How The Economy Back During The Depression of 2009 Changed The World Part 8: Marketing

Posted on December 15, 2008. Filed under: advertising, Apple, consumer marketing, Mashable, RSS feed, Science Fiction, Second Life, Social Network, tv ad | Tags: , , , , , , , |

In my continuing series on the Depression of ’09, or Bush’s Collapse, as historians have come to call it, I will focus on how marketing and advertising was effected. In 2038 it’s hard to believe that only 30 years ago quotes such as “no one every got fired for doing television” and ideas like Mass Marketing weren’t ridiculed. One needs to remember that back then Social Media was used to differentiate a particular form of “online engagement”. Of course people still used the term Internet to qualify where they absorbed a particular piece of information. Most Gen A kids today are still confused by the fact that during the Gen X/Y days we received information from multiple devices with screens: one you could interact with, and one you just stared at. I won’t mention “radio” for fear of veering too off topic.

Leading up to Dep II folks used the Internet to gather data, purchase goods, and be entertained by music, vids and games. In most cases a company I’d individual would “post” media to a “web site” where users could read, click, watch, or download it. Users had very little choice on what they got, generally being given only a few options. Something was about to change all that though.

Just prior to the election of President Obama, the first of his 3 terms, several print publications (see references below for definitions) named the consumer as the Person of the Year and Marketer of the Year. The average citizen was beginning to take control of how goods and services were presented to them. Up to this point most manufacturers and service providers would build a generic product then hire marketers to create advertising campaigns to promote their product. The advertisements would, almost without exception, be focused on a wide demographic. Men: 18-45, teens: 12-22, were typical designations. Of course no one today would waste time on such a broad and incongruous grouping. Even now, at 79, I can remember being a teen, nine of us were very similar. There were jocks, studes, vocies, rich, poor, popular, geeks, etc. It still amazed me that anyone sold anything in such a broad way. It’s important to remember that back in the 20th Century and into the singles of the 21st Century, most people just accepted that they belonged to a demographic and accepted products and services as they were: Corporate America was in charge. Of course that is no longer the case: we get goods and services tailored personally to us, we brag about the cool advertising generated by our profile. Lime most of history, it is easy, in hindsight, to see the tipping point: The Attack on Pearl Harbor, the Chinese Colonization of Mars, Secretary Michelle Obama’s Global Union Initiative, etc. Bush’s Collapse changed the relationship between consumers and corporations forever.

It is unfair that the Collapse be completely blamed on George Bush, it is so named primarily because the Iraqi Folly put such a financial burden on the country, at a point when a brief financial meltdown was imminent. It took several decades of corporate greed, governmental missteps, and an economy based on speculation and Wall Street, to cause the Collapse. The “Silly President” just happened to push it over the edge.

The hardship had many unexpected consequences including the collapse of the television, radio (much different than what we consider it today), music and oil industries. The collapse of the oil industry and it’s evolution into an international conservatorship has been widely discussed and irrelevant to this story. The Big Media collapse has direct bearing though.

Citizens attention was divided in their entertainment, communications and informational options then: between a television, telephone and radio or a computer. With meager incomes most had to choose between the two. History shows they chose computers. These bulky, desktop machines were far less elegant than our current solution, yet they offered information, communication, entertainment and productivity in one package. This primitive machine had been used to market to consumers in a 19th Century manner, with 20th Century technology. A few technology advances offered the ability for social networks to begin to crop up, all separate and distinct. Very quickly more niche networks emerged, focused on specific subjects, forms of communication, and psychographics. CGTalk, Twitter, and Ning are examples of each that I was immersed in. Very quickly the populace found they had replaced one fractured interface with another, as their attention was now divided between multiple separate “sites”.

Yet the seeds of control had been sewn. Many of these sites, oddly called “networks”, offered personalization features as well as the ability to be viewed on mobile devices. Soon a demand was met: the ability to bring all of their desired content together under a universal, personalized ID, that they could interact with on any device. Early mobile and computer companies began building customized devices receiving customized information. Soon behavioral targeting was giving users information they wanted before they asked for it. Advertisers couldn’t bridge the gap. Most companies were still selling generic products using mass marketing tactics. The people demanded better. They had the power to make demands. It was easier fir a mom & pop operation to deliver customized goods, promoting them with customized messaging, easier than large companies. Product and Services industries as well as their advertisers couldn’t compete on such a micro-level. This signaled the end of marketing as it had been for decades.

Early social media proponents recognized early on that talking to one was better than shouting at a million. Advertisers and companies, in their desperation finally began to listen. An entire generation of marketers and advertisers was displaced. Their seats were filled by social media evangelists managing hundreds of non-employee brand evangelists. These weren’t just mouthpieces, they weren’t even paid! They were brand fans. It was the pyramid management system. One SoMe evangelist would invite brand loyalists, even competitive brand loyalist to try products and report on them. These loyalists in turn were followed by thousands, who, in turn, influenced millions of others.

Many companies during this time abandoned the strategy when they received negative feedback. The smart ones began to see this as positive input. It wasn’t long before companies were creating custom products for their loyalists. It was expensive. This zoo drove the desire from all consumers to have personalized products. Advertisers soon got in the act, creating customized messaging. Consumers had long given up the idea of privacy or anonymity online. Their tracked behavior, purchase history, financial background, resume, even family info now fed shared databases from which technology evolved to serve advertising unique to every recipient.

It seems odd, in this day and age, that a single add would be the basis of an entire product campaign. Teens in college, sports fans in bars, even the few that still work in offices, share their commercials as a bag of identity, as unique as a fingerprint. Just today my grand kids and I were laughing over our implant OS updates from Apple. I’m still on 10.4.2!

Who knows how personalization will effect us in the future. If I have to spend 4 hours on an airship to visit my grandkids on the West Coast, I’d like a seat that knows I have a bad back!

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Now Is Not The Time to Skimp on Advertising and Marketing

Posted on November 3, 2008. Filed under: advertising | Tags: , , , |

As the economy continues to be of concern to citizens and corporations, we wanted to share a recent article we came across concerning economic downturn and advertising. A question was asked on Google Answers about what companies did well during the Depression. The answer is interesting and offers some great, concrete examples. Following the article is a link to the original post and to references from which informed the answer.

It is important to note that whether the economy is in an upswing or a downswing, consumers still spend money, they still have needs, and they still have wants. Pulling back on advertising only allows your competition to take advantage of a conservative marketing environment, and the advantages that offers, such as reduced media rates, to step in to capture a greater mind share. Taking advantage of new technology and marketing channels is as effective now as it was then. Compare the use of social media and mobile now to Proctor & Gambles use of radio then. The troubled economic times we find ourselves in now can be as good for some as much as they can be bad for others. It’s all on how you take advantage of the situation.

THE QUESTION

What industries fared relatively better and worse in terms of pricing and demand during the Great Depression of 1929? Do the industries reflect a hierarchy of demand from essential consumables to deferrable purchases to capital goods? What specific companies did well in any industry and what distinguishes those companies.

THE ANSWER

To begin, not all was gloom and doom during the Great Depression. It was a time when those who knew what they were doing made great economic strides and the very nature of the depression itself was an economic boon for them. It was a time when several companies benefited from aggressive marketing while their rivals cut back. A good example of that would be Kellogg besting C.W. Post during that time. Consumers didn’t totally stop spending during the depression, most just looked for better deals and the companies providing those better deals came out stronger after the depression ended. When spending picked up, consumer loyalty to those companies remained.

To state a generality, those companies who not only survived but did well and grew during the Great Depression are those who continued to act as though there were nothing wrong and that the public had money to spend. In other words, they advertised. These are industries who didn’t wait for public demand for their products to rise, they created that demand even during the most difficult of times. Because so many companies cut spending during that era, advertising budgets were largely eliminated in many industries. Not only did spending decline, these companies actually dropped out of public sight because of short sighted decisions made about spending money to keep a high profile. These advertising cutbacks caused many customers to feel abandoned and associated the effected brands with a lack of staying power. This not only drove customers to more aggressive competitors but caused a certain among of financial mistrust when it came to making additional investments in the no longer visible companies.

Both anecdotal and empirical evidence support the case that advertising was the main factor in the growth or downfall of companies during those years. To put it bluntly, the companies which demonstrated the most growth and which rang up the most sales were those which advertised heavily. The Great Depression offers classic examples of the power of brand advertising even during times of economic crisis.

Proctor and Gamble

This is a company which has a philosophy of not reducing advertising budgets during times of recession and they certainly did not make any such reduction during the Depression. P&G has made progress in every one of the major recessions and that is no accident. When their competitors were swinging the budget axe, P&G actually increased their spending. While the Depression caused problems for many, P&G came out of it unscathed. Radio took P&G’s message into more homes than ever.

Chevrolet

During the 1920s, Fords were outselling Chevrolets by 10 to 1. In spite of the Depression, Chevrolet continued to expand its advertising budget and by 1931, the “Chevy 6” took the lead in its field and remained there for the next five years.

Camel Cigarettes

In 1920 Camel was the top selling tobacco product. American Tobacco Company then struck back with the Lucky Strike brand and by 1929 Lucky had overtaken Camel as the number one brand. Two years later in the heart of the Depression, Chesterfield also overtook Camel. Camel countered with a massive increase in advertising spending and by doing so demonstrated the power of advertising during depressed times. By 1935, it was back on top.

Now, these examples count as anecdotal. But in addition to these examples, studies have demonstrated that during times of recession, companies that maintain advertising during these periods experience higher sales and profits during the downturns and afterward than companies who cut their advertising budgets.

It was also the very nature of this advertising that spurred the growth of two other industries during the Depression. The first of which was radio broadcasting.

Let’s return to Proctor and Gamble for a while. P&G first turned to radio in 1923 advertising Crisco on a New York station. Other products such as Ivory and Lava soap were advertised on ‘product oriented’ shows which were similar to today’s infomercials. But in the heart of the depression P&G took a step which changed not only that company but the broadcast medium forever while creating great demand for its products. The president of P&G at the time was Richard Deupree. In spite of the fact that shareholders were demanding that he cut back on advertising, he knew that people were still buying essential household products. So he created radio programming that did not focus on a product. Because of that, we now have a cultural attribute known as the “soap opera.”

In 1933, P&G went on the air with its first “soap” – “Ma Perkins,” sponsored by Oxydol. P&G was so satisfied with the increase of sales, they went on to introduce “Vic and Sadie” for Crisco, “O’Niells” for Ivory Soap and “Forever Young” for Camay. By the time 1939 rolled around, P&G was sponsoring 21 radio programs and they doubled their radio advertising budget every two years during the Depression.

Radio was one of the fastest growth industries of the depression. P&G virtually built daytime radio with its advertising budgets and programming. Two industries were thriving from the advertising budget of one.

The print media was also a growth industry during the Depression. To give some reason for this, we now return to Chevrolet. the first ads for Chevrolet appeared in print in 1914. In 1927, they began to increase their print advertising budget. As the country moved into the Depression a couple of years later, Chevy did not let its commitment to print advertising falter and its car ads not only kept some publications afloat, it helped many to grow. In as much as the term “print media” covers many outlets, they pioneered the outdoor advertising medium, billboards. Chevrolet also went into radio and sponsored such Depression Era classics as Fred Allen and Jack Benny. Chevy’s print ads appealed to the “emotional” side of a buying decision which was a great move in light of the economic uncertainty of the time.

So once again, those companies which took advantage of the Depression and came through in good form were those who kept their name in front of the public in spite of a lack of purchasing power.

Your question asks about a hierarchy of demand from essential consumables to deferrable purchases to capital goods. In reality there was no such hierarchy. I have tried to balance the examples given to show some spectrum across the board. Proctor and Gamble represents essential consumables, Chevrolet represents deferrable purchases and Camel represents non-essential products. So as you can see, the so called hierarchy of necessity and want was sidestepped by those who had the marketing gumption to ignore such distinctions.

However, capital goods information needs to reflect the entire economic structure of the Depression and not just those companies which were successful. Overall, new production of capital goods less capital goods consumed during the years 1929 – 1939 was near zero. The increase in the money supply during the 1920s also increased the prices of capital goods relative to the prices of consumer goods. This disparity set in motion a boom in real estate and stock market prices and interest rates were driven down by the “increase in Fed money.

It must also be noted that the preceding statement on capital goods is only one of many competing economic theories about the Depression. There are some who say this compounding of assertions is wrong from beginning to end. But in composing an answer such as this, there needs to be one which best meets the nature of the question and in conjunction with the material about public visibility covered above, this is the one your researcher ties into the equation. When money has entered the economy from whatever sources during business fluctuations in the past, has there been a disparity between the increases in prices of capital and consumer goods? That alone is a subject which would take volumes to answer. In fact, it would take volumes just to cover the debate without any resolution coming about.

As far as the end of the question as to what distinguished the companies that did well during the Depression? They were the companies that kept their name in front of the public and created brand name recognition even during the worst of times.

ORIGINAL ARTICLE
http://answers.google.com/answers/threadview?id=178334

SEARCHGoogle

TERMS
great depression, company growth great depression, great
depression success stories
, brand name awareness great depression,
advertising history, new industry great depression, benefits of
advertising

REFERENCES:

“America’s Great Depression – Causes and Cures” –
http://www.amatecon.com/gd/gdcandc.html

“H102 Lecture 19: The Great Depression and the New Deal” –
http://us.history.wisc.edu/hist102/lectures/lecture19.html
University of Wisconsin, Stanley K. Schultz, Professor of History

“Sliding into the Great Depression” –
http://econ161.berkeley.edu/TCEH/Slouch_Crash14.html – University of
California at Berkeley

“Great Myths of the Great Depression” –
http://www.uaca.ac.cr/acta/1998nov/lreed.htm – Universidad Aut noma de
Centro America

“Economic Surpluses” – http://www.sjsu.edu/faculty/watkins/surplus.htm
– San Jose State University

“Accounting for the Great Depression” –
http:/www.stern.nyu.edu?~fperri/papers/account.pdf – a PDF file,
Acrobat Reader needed.

“Four Myths About America’s Great Depression” –
http://www.libertyhaven.com/theoreticalorphilosophicalissues/economichistory/fourmyths.html
– From Liberty Haven

“EAP Vocabulary – Exercise” –
http://www.uefap.co.uk/vocab/exercise/buscycl.htm – some interesting
information about capital goods and business cycles here but mostly in
a modified glossary format

“Creating Mass Culture” –
http://xroads.virginia.edu/~CLASS/am485_98/graham/mass.html
University of Virginia

“The Visitor in Your Living Room: Radio Advertising in the 1930s” –
http://xroads.virginia.edu/~CLASS/am485_98/graham/visitor.html
University of Virginia

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