In 1965, Frederick W. Smith, an undergraduate at Yale University, wrote a term paper about the inadequacy of the routing systems used by most airfreight companies; he suggested that there was a pressing need for a system designed to handle shipments of time-sensitive items such as blood, medicines, computer parts and electronics.
After a brief stint in the military, he bought controlling interest in Arkansas Aviation Sales of Little Rock in 1969. There, Mr. Smith saw firsthand the frustrations in trying to deliver packages in one or two days. Looking for a better distribution system, he came up with the idea of Federal Express.
The company was incorporated on June 18, 1971. Promising on-time delivery with service in 25 cities, company officials launched 14 small aircraft from Memphis International Airport, shipping 186 packages on its first night, April 17, 1973.
Federal Express did not show a profit until July 1975, but customers increasingly came to rely on the company to transport high-priority goods. The business took off in 1977 when the air cargo industry was deregulated and the company invested in larger aircraft. By 2000, the fleet had 662 planes, including Boeing 727s, MD-11s, Airbus A310s and A300s and Cessnas. In 1984, FedEx began its international expansion, offering service to Asia and Europe. Airfreight service to Japan began in 1988.
Painted white and adorned with the company's purple and orange logo, the company's trucks, planes and drop-off locations became ubiquitous in the 1990s. In fiscal year 2001, FedEx Corp. earned $20 billion. With more than 218,000 employees worldwide and service to 211 countries, the company boasted regional headquarters for operations in Asia (Hong Kong), Europe (Brussels), Canada (Toronto) and Latin America (Miami).
Initially, the company's ads were done in-house. In 1973, Ally & Gargano became the company's first agency. In 1974, with an ad budget of $150,000, the first Federal Express commercial aired in six markets with the theme, "Federal Express?A whole new airline for packages only." In the year following the campaign's introduction, the number of overnight packages shipped via FedEx rose from 3,000 to 11,400.
In 1975, the Clio Award-winning 30-second spot "America, You've Got a New Airline" aired for four weeks in New York, Los Angeles, Chicago and Atlanta. Federal Express then expanded its ad efforts into other cities, including Philadelphia, Boston, San Francisco, Detroit, Dallas and Cleveland.
In 1979, Ally & Gargano created the highly successful tagline, "When it absolutely, positively has to be there overnight." FedEx targeted its competitor, Emery Air Freight, and decided to do research to see who was better. It filled 47 packages with sand and shipped them by both FedEx and Emery. The result was turned into a 1980 print ad with the caption, "If you're using Emery, you'd better not let your boss see these figures."
In October 1981, FedEx began airing 60-second spots on televised National Football League games, including one called "Fast-Paced World," also known as "Fast Talker." The commercial, with the unique touch of director Joe Sedelmaier, cast fast-talking actor John Moschitta as a senior manager frantically arranging meetings and tracking packages. "Fast-Paced World" and other commercials in the campaign won Effies, Clios, One Show awards and New York Art Directors Awards. In 1999, Advertising Age ranked it No. 11 in its list of the 100 greatest ad campaigns of the 20th century.
By 1985, though, the Federal Express-Ally & Gargano relationship had diminished. The agency created more than 80 commercials during its association with the courier, whose account was worth $20 million to $25 million by the mid-1980s. While the agency, then Ally Gargano/MCA Advertising, had made FedEx a household name, the formula was growing stale.
Hoping to present a more serious image, FedEx hired Fallon McElligott Rice to handle ZapMail, an electronic faxlike document transmission service launched in 1984. The new venture posted operating losses of $317 million because of high equipment costs, technological problems and competition from fax machines, and the $10 million "Star Trek"-centered campaign from Fallon was scrapped when ZapMail was discontinued in 1987.
Fallon won the entire FedEx account later in 1985. Its early ads for FedEx provoked smiles but also conveyed serious messages with the tagline "If it's important, send it Federal Express."
By 1990, FedEx was splitting its business between Fallon and BBDO Worldwide, with the latter handling international accounts. As domestic sales dropped, Fallon remained the agency of record. But by 1994, the year FedEx bought Kinko's, it had shifted the business to BBDO.
In 1996, BBDO created the company's first global ad campaign, featuring ads that depicted the company as a global force in the shipping business. The ads featured a spinning globe and the tagline "The way the world works."
As part of its marketing efforts, FedEx promoted many sports, sponsoring the FedEx Championship Auto Racing, USA Basketball and the FedEx St. Jude Classic golf tournament. The company also sponsored the annual FedEx Orange Bowl between two of the top collegiate football teams in the U.S. In November 1999, the company became the title sponsor of the Washington Redskins Stadium/FedExField.
In 2004, BBDO continued to handle the account.