Before the Sham-Wow...

The evolution of advertising and mass media.

Transcript

1. & Mass Media Advertising ought to you b Christine, David, Erika, Kim, Matt, & Nancy
2. ‣Products became brands, lifestyles were advertised to drive sales, and the protection of life and property became a focal point ‣Businesses needed advertising to grow, and insurance to cover their assets Mass Medi , Advertising & Insuranc The modern business world has grown with these three industries at its core.
3. ‣ These industries drove consumerism, materialism, and personalization ‣ Insurance policies fit personal needs and situations ‣ Advertising showed people how they, as individuals, could become part of wide-culture, or how they could make a depicted lifestyle part of their own day to day life ‣ The insurance industry became a significant and financially massive player in the American economy, while other industries benefitted from the presence of insurance industries and mass media Catalysts of Modern Business
4. ‣ Advertising shaped the way Americans viewed products, companies, and culture as a whole ‣ It allowed for a cultural unification of the nation ‣ American businesses were able to grow and expand both domestically and internationally by creating strong brand images, and selling “lifestyles” along with their products Advertising
5. Internet Radio Print TV 1. What your product does 2. Keep your target audience in mind 3. Slogan Pitch Perfect ‣60 seconds to pitch ‣Choose one spokesperson Points to Consider Choose a focus
6. Th Evolution of Selling ‣The sales “pitch” developed beyond the facts to further appeal •Manufacturers no longer sought to sell supply of goods, but created demand •Advertising ceased being simply “news” ‣From a $10 mil business in 1865 to $95 by 1900
7. Befor th Sham-Wow... “The Science of Money-Making and the Philosophy of Humbug.” Advertising became... -Phineas T. Barnum The bottom line? It paid to advertise.
8. Bigge , Bolde , Bette ? ‣High-speed press and automatic typesetters revolutionized publishing, and changed social norms •Newspapers carved out more space for advertising by the 1870s, unlike more conservative magazines ‣By 1868 “new” magazines appeared, and specialized business journals and weeklies
9. Mak oom in th mailbox!
10. Th Birth of B ands ‣Advertising gave old products new forms, shapes and significance •Goods lost their generic quality and became brand names ‣Agencies emerged, developing national campaigns and specializations •The founding of N.W. Ayer & Sons was monumental for the industry, paving the way for the likes of BBD&O
11. Radio the beginning ‣WWI showed the importance of radio as a means of communication •RCA organized when war ended ‣Important source of entertainment and advertising •Prominent during the Depression
12. Radio the beginning ‣By 1924, there were over 500 licensed radio stations •In 1926, AT&T’s rental of wire connections allowed for the formation of radio networks •NBC created that year, and within 3 years there were 3 major networks. CBS especially innovative
13. Radio the beginning ‣By 1928, sale of radio ads reached over $10 million ‣Higher quality programs = higher quality ads
14. Television the beginning ‣Success of radio ended in 1948 with the coming of television ‣Post-WWII, NBC linked stations in NYC, Philly, and Washington to form network ‣CBS vs. RCA color television systems
15. ‣Declining price of TV sets + increase in average hours of viewing = Growth in advertising revenue •Radio lost 70% of evening audience in shift from radio to TV ‣Need for regulation of advertising industry •Wheeler-Lea amendment to Federal Trade Commission Act in 1938 Television the beginning
16. And now, pecial commercial ea T b is g - fo -
17. Fo ou following egment, meet Inventors & Inventions
18. Alexande G aham Bell ‣Invented an electric speaking telegraph, better known as the telephone ‣His work for the deaf and interest in acoustics led him to experiment with the telephone ‣In 1876 he demonstrated the first magneto- electric telephone ‣In 1877 the first telephone company in the U.S. was created, The Bell Telephone Company
19. Theodor N. Vail ‣The man who truly built the Bell System 1878 Became general manager of Bell Telephone Company b. 1845 d. 1920 1907 Named president for the second time of AT&T ‣Invented a sorting system to speed delivery of mail by train that was used for 100 years ‣London saw the telephone as an American fad ‣Vail was thinking of a coast-to-coast telephone service ‣Promoted local telephone companies in various towns
20. Theodor N. Vail 1878 Bought Chicago manufacturing firm, Western Electric, to standardize equip b. 1845 d. 1920 1907 Named president for the second time of AT&T ‣When the patents expired in 1893, many other telephone companies emerged ‣Bell Company failed to maintain and buy new equipment ‣Vail began running advertising campaigns for AT&T after 1907 ‣Accepted the regulation of the phone business because of close link to public interest ‣By 1919, there were over 11 million Bell telephones in use 1882 1884 1885 1887 AT&T is organized Vail leaves the company Acquired interstate telephone rights Became general manager of Bell Telephone Company
21. Television ‣The basics of television developed in Europe in the 1920s ‣Radio Corporation of America (RCA), owner of NBC, was industry’s pioneer ‣WWII halted development of TV until 1946 ‣Television arrived in most large Eastern and Midwestern cities by 1947 and everywhere else by 1949 ‣TV hit radio networks and movie industry hard ‣In 1950, more than 80 companies produced TV sets vs. only 14 in 1947
22. Television ‣RCA was the leader, they made sets and owned a network ‣Color television became popular around 1960 ‣In mid-1980s, NBC,ABC, and CBS were acquired by large companies ‣Viewing of the original networks was diminished by the introduction of Fox and other independent stations and video ‣90% of viewers were watching NBC, CBS, and ABC in the 1980s, whereas only 50% do now
23. Computers ‣Took off in “Silicon Valley,” San Jose, CA area ‣Ken Olsen was the founder of Digital Equipment Corporation (DEC), and was the industry’s first hero •1960, Olsen created the minicomputer industry by offering small computers for $120,000 each •He failed to see the future of desktop computers ‣An Wang built Wang Laboratories in the 1960s •He was the dominant supplier of electric calculators ‣In the 1970s he reinvented his company to produce word- processing machines ‣In the 1980s, general-purpose personal computers could run a variety of word-processing software including WordStar, WordPerfect, and MultiMate
24. Computers ‣IBM dominated the market for accounting machines in the 1930s •In the mid-1950s, IBM started working on computers •IBM machines in 1964 each had to be run off a different software & operating system ‣Under the leadership of Tom Watson Jr., IBM spent $5 billion to build an operating system that would run on all machines, called IBM’s System/360 ‣DEC also did the same thing as IBM and built the VAX
25. ‣1975, Bill Gates and Paul Allen started Microsoft and created the BASIC operating system for all personal computers ‣Almost every PC manufacturer licensed a programming language from Microsoft, the compatibility of software became huge for the purchase of home computers ‣By 1980, IBM controlled 80% of the market for computer hardware of large computers ‣IBM turned to Microsoft to create an operating system for small computers ‣They created the Microsoft Disk Operating System (MS-DOS) and the standard PC ‣It hit the market in 1981 Computers
26. ‣Microsoft was interested in making money by licensing MS- DOS to computer companies ‣Apple was one of the only companies that did not run on this system ‣In 1983, Microsoft created a graphical computing system called Windows ‣IBM held back on PC development in order to sell more large computers and this let other companies into the PC market ‣Microsoft was seen as a monopoly but, the company did not get broken up, although they were fined greatly in Europe ‣The recession after 9-11 did impact the industry and the profit values declined but, it is still a very important industry in America Computers
27. Research & Development ‣In 1879, Edison’s Menlo Park laboratory was one of few industrial research laboratories ‣In the early 1900s, many companies thought that all the research they needed could be found in Europe ‣Standard Oil and the Carnegie Company did some research of their own during this time ‣General Electric and Westinghouse established the first corporation-sponsored research laboratories in the 1890s
28. Research & Development ‣Around the time of World War I, there were about 100 laboratories, by 1920 there were 300 ‣Most funds were spent on applied research, or cost reduction ‣Companies could often make more money by cutting costs than introducing a new product ‣Recently, R&D in the US has fallen behind Europe and other countries ‣In Japan R&D is about 3% of the GNP, and only 1.9% of the GNP of the US
29. Vail was embroiled in a patent battle with this company--which actually had a better product, too. What company was this and who invented the competing product? Questions let’s hear it!
30. Vail was embroiled in a patent battle with this company--which actually had a better product, too. What company was this and who invented the competing product? Questions let’s hear it! The company was Western Union. Thomas Edison created the superior telephone.
31. What were the four TV networks in 1948? Questions let’s hear it!
32. What were the four TV networks in 1948? Questions let’s hear it! NBC, CBS, ABC, and DuMont.
33. How much money did RCA lose on color programming before 1960 and why? Questions let’s hear it!
34. How much money did RCA lose on color programming before 1960 and why? Questions let’s hear it! They lost over $100 million on color programming. Advertisers would not buy color programming until enough sets were in use to warrant the extra cost.
35. Why did Wang’s personal computer fail? Questions let’s hear it!
36. Why did Wang’s personal computer fail? Questions let’s hear it! It was not a true personal computer because it was only designed to handle text. Also, other machines came out that could handle more than just one program.
37. What was the first company to introduce a graphical operating platform and in what year? What year did they permit other companies to manufacture hardware that would run it? Questions let’s hear it!
38. What was the first company to introduce a graphical operating platform and in what year? What year did they permit other companies to manufacture hardware that would run it? Questions let’s hear it! Apple’s Macintosh created the first graphical operating platform in 1984. It was not until 1995 that they permitted anyone else to manufacture computer hardware that would run it.
39. Th American Insuranc Industr with your hosts Matt, Christine, & David
40. the industry American Insuranc ‣4 kinds of insurance: fire, casualty, marine, life ‣Two kinds of insurance companies: stock & mutual •Stock: sells policy at certain price equivalent to cost plus profit -Profit distributed as dividends to stockholders not necessarily policyholders •Mutual: contributors both stockholders & policyholders -Contributors own the company and share in profits given out as dividends
41. Th Insuranc Compan of North Americ ‣Started as aborted “tontine” scheme that was unable to find enough takers to be profitable ‣First policy insured $5,333.33 in cargo for a premium of $120 ‣Recorded profit of $189,474.59 in first year ($4,511,299.76 in 2012)
42. the industry Lif Insuranc ‣Life insurance “took off” in 1840’s •Previously seen as useless, immoral by those in rural communities; seen with indifference by those in urban ones •Rapid growth attributed to economic stability, the rise of the city, among others ‣The Pennsylvania Company for Insurance on Lives and Granting Annuities, founded in 1809, was the first company that dealt exclusively with life insurance •Depended on many different life-expectancy tables, although most, if not all, were unreliable
43. the industry Lif Insuranc ‣Much of the wealth accumulated during the Gilded Age was due to life insurance ‣By 1892, more life insurance was sold in the U.S. than in the rest of the world combined in 1850 ‣In order to keep up with competition, many companies started unethical practices
44. A few questions of th insurances of and other matters Newsflash!
45. What served as the model for Benjamin Franklin’s Philadelphia Contributorship for the Insurance of Houses from Loss by Fire?
46. What served as the model for Benjamin Franklin’s Philadelphia Contributorship for the Insurance of Houses from Loss by Fire? The Hand-in-Hand Was the first mutual company, founded in 1696, and lasted until 1905 when it was absorbed by the Commercial Union Assurance Company, Ltd.
47. What was the major reason that the marketing of life insurance skyrocketed in the late 1800s?
48. What was the major reason that the marketing of life insurance skyrocketed in the late 1800s? Greater sales incentives- commissions rose from 5-10% in 1840s to 14-20% in 1860s to 80% in 1880s to sometimes even 100% by 1900.
49. What were the three main reasons that the public became more receptive to mutual insurance?
50. What were the three main reasons that the public became more receptive to mutual insurance? Lower premiums, aggressive salesmanship, fraternal qualities
51. When did many life insurance firms enjoy the most success?
52. When did many life insurance firms enjoy the most success? After the Civil War (1865)
53. Who started the first organized stock insurance company in London in 1666 called the Fire Office?
54. Who started the first organized stock insurance company in London in 1666 called the Fire Office? “Damned” Nicholas Barbon
55. Insuranc Reform & Regulation 1. Internally: standardize procedure to build credibility for increased sales and confidence -Reputation influenced by public perception -Scandal, natural disasters shape views -Industry wide efforts to organize and regulate to strengthen position 2. Externally: State investigation and participation to protect consumers and enforce company obligation 3. Soundly run industry as a source of investment capital
56. What drives internal eform? ‣Insurance sales depend on consumers’ confidence that a company will honor their obligations ‣Industry-wide standardization builds credibility and trust •Bad post-civil war image
57. Goals of Reform ‣Create operational standards ‣Organize methods to self-regulate ‣Push for legislative guidelines at the state level ‣National Board of Fire Underwriters (1866) -Standards on premiums -Stabilizes rate structures ‣Result: Greater sense of trust in the industry -increase in policy sales!
59. G eat Chicago Fir of 1871 ‣Monumental property damage -Generates huge losses to be covered -Bankrupts 68 companies ‣Huge boost in confidence -INA meets 100% of obligations at a cost of $658,000) ‣Reinforces need for fire insurance in urban areas ‣Policy sales increase drastically
60. P udential Lif
61. P udential Lif ‣ From small scale Widows and Orphans insurance program to one of the US’s largest life insurance firms ‣ John Dryden ‣ Dropped out of Yale, relocated, restructured, reaped huge benefits ‣Assets over 1 million dollars within first 10 years ‣Elected to Senate in 1901
62. Internal efforts fo good practices ‣National conference: May 1871, New York -licensing/taxing of insurance companies -leads to adoption of: ‣American Experience Table -nationwide standards for risk statistics ‣American Table -accurate demographic data ‣Actuarial Society of America, 1889 -enhances professional status and presence as an industry ‣National Association of Life Underwriters -code of professional ethics
63. Roots of government involvement ‣Scandals exposed around 1905 due to: -Muckraking journalism -Try to expose problems in the industry -Progressive movement in politics -press for federal regulation of big business and destruction of trusts ‣However, 1869 Supreme Court ruling holds that ‘issuing a policy of insurance is not a transaction of commerce’ -So, insurance industry is EXEMPT from legislation like the Sherman Anti-Trust Act.
64. A mstrong Investigation ‣Sparked by internal dispute within Equitable Insurance Co. over how company funds were invested in rival banks ‣Henry Clay Frick charges management with improper accounting/ investment practices ‣Board rejects an internal report’s findings, provoking an investigation by a NY insurance commissioner ‣Governor of NY calls for a special legislature session -Senator William A. Armstrong heads committee to investigate -Attorney Charles Evans Hughes runs proceedings -Hurts company reputations (Aetna Life is one exception ‣Motivates other states to start similar investigations
65. A mstrong Investigation ‣ Further internal reform/organization and additional self- regulation through recommendations of the Committee p. 208) ‣Against: -company investment in common stock -participation in syndicates that underwrote corporate securities ‣For: -standardized policy forms with automatic extension provision -limit commissions/bonuses/prizes to agents -annual distribution of dividends -cost of acquiring new business cannot be more than cost of agents’ commissions and policy preparation fees in the first
66. A mstrong Investigation ‣ Registration of insurance company lobbyists ‣ Elimination of permanent voting proxies ‣ Ban on political contributions ‣ Uniform values on surrendered policies ‣ Legal liability for misrepresented policy terms ‣ Uniform accounting procedures
67. Adoption of A mstrong ‣ Armstrong Committee favors Mutual over Stock companies ‣ NY companies strongly oppose some moves, but NY Legislature approves most suggestions ‣Other states follow: Kentucky, Minnesota, Tennessee, Wisconsin
68. Furthe Internal Reform ‣ Post-Armstrong atmosphere motivates more reform from within people lose trust when scandals are exposed ‣ 1905 Conference in Chicago resolves to: pg 209) ‣Favor uniform state law for policyholder protection ‣Oppose federal supervision and control for life insurance companies ‣Oppose state laws requiring payment to the state for the privilege of doing business ‣Oppose severe taxation and licensing
69. Furthe Internal Reform ‣ American Life Convention (first meeting 1906) ‣ Southern/Western companies ‣ Life Insurance Association of America ‣ Oriented towards Northeastern companies ‣ Promote regulatory legislation at the state level
70. San F ancisco Earthquak & Fir ‣ 3,000 casualties ‣ 80% of city destroyed ‣ 400$ property loss ‣ Huge hit for industry reputation    
71. San F ancisco Earthquak & Fir ‣ Colossal amount of damage devastates industry ‣ Negative example of company trust /responsibility ‣Companies try to cut losses by disavowing claims or only paying partially ‣Thought earthquake damage should be deducted before payment for fire losses was made ‣Try to claim that most losses were caused by the earthquake before the fire broke out ‣Only 10% was caused by the earthquake
72. San F ancisco Earthquak & Fir ‣ 27/113 companies paid claims in full ‣ INA and a few others made full restitution ‣ As a result, people lose even more trust in the insurance industry ‣ Company failure to honor claims strengthens push for state regulation
73. Wisconsin ‣ Legislature hears 72 bills to regulate the industry in 1907 ‣ Most laws passed follow New York’s example ‣ Negative for individual companies, but strides made for consumer protection ‣Requirement that companies must deposit securities with secretary of state “equal in value to the total liabilities on their outstanding Wisconsin policies” (211) ‣Ceiling on premiums ‣15 companies leave the state
74. Texas ‣ 1907 reform move similar to acts passed in WI) ‣ Robertson Law: 75% of Texas policy reserves to be invested in the state ‣ Securities subject to ad valorem taxes ‣“According to value” ‣Again, causes some companies to stop doing business there
75. Question... What was Governor James E. Ferguson’s position with respect to what effect the reform acts had? According to him, keeping them would result in….?
76. Insuranc Companies & Investment ‣ Major role of insurance companies is to “accumulate personal savings and transfer those savings as investment capital to areas where they are needed” (212) ‣ Discrepancy in amount of money invested across states ‣69 cents of every dollar of policy in Mid-Atlantic ‣Average 3$ for every dollar of policy reserve in South- Central region (Texas, Louisiana, Oklahoma, Arkansas
77. Expansion ‣ To create additional profits: insurance firms enter new areas along with investment capital aims ‣Carrying employee benefit packages ‣Health, accident, retirement programs ‣Industrial policies for developing businesses
78. W now interrupt fo hort commercial messag ...
79. Auto Insuranc Industr ‣ First auto liability policy written around 1912 by James S. Kemper ‣ Kemper founded Lumbermen’s Mutual Casualty Company that same year ‣ His company’s early success was attributed to: ‣ Salaried sales agents ‣ Low rates due to large dividend returns ‣ Early form of auto insurance policies
80. A Focus on th Farm ‣ Kemper built an insurance empire, with specialized insurance companies covering retailers, automobiles, fire, and farmers ‣ In 1922, George Jacob Mecherle founded State Farm Mutual, taking advantage of an area Kemper had missed, the farm automobile insurance market
81. Stat Farm an interpretation of his motivation...
82. Stat Farm ‣Started in Illinois as a specialized insurance company ‣Innovations that led to success: ‣Six-month term policies to lower premiums ‣Premium payments could be sent by mail ‣Sales agents were full-time salespeople instead of also being collection agents ‣Reduced claims by insuring a percentage of a loss deductible policies
83. Post-World Wa Two ‣ Automobile sales boomed, as did insurance coverage ‣The percentage of American’s owning automobiles rose from about 32% to 82% by 1970, one third of which owned 2 or more ‣Insurance premiums climbed from $1.25 billion to $14.6 billion during the same time-frame. ‣ The insurance industry became an integral part of economic expansion
84. Lif & P opert ‣ Modern insurance ‣Insurance industry became one of the top three financial intermediaries in 1980 ‣Insurance companies became the financial administrators for retirement programs, which lead to an enormous amount of investment capital
85. Fou Phases of th Insuranc Industr 1) Up to the 19th century: developmental and experimental phase where stock and mutual structures were developed for insurance companies 2) 1800s-1906: Rapid growth phase where insurance companies were not subject to significant government regulations 3) 1906-1950s: Regulations were implemented to protect both the consumer and corporate sides of the insurance industry 4) 1950s-Present Day: Insurance companies increased their scope in order to become a multi-purpose financial intermediaries. The insurance industry became more aligned with banking, savings, and investment institutions
86. ‣ These industries are essential in modern business, and they form a large segment of the American economy ‣ The US has a materialistic society because of these industries, and they have arguably been the most influential in shaping American culture and foreign perception since the late 1800s In Conclusion
87. That’ all, folks!