked brilliantly.

As reported in the Journal of the American Medical Women’s Association, in 1923 women only purchased five percent of cigarettes sold. By 1929 the female market had increased to twelve percent, and by 1935 women composed over eighteen percent of the cigarette market.

Edward Bernays became known as „the father of public relations,“ and was later chosen by Life magazine as among the one hundred most influential Americans in the twentieth century.

Clearly, the power of a carefully orchestrated advertising campaign had been proven – for better or worse. The age of modern marketing had begun and soon every company had learned about mass marketing.

The advertising industry that began nearly a century earlier had now become a social and cultural force. Let’s turn back the clock to see how it all began.

The Origins of Advertising

Meet Mr. Volney B. Palmer. The year is 1841. The place is Philadelphia, Pennsylvania. Mr. Palmer is a gruff-looking man who, like many other hard-nosed businessmen of the time, is seeking a way to keep his commercial interests afloat. Among his many holdings is a small coal supply company. No doubt his product contributes to the choking haze that shrouds cities from London to San Francisco.

Volney Palmer is of interest to us for one reason: he is credited with operating the first successful advertising agency in the United States. His business plan was very simple: he bought large amounts of space in newspapers at discounted rates, and then resold the space at higher rates to companies and individuals who wished to advertise a product or service.

Most of his advertisements were straightforward mes- sages announcing the availability of a product, not unlike today’s classified ads. The few lines of text gave the name of the product, the place where you could buy it, and the price. There were a few exceptions, most notably the patent medicine ads that made outrageous claims about curing every disease known to man. But generally, an advertising agency was no more than a messenger that delivered product information from the client to the audience.

To be fair, Palmer did not invent advertising; he helped turn it into an industry. Humans have long hawked their goods and services. As far back as 1759, Samuel Johnson had complained, „Whatever is common is despised. Advertisements are now so numerous that they are very negligently perused, and it is therefore become necessary to gain attention by magnificence of promises, and by eloquence sometimes sublime and sometimes pathetic.“

For a product „to gain attention by magnificence of promises“ – now that’s something that every consumer has experienced!

After the Second World War, consumer goods companies and the advertising industry exploded. It culminated in an endless stream of one-way commu- nication that flowed from manufacturers through ad agencies to the growing middle class.

Consumers were barraged with billboards, TV ads, and radio ads. Not just consumer products but also business to business. And during the 1970s companies started to use telemarketing as a way to reach more people.

In the 1970s consumers were exposed to about five hundred ads a day. Today, that has increased to an estimated five thousand a day. What would Samuel Johnson say?

Towards the end of the twentieth century, like a drug addict needing a bigger and bigger fix, the advertising and marketing people were starting slowly but steadily to destroy themselves. It was not just an American phenomenon. The companies screaming for attention had long since spread out to the rest of the world and very much indeed to „the New York of the tropics“ – São Paulo, Brazil.

Creative Destruction

It’s the 26th of day of September in 2006. It seems like another normal day in São Paulo, where in its many office buildings sales and marketing managers are working hard to figure out new plans and campaigns to attract more customers and gain a new market share. It’s selling by yelling. More and more phone calls need to be made, more and more ads need to be created. The competition is rough and they have to speak louder and louder to get people’s attention.

If you look outside the office window you can see the results of the work done inside.

Fifteen thousand billboards cover the city. It’s a visual cacophony, a chaotic mashup of colors and logos and images, each one promoting a product or service and giving the impression that this great city is nothing more than a scaffold for obnoxious advertisements. Vinicius Valvao, a reporter at Folha de São Paulo, Brazil’s largest newspaper, said in an interview, „You could not even see the architecture of the old buildings, because all the buildings, all the houses were just covered with billboards and logos and propaganda.“

And as the BBC said, „A remarkable number of ads feature giant images of men and women dressed only in their underwear, while the Brazilian edition of Playboy is publicised with huge posters and cut-outs of the latest centrefold models. It all adds to the sensory overload of a city that many see as South America’s version of the hi-tech cityscape portrayed in the film Blade Runner.“

At the same time in another office, a man is sitting with a plan. A plan that is going to send shock waves through the city. The man is mayor Gilberto Kassab, and from City Hall on that day he declares Lei Cidade Limpa – the Clean City Act.

In just three months, every billboard had to go.

The companies were shocked. How could they get new clients? Would they lose their existing clients?

Even many ordinary Paulistanos were worried, fear- ing that the city’s grey concrete would look drab and boring without the generous splashes of colour provided by advertising. The BBC quoted one citizen as saying, „It would be like New York without Times Square.“ Another said, „No, it would be like eastern Europe before the fall of communism.“

On the streets of São Paulo, Mayor Kassab hoped to replace the overbearing signage with human-scaled „street furniture“ – bus shelters, information panels, and kiosks like the ones in London or Paris.

The bill passed the city council and became law. On the first day of January 2007, the city woke up to a new reality.

The billboards were gone, and with them one of the traditional methods used by advertisers to get peoples’ attention.

Whether it’s billboards, banner ads on the computer, TV commercials, or telemarketing, these traditional methods all try to interrupt people as they go about their daily lives.

You’re driving your car and suddenly a big billboard looms overhead – it’s an interruption. The phone rings when a telemarketer calls – another interruption. You’re watching your favorite show on TV and suddenly you see an ad for a fast-food restaurant – another interruption.

What if you were one of the sales and marketing people who were trying to interrupt the consumer, and suddenly you couldn’t advertise the way you used to do? What if you couldn’t make that cold call to a pros- pect like you used to do? What if everything you did yesterday was not possible today? Maybe not because it was made illegal, but simply because the traditional advertising was not effective anymore?

In his theory of creative destruction, the Australian economists Joseph Schumpeter asserted that the essence of capitalism was that the emergence of new methods, industries, and products must be equally counterbal- anced by the destruction of old ways that had been rendered useless or were an impediment to progress. The key to creative destruction is that for some segment of so- ciety – workers, consumers, owners – there will be pain. A society cannot reap the rewards of rebuilding with- out accepting that some individuals will be worse off, not just in the short term, but even perhaps forever.

Throughout history, examples of the replacement of the old with the new abound. For example, take that ancient mode human transportation, the horse. Horses were used by nearly everyone, everyhere – from pulling omnibuses in cities to hauling wagons on farms. In New York City, by the end of the nineteenth century the streets were jammed with over 150,000 horses. The twenty pounds of manure produced daily by each beast resulted in more than three million pounds of horse manure per day that needed to be disposed of. That’s not to mention the daily 40,000 gallons of horse urine. One New York prognosticator of the 1890s concluded that by 1930 the horse droppings would rise to Manhattan’s third-story windows.

This huge army of horses – not only in New York but in every city and town in America and Europe – supported a vast industry of blacksmiths, tanners, stable owners, carriage makers, feed suppliers, veter- inarians, and horse breeders. According to American Heritage Magazine, in 1880 New York and Brooklyn were served by 427 blacksmith shops, 249 carriage and wagon enterprises, 262 wheelwright shops, and 290 establishments dealing in saddles and harnesses.

Then came the automobile – a classic example of creative destruction.

Cheap, fast, and increasingly reliable, „horseless carriages“ quickly replaced horses on both city streets and country roads. By 1920, there were over eight million registered automobiles in the United States. The 1920s saw tremendous growth in automobile ownership, with the number of registered drivers almost tripling to twenty-three million by the end of the decade. Dozens of spin-off industries blossomed, including vulcanized rubber, petroleum, road construction, auto repair, gas stations, and parking lots.

While no city ever took such drastic action as banning horses completely from its boundaries, it was an inevitably change that was beyond regulations. By 1930, horses had nearly vanished from the streets of New York, with only the hansom cabs remaining for romantic rides around Central Park.

If you were in the horse business in 1900, within twenty years you had either changed your business or cashed out.

In São Paulo, the creative destruction of the billboard industry caused the billboard companies to suffer financial losses. Before the law took effect, critics worried that the advertising ban would entail a revenue loss of $133 million and 20,000 people would lose jobs. Schumpeter’s enduring assertion reminds us that capitalism’s pain and gain are inextricably linked. The process of creating new industries cannot advance without sweeping away the preexisting order.

Whether or not you like the billboard ban – that’s not the point – the city’s edict was an act of creative destruction that forced companies to search for new solutions. The companies that were agile were the ones that adapted and prospered.

For the rest of us, it will be the trend of the rapidly failing effect that advertising has in a noisy world that will eventually force us to change.