In the U.S., ad revenues fueled the rapid development of mass TV. Bulova Watch was purportedly the sponsor of the first commercial spot in 1941, paying $9 for time on NBC's New York station. Marketers such as Lever Brothers, Gillette Razors, Pan American Airways, Firestone Tire and Esso all took to TV in 1945. By the end of 1948, 933 sponsors had bought time.
By 1955, ad revenues topped $1 billion, and TV had become the leading national ad medium in the U.S., surpassing radio and magazines. By 1960, three networks—ABC, CBS and NBC—plus more than 500 mostly affiliated stations distributed programming through most of the day and night to 87% of U.S. homes (45.7 million households).
Much TV entertainment throughout the 1950s was controlled by ad agencies, which bought program time on the networks and supervised the production of each show for advertiser sponsors, a pattern inherited from network radio. Advertiser sponsorship favored the shows that captured the largest audiences, since those offered advertisers the maximum number of viewers. The drive to capture a mass audience had the effect of eliminating specialty TV shows, such as the various playhouses, and replacing them with action dramas, notably the cowboy sagas that filled the evening schedules of all three networks at the end of the 1950s.
The priority given commercials even organized the shows themselves, with the action of a story built around commercial inserts to ensure that viewers were in an appropriate frame of mind to watch the ads.
TV network executives, however, were not happy with agency control. Sylvester L. "Pat" Weaver Jr., president of NBC (1953-55), proposed instead the "magazine concept," whereby networks directed production and sponsors bought ads inserted into the programming. That approach won little support at the time.
In 1959, however, after Charles Van Doren, a big winner on the quiz show "Twenty-One," admitted that he had been coached to ensure that the agency got what it wanted, namely drama and heroes, things began to change in the TV industry. Further disclosures revealed that rigging had infected many of the popular quiz shows, including "The $64,000 Question," on which Revlon Cosmetics founder Charles Revson determined the fates of contestants. The scandal and the uproar that followed led to congressional hearings and a Federal Communications Commission probe.
As a result, the sponsorship system began to give way, and multiple advertisers began to buy spot time on hit shows.
TV and the "Creative Revolution"
The 1960s was the decade in which TV advertising was reinvented. By 1960, the TV industry boasted its own advertising awards festival, the Clios, honoring the best spots and campaigns of the year. The ad industry was poised for many awards, with TV the most important aspect of the "creative revolution"—a brief, explosive period when innovation and experimentation seemed to dominate New York's Madison Avenue. In short, advertising became tremendously entertaining.
The upheaval was rooted in the general prosperity of the times and in the resulting advertising boom, as business rushed to capture the affluent. The amounts spent on TV in the U.S. more than doubled, from $1.5 billion in 1959 to $3.5 billion in 1969. By 1964, CBS, the ratings leader among the three networks, was asking $50,000 for a 60-second spot in prime time.
Super profits did not necessarily mean enriched programming, however. The programming that developed to accommodate commercials, usually a filmed drama, was also designed to draw the largest audiences. This American style of drama also proved popular abroad and less expensive than many homegrown shows. By 1965, for example, the major CTV network stations in Canada's top markets were earning huge sums on ad revenues generated simply by showing American imports.
In the '60s, technology and economics combined to change the very look of TV advertising. Color telecasts became commonplace in the middle of the decade. By the end of 1965, NBC's evening offerings were almost completely in color, and leading advertisers took to color even more quickly than consumers. A short time later, the costs of TV time encouraged a move toward the more-compact, 30-second commercial.
That shift escalated in 1971; the networks had recently lost a lucrative revenue stream when cigarette advertising (valued at roughly $150 million in business in 1970) was banned from TV. They recovered by offering cheaper, 30-second spots, although at more than half the cost of the old standard 60-second spot.
In the U.S., where the networks controlled the lion's share of the TV audience (roughly 90% of that audience in the evenings), TV was a seller's market. The most common forms of programming were situation comedies and crime dramas, and an extra ratings point translated into additional earnings of $75 million for a network. The cost of a 60-second spot on a hit program in prime time (8 p.m. to 11 p.m. ET) reached $200,000 by the end of the 1970s.
After 1980, the status quo in the U.S. and elsewhere was transformed by the rapid expansion of TV advertising into new territory. The U.S. Public Broadcasting System began to accept more corporate monies to finance programming. Sometimes defended as an extension of corporate support for the arts, in fact the practice marked the commercialization of the service.
Newly developed channels offered not only more choice but what seemed to be innovative programming. To attract the younger viewers so highly valued by advertisers in the U.S., the Fox network—which debuted late in 1986 and gradually expanded to a prime-time schedule—featured edgy, youth-oriented shows such as "The Simpsons" and "Married . . .With Children."
At the same time, cable and satellite broadcasting began explosive growth. By the end of the 1980s, the onslaught of cable and satellite channels such as HBO, Showtime and ESPN reduced the U.S. broadcast networks' audience share to about 70%. However, many new cable channels in North America in the 1980s were funded via viewer subscriptions, meaning that they competed for viewers but not ad dollars. CNN (also launched in 1980) was ad-supported, however, and that all-news network became a major force via its massive coverage of the Gulf War in 1991. By 2000, cable networks in the U.S. had captured nearly $11 billion in advertising revenue, compared to a little less than $16 billion for the four broadcast networks (including Fox).
In a different vein was the arrival of new modes of selling on TV. The enormously successful MTV (launched in 1980) displayed a succession of music videos, which employed the styles and imagery of TV commercials. MTV and its imitators became major engines of record sales in the popular music field.
The annual Super Bowl broadcast also emerged as a showcase for commercials, particularly after the success of Apple's "1984" commercial (in 1984). Advertisers were willing to pay top dollar to reach one of the largest audiences TV assembled each year.
But perhaps the most intriguing hybrid of advertising and programming was the infomercial, usually a half-hour, syndicated program that employed the style of the talk or interview show to sell a product. Individual stations charged a couple of thousand dollars to run infomercials in their late evening time slots, an arrangement that usually was more profitable than running an old movie and trying to sell ad time.
By 1992, infomercials were generating an estimated $750 million in sales.
Humor, shock and titillation
The expansion of TV advertising exacerbated the problem of clutter, especially after 1982, when the 15-second commercial became popular. At the beginning of the 1990s, the four American TV networks purportedly aired more than 6,000 commercials a week. The public's ability to recall ads just viewed fell from 18% in 1965 to 4% in 1990.
Ad makers met the challenges posed by clutter by using celebrities, popular music, humor and sex, often spiced with special effects. Hit tunes from earlier years were revived in new spots. The 1983 launch of Pepsi's "New Generation" campaign, handled by BBDO, featured Michael Jackson and cost $5.5 million. Stars from the worlds of sports and entertainment began to populate TV spots with increasing frequency.
Humor and irony gained favor among agency creatives and national advertisers. Isuzu, for example, using a spokesman who told obvious lies about the performance of its cars, won loads of publicity via a U.S. campaign of the late 1980s.
Ad makers also adopted bizarre or surreal imagery—mock violence, references to bodily functions once deemed vulgar, ugly and occasionally frightening sights—to overcome viewer indifference. But the most startling kinds of imagery during the decade of the 1990s were sexual, with the sexual sell used to promote everything from jeans and perfumes to potato chips and telephone service.
As an ad medium, TV had first registered on the annual McCann-Erickson survey of U.S. ad spending in 1949, when advertisers placed some $58 million into the hands of TV networks and stations. In 2001, according to Advertising Age, TV accounted for $54.4 billion of U.S. advertising expenditures—nearly one-quarter of the total $231.4 billion.