Sponsor Content Above the Clutter with Pete Krainik
Episode Seven: Man And Machine
Brought to you by: IBM
The 1970s presented U.S. marketers with some real challenges. In electronics&mdash:especially radios, TVs and videocassettes—the Japanese practically swept U.S. manufacturers from the marketplace. The gasoline shortages that started in fall 1973 had an enormous impact on all segments of the economy.
Political events of the 1970s also contributed to the decade's unrest. The Watergate scandal and subsequent resignation of President Richard M. Nixon, as well as the divisiveness caused by the Vietnam War, resulted in a growing lack of support for and suspicion of the government. Inflation, the apparent influence of foreign business and the visible success of foreign manufacturers in winning large portions of the American market further eroded faith in both government and business. Moreover, a perceived U.S. vulnerability to foreign oil imports also caused concern.
In spite of an economy slowed by economic pressures and political unrest, by the middle of the decade billings at the top agencies and total ad expenditures increased faster than the gross national product, inflation or any other economic indicator.
The American Association of Advertising Agencies estimated that during the 1970s, an average American consumer was exposed to 1,600 ads per day, although fewer than 80 ads were consciously noticed, and only 12 provoked some type of reaction. Advertising was an integral part of American culture.
By the beginning of the 1970s, TV viewing had emerged as a core experience of American culture. The growing trend toward the use of TV as a preferred ad medium continued throughout the decade. In 1976, with more than 69 million U.S. homes owning at least one TV set and viewing-per-home topping six hours per day, advertiser spending reached nearly $5.9 billion.
Marketers in the 1970s looked for accountability and efficiency in their ad agencies, and campaigns used "positioning" as a more scientific technique for placing ads in the minds of consumers.
Throughout the ad industry, the use of computer technology grew, reflecting a rediscovery of and growing emphasis on "empirical advertising"—research and fact-based marketing—during the decade. This practice was a reaction to the "creative revolution" of the 1960s and indicated a marked shift to a preference for discipline and accountability.
At least three intense pressures challenged the advertising business during the 1970s. First, early in the decade the business was experienced a threat from growing government regulation. Second, the public was increasingly suspicious of and disenchanted with advertising practices. And third, agencies were making continued efforts to increase diversity within their own professional ranks and among the populations portrayed in their advertising.
In contrast to the "product era" of the 1950s and the "image/impression era" of the 1960s, "positioning" emerged as a primary ad strategy of the 1970s. In a media-oriented culture, marketers found it necessary to position a product in the consumer's mind, both within the context of its own merits and strengths and in relation to its competitors.
As a result, the practice of comparative advertising flourished. 7UP's "Un-Cola" campaign took aim at Coca-Cola and doubled 7UP sales, for example. Pepsi and Coca-Cola went head-to-head in Coke's "It's the Real Thing" campaign and Pepsi's hidden cameras that recorded blind taste tests against Coke, boosting Pepsi's market share in a year.
Both advertisers and the public seemed to respond to comparative advertising. Some campaigns directly named competitors, while others merely alluded to them. For example, a campaign for Scotti Automobile Mufflers explicitly scoffed at "the Midas touch." In a similar fashion, a Dictaphone commercial proclaimed, "Bad news for IBM."
Industry code review boards and federal government officials monitored the practice carefully, often banning unclear, exaggerated or untrue claims. Moreover, the watchdogs often discouraged disparaging comments about rival: An advertiser could claim that "our product is better than their product" but not that "their product is worse than our product." Nonetheless, the practice of positioning expanded in use.
Even the tenacious regulator of advertising, the Federal Trade Commission, allowed light-beer marketers to compare the calorie counts of products. In the U.S, "Light" became the magic word in beer, and "diet" the secret of soft-drink sales during the decade.
These strategic approaches and the trends toward increased TV advertising, positioning and comparative advertising were accompanied by four distinctive management practices during the decade. First, many large agencies went public. Some even diversified into auxiliary businesses to generate increased profits for principals and stockholders. Doyle Dane Bernbach, for example, went into the sailboat business.
Second, the understanding of and use of computers increased, revolutionizing many facets of the ad industry's day-to-day operations. Empirical methods for accounting, billing and reporting became regular tools of the business and provided ad execs with detailed data and analyses necessary for making sound decisions. In addition to these clerical functions, the new technology provided advertisers with information about market segmentation, product proliferation, automated distribution, demographics and profits. The computer was used to analyze consumers, to calculate cost-efficiencies in relation to client objectives and to make projections.
Third, industry management was plagued by the fluidity of client relationships. The recession in the U.S. economy at the beginning of the decade left most large agencies suffering losses in total domestic billings. For many shops, financial losses were aggravated by a loss of clients to rival shops as many marketers with declining profit margins broke out of long-standing agency relationships.
American Motors Corp., Lever Brothers, Whirlpool, Sara Lee, Quaker Oats and others left often long-standing relationships, resulting in aggregate account losses among several agencies of about $33 million in 1972. The following year, a decline in U.S. billings of nearly $11 million continued the trend. By various accounts, 20% to 25% of all advertising accounts in the nation moved from one agency to another during the decade.
Finally, a number of mergers occurred, with large agencies merging with smaller shops to keep their business volume high. One of the decade's largest domestic mergers brought together MacManus, John & Adams and D'Arcy Advertising. A second merger, finalized in 1976, created D'Arcy-McManus & Masius. Other agencies accelerated the merger trend: Interpublic Group of Cos. bought Campbell-Ewald (1972); Ogilvy & Mather purchased Scali, McCabe, Sloves (1976), one of the hottest new agencies in the 1970s; Ted Bates & Co. bought out Campbell-Mithun (1979); and the three largest public relations firms were absorbed by JWT, Young & Rubicam and Foote, Cone & Belding. By the end of the 1970s, no major independent U.S. agencies remained on the West Coast.
U.S. ad agencies also looked overseas for new markets and growth. SSC&B, for example, acquired a 49% interest in Lintas, Europe's largest agency. Other shops strengthening their global position included Leo Burnett Co.; Ketchum, MacLeod & Grove; and Batten, Barton, Durstine & Osborn.
The early years of the decade also brought an increased threat of government regulation, triggered largely by concerns that advertising was capitalizing on the inability of children to distinguish between commercials and programs. TV advertisers were spending millions of dollars annually pitching products to children. Empirical research suggested that children younger than eight generally could not distinguish between a commercial and the main program fare. The data suggested this remained true until about sixth grade.
Public concern led a group of women in Boston to form Action for Children's Television. ACT, under the leadership of Peggy Charren, won some important skirmishes by forcing the withdrawal of vitamin ads appealing to children, reducing commercials during weekend children's programs and garnering support to ban stars from making pitches to children. It also secured the requirement that advertisers portray the size and speed of toys accurately and in some "meaningful and understandable" manner for children.
Advertising also faced criticism that it was engaging in subliminal "sexual embedding." Journalism professor Wilson Bryan Key first accused Madison Avenue of placing the word "sex" somewhere in ads for political campaigns, on magazine covers and even in the promotion of Ritz crackers.
Such concerns as those expressed by ACT and Mr. Key resonated with a public growing increasingly suspicious and skeptical of advertising. A 1976 Gallup Poll asked Americans to rate the honesty and ethical standards of those engaged in 11 fields of work. The professional at the bottom of the list—dead last—was the advertising executive. Because of this distrust, the FTC and the industry's own National Advertising Review Board began holding ads to unprecedented standards of accuracy, honesty and disclosure.
This led to another distinctive practice during this decade, corrective advertising. The FTC, for example, ordered Warner-Lambert to spend $10 million to correct its claim that Listerine prevented colds or sore throats and required American Home Products to spend $24 million on ads explaining that Anacin did not relieve tension, as previously claimed. The use of corrective advertising waned by the late 1970s, however, within the general context of deregulation.
In 1976, the U.S. Supreme Court extended some First Amendment protection to commercial speech. While the amendment had long been applied to matters of defamation, privacy and prior restraint, the Supreme Court gave advertising legal standing and protection.
Finally, reflecting a trend that grew out of the 1960s in American culture to demonstrate greater sensitivity to gender differences and ethnic minorities, the ad industry in the 1970s worked to improve diversity in advertising itself and within its own ranks. Some progress was made with ad content. Whereas blacks appeared in only 5% of all TV ads in 1967, for example, this grew to 13% in 1976.
Progress was also made in the employment arena. Between 1970 and 1975, minority employment at the two-dozen largest agencies rose from 8.9% to about 10% overall. At mid- and top-management levels, however, the percentage was lower and actually decreasing. A number of individuals pursued employment discrimination suits against agencies during the 1970s, making it a most litigious period for the industry.
Minorities also launched a number of agencies during the decade, but for a variety of reasons, those firms were generally short-lived, although a few thrived, including Burrell Advertising, a black-owned agency founded in Chicago in 1971.
Overall, women seemed to be more successful at improving their lot within the industry, some even reaching the upper ranks. For example, Charlotte Beers was elected JWT's first woman senior VP in 1973.