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The Evolution of Advertising

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WHAT WAS THE NEED FOR

ADVERTISING??

Manufacturers attempt to gain power over the

distribution channel by building brand demand.

Takes consumers focus away from Retailer and

Wholesaler. Mass Media telegraph enabled rapid communication,

spawned global interest and fostered a sense of

community.

this free communication is supported by

advertising.

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Evolution of Advertising

Pre-1800

Print media (news books, newsletters, then gazettes)

1800-1875 Circulation of dailies (newspapers) 1M/day Circulation increased by railroad expansion

1875-1918 Consumer culture breeds advertising as urbanization takes hold (self-reliance no

longer plausible)

The 1920s roaring twenties advertising was the work of the young, smart and sophisticated High standard of living A product for a cure for almost everything Ads became more visual than past

1929-1941 Advertising seen as villainous as millions starve Bye-bye pretty, hello ugly harsh-reality, attention-grabbing ads Radio takes hold as medium.

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1941-1960

Fear of motivation advertising research and subliminal ads

Start of the babyboomer generation and women join the workforce

1960-1972 (Peace, Love and Creative Revolution)

Advertising slow to keep pace with the cultural revolution

creative directors gain more control of copy and ads

1973-1980 Slowing economyads go back to hard sell

Regulators: ACT, FTC, NARB

1980-1992

Designer era Greed was good, more stuff was good

1993-2000

Prediction of Interactive media enabling audit of more accountable advertising

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1964 1969

BMW-ADVERTISEMENT IN 60S

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1972 1973

70S

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1980 1983

80s

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90s

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The 00s: More Hip Ads and More Technology (2001

present)

Ads seen as adsself-aware

Dot.bomb websites totally dependent on online ads forrevenue (However, stock value was in potential ad revenue not real productrevenue)

E-business selling real product online

Increase in web advertising

Branded Entertainment (and product placement)

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2005

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2007-Magazine Ad

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2010

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2010-Inspiring Designs Dont Always

Start On Paper

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Where our exploration ends,yours

begins

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HAVE A LOOK

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18

Advertising and Society:

Ethics, Regulation and SocialResponsibility

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Advertising and Society

Advertisings visible social role makes it atarget for criticism.

Some of todays consumers believe that agreat deal of advertising is unethical becauseit:

Adds to the price of products,

Is untruthful, Tricks people, or

Targets vulnerable people.

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Ethical Criteria

Accuracy

Subtle Messages Trouble Critics EspeciallyWhen Aimed At Groups Such as Children, the Elderly, or

the Disabled.

Acquisitiveness

Are We Persuaded That We Continually Need More andMore New Products? Consumers Make the Final

Decision.

Advocacy

Advertising Tries to Persuade the Audience to DoSomething; It is Not Objective or Neutral.

Numerous Advertising-Related Issues Are Left to the Discretion of the Advertisers and Are Basedon Ethical Concerns.

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The Problem of Being Ethical

Ethical

Decisions

Nonethical

Decisions

Company's

Mission Marketing

Objectives

Reputation

Available

ResourcesCompetition

Based On

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Puffery

Advertising Or Other Sales Representations, Which Praise

the Item to Be Sold With Subjective Opinions, Superlatives,

or Exaggerations, Vaguely and Generally, Stating No Specific

Facts.

Product

Categories

Taste

Issues

Taste and Advertising

Current

Issues

Ethical Issues in Advertising

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Stereotyping in Advertising

Controversial

Topic

Limits Set For

Amounts of

Advertising

Advertising to Children

3 Hours of

Educational

TV Per Week


Women inAdvertisements

Racial & EthnicStereotypes

Gay & LesbianConsumers

SeniorCitizens

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Subliminal AdvertisingA Subliminal Message is One That is Transmitted in Such a

Way That the Receiver is Not Consciously Aware of

Receiving It.


Tobacco Alcohol

Advertising Controversial Products

Gambling

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LegislationSocial

Responsibility/Self-Regulation

Advertisement

Organized

Groups

Audience

Protection

Media

Groups

Government

Agencies

Regulatory Factors Affecting

Advertising (Fig. 2.1)

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Federal Case Law Affecting Advertising

First Amendment Case Law

This Protection Applies to Commercial Speech, Which

is Speech That Promotes Commercial Activity.

That Protection is Not Absolute.

Privacy Case Law Developments:

Online AdvertisingLegal Issues of Data Collection Are Troubling

Consumers, Online Advertisers, and the Government.

Online Privacy Alliance Has Published Guidelines.

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Deception

Reasonable Basis for Making a Claim

Comparative Advertising

Endorsements

Demonstrations

Advertising and the Federal Trade

Commission

The Federal Trade Commissions (FTC) Main Focus, Regarding Advertising, is to Identify and

Eliminate Ads that are Deceptive or Mislead the Consumer. Key Areas that Concern the FTC:

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Deception

The current FTC policy on deception containsthree basic elements:

Where there is representation, omission, orpractice, there must be a high probability that itwill mislead the consumer.

The perspective of the reasonable consumer isused to judge deception.

The deception must lead to material injury.

This policy makes deception difficult to prove.

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Reasonable Basis for Making a Claim

Determining the reasonableness of a claim isdone on a case-by-case basis. In general the FTC

considers the following factors: Type and specificity of claim made

Type of product

Possible consequences of the false claim

Degree of reliance by consumers on the claims

The type and accessibility of evidence available formaking the claim.

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Comparative Advertising

The FTC considers comparative advertisingdeceptive unless:

1. The comparisons are based on fact.

2. The differences advertised are statisticallysignificant.

3. The comparisons involve meaningful issues.

4. The comparisons are to meaningful competitors.

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Endorsements

An endorsement or testimonial is anyadvertising message that consumers believereflects the opinions, beliefs, or experiences of

an individual, group, or institution. Endorsers must:

Be qualified by experience or training to make

judgments, and They must actually use the product.

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Method 1. Consent Decrees

Method 2. Cease-and-Desist Orders

Method 3. Corrective Advertising

Method 4. Substantiating Advertising Claims

FTC Deceptive and Unfair Advertising

Remedies

Method 5. Consumer Redress

Method 6. Hold Advertising Agency Legally

Responsible

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Advertising and Other Regulatory

Agencies

In Addition to the FTC, Several Other Federal Agencies

Regulate Advertisers and Their Agencies.

Food and DrugAdministration

FederalCommunication

Commission

Additional FederalRegulatoryAgencies

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Social Responsibility

Level Two

Advertiser isEngaged in

Prosocial

Messaging

Level One

Being SociallyResponsible is a

BusinessPhilosophy

Organizations Task is to Determine the Needs,Wants, and Interests of Target Markets and to

Deliver the Desired Satisfactions More EffectivelyAnd Efficiently Than Its Competitors in a Way that

Preserves or Enhances the Consumers andSocietys Well-Being. (48) by Phillip Kotler.

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Self-Discipline

An OrganizationDevelops,

Uses, and

Enforces Norms

By Itself

Pure

Self-Regulation

The Industry

Develops,

Uses and

Enforces

Norms

Co-opted

Self-Regulation

Industry VoluntarilyInvolves Nonindustry

People in theDevelopment,

Application, andEnforcement of Norms

Different Levels of Self-Regulation

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Economic Effects of Advertising

Effects onconsumer choice

Differentiation

Brand loyalty

Effects on competition

Barriers to entry

Economies of scale

Effects on product costs and prices

Advertising as an expense

Increased differentiation

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Advertising = Market Power Advertising affects consumer preferences and

tastes, changes product attributes, anddifferentiates the product from competitiveofferings.

Consumers become brand loyal and less pricesensitive and perceive fewer substitutes foradvertised brands.

Potential entrants must overcome establishedbrand loyalty and spend relatively more onadvertising.

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Advertising = Market Power

Firms can charge higher prices and are not aslikely to compete on quality or price

dimensions. Innovation may be reduced. High prices and excessive profits accrue to

advertisers and give them even moreincentive to advertise their products. Outputis restricted compared with conditions ofperfect competition.

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Advertising = Information

Advertising informs consumers about productattributes but does not change the way they

value those attributes. Consumers become more price sensitive and buy

best value.Only the relationship between priceand quality affects elasticity for a given product.

Advertising makes entry possible for new brandsbecause it can communicate product attributes toconsumers.

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Advertising = Information

More informed consumers pressure firms to

lower prices and improve quality; new

entrants facilitate innovation.

Industry prices decrease. The effect on profits

due to increased competition and increased

efficiency is ambiguous.

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It must be said that without advertising we

would have a far different nation, and one

that would be much the poorer-not merely in

material commodities, but in the life of thespirit.

These excerpters are from a speech given by Leo Burnett on the American Association

or Advertising Agencies 50th anniversary, April 20,1967

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