Despite its power with listeners, other forces at work fundamentally changed radio. FM radios, which earlier had been manufactured in limited quantities, by 1940 approached something closer to mass production. License applications boomed as well, spurring a need for greater bandwidth for broadcast stations. Commercial operation of FM radio was authorized by the Federal Communications Commission in May 1940.
By the end of 1941, 46 FM stations were operating in the U.S. and more than 500,000 receivers were in use. But with the onset of war, FM was shelved, manufacturing stopped and station activity curtailed. Much politicking went on behind the scenes, however, as the AM radio industry sought to influence future government policy.
By 1945, a quite different FCC once more looked at FM and decided, for various technical reasons, to move it up the spectrum from the position to which it had originally been assigned. The effect of that decision was to make every FM radio in the country obsolete and kill off what little audience FM had developed. The influential AM network system, through which advertisers could easily reach the entire country from coast to coast, continued to dominate the industry for another 20 years.
By the mid-1940s, the entertainment programming heard and seen by all Americans was effectively in the hands of three networks and a handful of powerful ad agencies, with TV still only a minor factor. The power of the U.S. radio industry was so concentrated that it drew the attention of the Justice Department and the FCC. In 1941, the FCC held NBC to be a monopoly and told the broadcaster that it could no longer own two networks.
At NBC, the Red network was the more prestigious chain; the Blue had a more small-town image. So NBC set up the Blue network as a separate company and in October 1943, sold it for $8 million to Edward J. Noble, who had built Life Saver Corp. Mr. Noble formed a new network and renamed it the American Broadcasting Co. (The Columbia Broadcasting System, U.S. broadcasting's third network, had been created in 1929 by William Paley.)
World War II
When the U.S. entered the war in December 1941, the impact on advertisers was immediate. Rubber and fuel were subject to strict rationing. Automobile production ceased, and factories converted to military production. The 1942 model year would be the auto industry's last until 1946.
Ad agencies confronted the problem of what to advertise when there was nothing to sell, and ads emphasized what the advertiser was doing to help the war effort now and how today's sacrifices would pay off in new products that consumers would enjoy after the war.
Patriotic copy boasted of the pride manufacturers felt in taking on vital military jobs. "Fire power is our business," General Motors Corp. proclaimed in an Oldsmobile ad. Another said, "Buick powers the liberator," adding, "As of Sept. 1, 1944, Buick has built more than 55,000 Pratt & Whitney aircraft engines."
A serious threat to advertising was taxation, and when in October 1942 the Internal Revenue Service announced it would carefully examine deductions taken for advertising, agencies, advertisers, publishers and broadcasters rushed to Washington to lobby against such scrutiny.
Shortly after the IRS announcement, Washington relented on the tax question, allowing "reasonable" ad costs to remain deductible. After all, the war effort required advertising if war bonds were to be sold, rubber and scrap drives were to be effective, rationing was to be accepted and a whole range of civilian controls and policies was to be effectively publicized.
In fall 1941, the Association of National Advertisers and the American Association of Advertising Agencies met and laid the basis of what became the industry's chief public relations instrument. Early the next year, the War Advertising Council was formed to provide government liaison and leadership in helping advertisers promote the war effort.
The WAC became the facilitator of government-advertiser cooperation, which soon became standard operating practice. Elmer Davis left his post as chief news analyst at CBS News to head the Office of War Information, which set priorities and worked closely with radio writers and performers as well as ad agencies to present information.
After the war, the OWI was dissolved and the WAC continued as the Advertising Council, setting its own priorities in choosing worthy causes and creating public service messages.
In the 1940s, the U.S. agency landscape changed in significant ways. In 1942, Duane Jones left the Maxon agency to form Duane Jones Co., and at the end of the year Albert Lasker, who had built Lord & Thomas into one of the country's most powerful agencies, suddenly resigned, retired the agency name (which he owned) and turned the company over to the heads of its three principal offices.
Emerson Foote, Fairfax Cone and Don Belding reopened the shop after the New Year's break as Foote, Cone & Belding. FCB made history in 1948 when it voluntarily resigned the $12 million American Tobacco Co. business over marketing differences. It was the largest account any agency had ever chosen to walk away from up to that time, and FCB was much admired for its courage.
The same year FCB was born, Hill Blackett left Blackett-Sample-Hummert, which continued as Dancer-Fitzgerald-Sample, and established Hill Blackett Inc. C.J. LaRoche departed Young & Rubicam and later formed C.J. LaRoche & Co. In 1944, four senior officers at Pedlar & Ryan departed to form Doherty, Clifford & Shenfield, taking the Bristol-Myers account with them.
In 1946, a similar defection from Ruthrauff & Ryan produced one of the hottest postwar agencies, Sullivan, Stauffer, Colwell & Bayles, which rose to the rank of a major agency within two years on the strength of the Lever Brothers' Lifebuoy brand and American Tobacco's Pall Mall cigarettes.
After the war, advertisers worried about a depression that never came. In 1948, total national advertising spending was estimated by Advertising Age at $1.224 billion. What did come was a major spurt of inflation as the Office of Price Administration was killed off, wartime price controls were lifted and prices rose to catch up with the money supply.
New products came onto the market in rapid succession. In 1946, Procter & Gamble Co. launched Prell, a shampoo in a tube, via Benton & Bowles. In 1947, the Toni home permanent (which was acquired by Gillette in 1948) became the wonder of the postwar world, and the ad budget handled by FCB shot from $5,000 to $6 million almost overnight ("Which twin has the Toni?").
In March 1940, Radio Corp. of America, which had invested $10 million in TV and was eager to see some payoff, made its first attempt to launch the new medium. In 1941, an FCC technical panel set the TV picture standard of 525 lines synchronized at 30 frames per second. By then, the basic patents had been joined in a patchwork of licenses and agreements, and AT&T was tackling the problem of coast-to-coast broadcasting with plans for a national coaxial cable hookup of landlines.
By the time the U.S. entered the war, there were eight commercial stations on the air broadcasting to about 10,000 sets, mostly in New York. By the end of the war, however, they all were obsolete.
A great debate surrounded the future of TV in 1944 and 1945. One camp (RCA, DuMont Laboratories and Philco Corp.) wanted a system set in the very high frequency range (30 to 300 megacycles), where proven technology and most of RCA's accrued investment could get TV off to a fast postwar start. The other (CBS, Zenith) favored a system in the less-crowded ultrahigh frequency (500 to 1,000 megacycles), where TV would have space to grow even though it would take several more years to set up.
In May 1945, the FCC voted to keep TV in the VHF range but broke the original allocation, which dated to 1940, into two smaller band segments totaling 12 channels, with 2 to 6 in one slot and 7 to 13 in the other. Those frequency allocation decisions were the most critical factors in shaping the next 50 years of commercial TV in the U.S. Their effect was to create an artificial scarcity of spectrum space that in turn concentrated great economic power in the hands of VHF broadcasters, particularly RCA.
As the audience grew in 1946 and 1947, advertisers moved toward TV in earnest. Maxon Inc. put Gillette on NBC in "The Gillette Cavalcade of Sports" and JWT produced "Kraft TV Theater," a live drama anthology that became a standard format for many advertisers over the next decade.
In 1948, the new medium had its first three runaway hits capable of generating large-scale set purchases: "Arthur Godfrey's Talent Scouts," produced by Y&R for Lipton tea; "Toast of the Town" with Ed Sullivan, produced by Kenyon & Eckhardt for Ford Motor Co.'s Lincoln-Mercury division; and the biggest hit, "The Texaco Star Theater" with Milton Berle, produced by the Kudner Agency for Texaco.
Despite its allure, live TV had its disadvantages: Programs could only be seen along the upper East Coast, as coaxial cable construction was still pushing beyond those tight boundaries; the costs of constructing a basic TV station ran close to $500,000, a far greater investment than that required for radio in the same market; and ad revenues remained sparse. To recoup as much revenue as possible, stations began to break with the radio tradition of single-sponsor programming and to offer instead segments of a show to noncompeting advertisers.
"Participating sponsorship," as it was called, became a new trend in TV time sales, in some cases bringing in advertisers that had never used radio. In April 1948, it was estimated that there were 301 advertisers buying time on all TV stations combined; a year later, that number reached 1,350.
TV traffic jam
The rush to get into TV, however, created a traffic jam in the narrow 12-channel corridor allocated to the burgeoning industry. To buy time to study a solution, the FCC clamped a freeze on further expansion of the TV industry in September 1948. Stations already up and running (37 outlets in 21 cities) or licensed (another 71) could continue to operate, but no new licenses would be granted until various technical issues were worked out.
The freeze came at a time when TV coverage was still spotty and unbalanced. New York had six stations; Chicago, four. But many major markets, such as Denver, had none. Expected to last only six months, the freeze dragged on for nearly four years, keeping 14 states blacked out while at the same time permitting stations already on the air to solidify network, advertiser and market relationships while totally protected from new competition.
In the late 1940s, quiz programs came back into fashion on radio. Taking a cue from radio, advertisers returned to the contest as a promotional vehicle. Borden, for example, drew almost 1 million entries in a 1948 contest wherein it asked for suggestions on naming the calf of its much-beloved icon, Elsie. (Beauregard was the winning name.)
By the end of the decade, advertising was developing enough of a sense of its own that the Advertising Federation of America and the New York Ad Club created the Advertising Hall of Fame. Among the 10 first inductees in 1949: retail pioneer John Wanamaker, Printers' Ink Editor John Irving Romer and legendary copywriter Theodore MacManus.
As well as these major influences, the decade included many smaller milestones: Vitamins and vitamin content became a strong selling point early in the decade, as Standard Brands launched Stamms and Lever Brothers came out with Vimms.
In 1942, The New York Times launched its Sunday Magazine, which became a much sought-after medium for fashion marketers. In 1945 in Chicago, Johnson Publishing began publishing Ebony, a Life-like photojournalism magazine aimed at a national Negro market. Two years later, also in Chicago, Marshall Field bought the Chicago Times and merged it with his own Sun to form the Sun-Times.