By Steve Fajen
“ The new medium birthed a cycle of increasing expectations and demands for innovation on the part of a smarter and smarter consumer to allow a connection for a marketer…”
The Modern Era
Arguably, the modern era of advertising media began in the late 1950s – early 1960s. Television came of age evolving from a sponsorship medium in only 9% of US homes in 1950 to a host for everyone’s commercials gobbling up huge chunks of advertising revenue, while reaching 89% of homes by 1960. This propelled major changes in the media landscape.
Measurement of the medium became more sophisticated than that used for radio, factory shipment data tracked the movement and presumed consumption of goods, Bill Harvey chopped the country up into more than 200 jigsaw-like pieces called Areas of Dominant Influence (ADIs). These were the precursors of the current age of digitally and data driven advertising media planning and placement, the events, which accelerated at a deliberate and then dizzying pace of change leading to today’s media marketplace.
Simultaneously, the unprecedented power of TV revealed a new palate for creative innovation in every direction that could engage the mind of the consumer. The new medium birthed a cycle of increasing expectations and demands for innovation on the part of a smarter and smarter consumer to allow a connection for a marketer. All this foreshadowed the pace of change leading eventually to the digital future
4,000 BC – 1960 In A Nutshell
Putting aside papyrus messages and commercial wall paintings in ancient Egypt, Greece, Rome, China and Native America that date back to 4000 BC, advertising media moved at the same glacial pace as the global culture as a whole. The first advertising agency was born around the time of our revolutionary war against England and was located in London. They placed newspaper space and were essentially the first media departments, which was all they were. The first US agency, opened sixty years later, in 1850 by Volney Palmer, also merely bought newspaper space, but did it “on the spread.” They inflated the price of newspaper space that they charged clients and pocketed the difference, a practice that slowly died away in the early 20th century and then reappeared in the late 1950s when media buying services emerged.
In 1856 Mathew Brady offered to produce photographs for clients and place them in newspapers. Thirteen years after that (just after the Civil War), pioneered by Frances Ayer at age 20, NW Ayer appeared in Philadelphia and became the first full service agency, actually writing ads for clients for the first time. J Walter Thompson appeared a decade later and hired writers and art directors to produce ads, forming the first creative department.
At the turn of the 20th century, McCann Erickson opened and became the first agency to spread elsewhere, first to South America.
Meanwhile agency compensation evolved from the early buying on the spread to a 15% commission system, which paid for creative as well as media, to a sliding scale commission to fee based compensation in all it’s variations. The system of rebates from the media, back to agencies would come later, from overseas.
In the modern era, beginning in 1960, there were roughly ten people per million dollars billing at agencies and we placed bets on television programs based on a 1200 home Nielsen sample and tracked factory shipments of products to trading areas. Today, each agency person handles approximately ten million dollars in billing (a complete reverse of their fortune) and we know the viewing habits of millions of individual homes (due to cable systems) and track their product purchases with scanner data. These can be integrated, analyzed and strategized down to the level of more than 41,000 zip codes. Media and marketing research had moved into the neighborhood.
After serving more than 300 clients from seven advertising agencies, two major research organizations and three media consulting firms, looking at how media has been delivered, bought, sold and consumed through the lens of the six modern decades has given me a unique perspective. Here is a snapshot of each decade and my take-away of some of the most important trends from those times.
The 60s: 6 Rural Shows to Urbane 60 Minutes
Nielsen chronicled how TV morphed from a predominantly sponsored medium in the 50s, to one of scattered commercials. It was truly the beginning of fragmentation. The top six shows in 1960 had a slow, deliberate, rural flavor – “Gunsmoke,” “Wagon Train,” “Have Gun, Will Travel,” “The Andy Griffith Show,” “The Real McCoys” and “Rawhide.” By the end of the decade CBS introduced 60 Minutes, which of course is the sole survivor. It was the beginning of the end of innocence and the televised introduction to an edgy, gritty reality.
I remember going with Nielsen’s head of sales on a call to a midsized agency. Summing up his presentation to the head of media he asked “So would you rather buy just one commercial a year on network TV or for the same money measure all your commercials in a year with Nielsen ratings?” The prospect replied. “I’ll take the spot.” The insatiable appetite for data had not yet taken hold. They say in a court of law never ask a question unless you know the answer. You could say the same for sales calls.
We were just emerging from an intuitive “roll the dice” mentality, both creatively and in media. We were still decades away from an obsession with accountability.
The 70s: It’s All About People
If there ever was a perfect storm of social turmoil and its reflection in advertising, it was the 70s: bans on cigarette and liquor advertising on TV, black and women’s rights expressed in commercials and the Anti-war movement.
At McCaffrey & McCall, my first Media Directing job, Chairman David McCall did two provocative and innovative things prompted by both social and personal unrest. First, he opened the doors of the agency to those in the business who wanted to write anti-war advertising after-hours. Secondly, after being frustrated by his children’s inattention at school, but hearing them repeat every popular song on the radio word for word, he commissioned his co-Creative Directors George Newall and Tom Yohe, to produce a series of educational three-minute cartoons called “Schoolhouse Rock.” He convinced two influential clients, (ABC and General Foods) to deliver and sponsor the series and the result was something that not only tapped into the zeitgeist of the 70’s, it became a classic that has spanned almost 4 ½ decades. Who doesn’t know the lyrics to “I’m Just A Bill?”
David was a visionary who wasn’t afraid to let his personal opinions affect his agenda. He died delivering food and supplies to needy people in Africa when his jeep veered off the side of a cliff. His business and personal work was creative and impassioned. Given current problems, we could use more courageous communicators like David McCall today.
The 80s: It’s All About Money
“Greed is good.” When Gordon Gekko made his proclamation in the 1987 move “Wall Street.” he was reflecting the times. The Chairman of one agency reportedly received a check for $200,000,000 for the sale of his company. With inflation, , that would amount to a half-billionaire in one shot today. The Saatchi’s began buying agencies, after leveraging their London start-up from ten years earlier. They had a really smart CFO, who eventually started his own agency complex and was eventually knighted. Y&R, JWT and O&M merged to form WPP, under Sir Martin Sorrel. DDB, BBDO and TBWA fused in the BIG BANG – Omnicom. The new holding companies were inspired by Marion Harper’s Interpublic from the 50s, which sought to handle competing brands within the same agency complex, but Harper nearly bankrupted Interpublic because he prized luxury and talent over frugality. By the 80s, the executive suite learned this lesson. One agency fired a quarter of its staff on a Friday and on the following Monday announced a 99% increase in profits on the back page of the New York Times.
In the process, agencies became leaner, arguably more productive and more profitable. However, clients sensing the profits being reaped at their expense began hiring compensation consultants to contain costs. This would eventually lead to agency search consultants and then companies assigning large numbers of procurement people to oversee marketing services two decades later. The battle over agency compensation was on.
The 90s: Cable Rules, Recency Reigns
Following a decade of growth after Ted Turner’s introduction of a 24-hour news network, the old television dial went from thirteen to a digital three hundred plus channels. In the face of this fragmentation enter Professor John Phillip Jones and super-star media thinker/communicator Erwin Ephron, with Recency Theory. Simply stated, Recency Theory recognized that people were much more receptive to advertising when in the market for a product. Since the population is so large and, excepting seasonal products, we don’t really know when given numbers of customers are ready-to-buy, it is better to advertise continuously than to flight with big chunks of advertising and then to disappear, harboring funds for the next blitz, as research from the 60s, based on rather abstract theories of learning had led us to believe. The concept purified media planning and changed the way major advertisers spent their money. In a sense, building brand equity now rode on the coattails of producing immediate sales on a rolling basis.
Erwin Ephron passed away in 2013, but to honor his contribution to the industry the Advertising Research Foundation (ARF) now gives the Demystification Award annually to the most innovative media thinker/communicator. The first one went to Bill Harvey, Ephron’s friend and colleague, as well as the inventor of the ADI.
The 1990s was the beginning of media thinking assuming a seat at the table equal to creative thinking, especially in new business presentations. Media agencies flourished. But once digital media matured a bit in the next decade, everything changed once again.
The 2000s: The Digital Decade
Shortly after Al Gore invented the Internet, the digital revolution was launched. At the beginning of the decade TV still completely dominated both usage and spending. By the end of the decade while television usage was still dominant with just under 4 ½ hours per day per person, digital usage was barely an hour behind. As a consequence, ad spending for digital rocketed to more than half that of television and is still climbing, while TV spending stagnates, ripe to be overtaken. It is projected that digital spending will surpass television in 2017.
One of the major consequences of “New Media” was new language. Media has always had a vocabulary all its own, protected by practitioners who wanted to maintain the “media mystique.” However, I learned a long time ago that the media professionals who spoke in plain understandable English had the most successful careers.
Here’s a thought in plain English. The most recent research from RMT, Simulmedia and CBS shows that television is still the most productive medium to sell most products. Digital advertising cannot compete yet on an ROI basis. As a consequence when a marketer shifts money from TV to digital media they might very well be inhibiting sales growth. Perhaps it is better to shift funds from a less productive medium than television into digital enterprises in order to reap the benefits of both television and digital media.
The 2010s: Data Dominates
So here we are today, over-sampled, over-modeled, over-sold and a bit under-understood. But we are making headway and the attempts to quantify our understanding of how advertising works are to be honored.
I sincerely believe that Big Data techniques are bringing us closer to a real understanding of human nature as it relates to advertising messaging and its consequence.
Simultaneously, client Procurement continues to turn the screws on agencies in reaction to decades-old practices when agencies reaped huge profit margins. I have seen, first-hand, Procurement oftentimes over-reacting and thus inhibiting the attempts agencies make to provide contemporary value to clients. I say this even though most of my clients are advertisers, not agencies. And we are very well versed in the economics of our business. At the same time there are allegations (yet unproven) that agency holding companies are pocketing rebates from the media without client knowledge. We still have a lot to sort out.
The Nobel Laureate Physicist Richard Feynman once described the way we understand nature. I think it’s true of the way we understand human nature as well. He supposed that if we didn’t know the rules of chess, but still had to play the game, over time we might notice that the pawn always moves one space, straight ahead. Also, we notice that when a pawn takes another piece, it suddenly moves on the diagonal. So now we discovered a rule – a law. We might, through observation and deduction, uncover other little bits of rules that increase our understanding of the game’s laws until suddenly a pawn makes it to the other side of the board and is rewarded by replacing itself with a queen, which can move any number of spaces in many directions. Suddenly the rules have changed. Feynman claims that science is like that. Scientists try to discover the rules of nature much the same way his fictional chess player is discovering the rules of the game and then the rules change. Isn’t business like that? Doesn’t our knowledge of how things work evolve over time because we are curious enough to doubt the dogma of the day?
I envy young media professionals of today who have the privilege of watching the media business unfold on a more personal level, but they should never forget the changing currents we all rode to reach this beachhead. My sincere hope is that as we move forward, we begin by placing a bit more value on talent and people and a little less emphasis on making a short-term profit.
Russia used to have a five-year plan. Advertising had a one-year plan. Harvard Business review introduced the quarterly report. Nielsen went to monthly reach. Automotives went to the ten-day report. Recency advocated weekly reach. Nielsen offered overnight ratings and now we live with instantaneous digital reports. While it all seems like an improvement, is anyone looking out for long-term unintended consequences?
I would love to see some of today’s best media/marketing thinkers take a longer view of where we are headed. The trends of the last six decades prove that every action has a reaction. I think we need to take a breath and spend more time thinking about the balance between paying for talent and cutting for profit. We need to recognize that change is constant and only by challenging the dogma of the day can we anticipate the forces of change and learn the new set of rules which are sure to emerge. Each new cycle of media evolution provides new creative challenges and new opportunities to engage consumers in a more personal way. While there are almost always stories in numbers, it is the passion each individual media practitioner brings to their job that advances our art and science in the new digital world in all its mutated platforms and beyond.