Wednesday, May 24, 2006

The Media Era

(continued from In the beginning..., see 5/19/06 below)

In case you just joined us, we’ve been reflecting on the history of the advertising business in order to gain a historical perspective to better understand the significant changes that are taking place in advertising today. In every period, there are leaders, entrepreneurs, who “think different”, who see opportunities and capitalize on them or find a better way of doing business. When others see the value of what they’ve done, they copy it. And that’s how business practices change.

We’re talking about an era in advertising that I call the Media Era, from 1841 to 1903. It was a time when media buying was the advertising business. Creative services, if provided at all, were provided as added value. No agency saw the need to have a full-time Creative person on staff.

Three important media entrepreneurs of the period were Francis W. Ayer, George P. Rowell, and J. Walter Thompson.

Francis Wayland Ayer founded N.W. Ayer and Son in 1868 (he named the agency after his father). Ayer pioneered the concept of the “open contract” which made the commission rate that agencies earned a set standard, at first 12.5 percent, then later 15 percent of the publishers’ rates. The 15 percent commission stayed the norm for the advertising business for many years to follow and provided stability in what was until then an untamed business environment.

George P. Rowell, mentioned in our post of 5/19 as the originator of the “space wholesaler” agency, also became the first media researcher. In 1869, he introduced Rowell's American Newspaper Directory, the first annual guide to over 5,000 American and Canadian newspapers. It later merged with a directory published by N.W. Ayer, and became known as Ayer’s Directory of Publications, which was published until 1982 when it became the Gale Directory of Publications and Broadcast Media which, to my knowledge, is still published to this day.

Then there was J. Walter Thompson. When we think of the founders of agencies today, they’re usually Creative Directors. Thompson, of course, was not. The role of Creative Director hadn’t been invented yet. In the same year that N.W. Ayer was founded, Thompson (then 20 years old) was hired as a young bookkeeper and assistant of the small agency of Carlton & Smith, which bought and sold space in popular religious journals. Thompson’s innovation was that he recognized the potential for advertising in the high class magazines of the period. At the time, these magazines took no advertising; they considered advertising offensive to their affluent readers.

Thompson managed to get two of the leading women’s magazines, Godey's and Peterson's, to take ads for asbestos roofing. These women's journals seemed an unlikely medium for a product bought, presumably, by men. Yet the ads sold more roofing than any promotion in the company's history. He repeated this success with advertising in Peterson’s for a game called “jackstraws”. Within 20 days, the merchant received over $3,000 worth of orders in sums no larger than 35 cents. Following these successes, Thompson eventually acquired a monopoly over advertising in the leading magazines of the period. In 1878 he bought out his employer, paying $500 for the business and $800 for the office furniture, and renamed the agency after himself.

And the rest, as they say, is history….

(to be continued....)

Sources and additional reading:
Stephen Fox, The Mirror Makers, William Morrow and Co., New York, 1984
John O'Toole, The Trouble with Advertising, Times Books, div. of Random House, Toronto, Canada, 1985


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