The world of Adverts

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Picture yourself lying on a beautiful sandy beach lost from worries of everyday life while listening to the calm and tranquil sounds of the ocean and wind, gazing at the blue ocean, taking in the sun and watching kids savoring their time in the serene waters. Trying to forget about the stress of daily life – no political news, no social media, no emails to read and reply to, and no bills to worry about, just a camera to capture memories and suddenly you are hit by an eyesore, right in front of you is an inescapable gargantuan billboard advertising to you the same credit cards and television shows you meant to escape.

Now you may ask how in the heck can a billboard which has been plastered throughout the American landscape has made it’s way on to the shores of America’s pastime?

The answer is not hard, as long as there is a product or service to sell, companies have found nifty ways to bombard or sometimes in subtle ways influence prospective buyers of their offerings. This has paved the way for companies to creatively find ways to grab our attention. So how can this be done on a beach, well, introducing the floating billboard.

Just outside the buoys, which is a sign for swimmers to not cross from the shore, a floating digital billboard boat makes rounds from one end to the other to capture beachgoers attention. The ads are rotated every few seconds similar to the ones found on highways.

How did the world reach this point of inescapable and continuous presentation of advertisements, what led to their ubiquitousness?

A bit of advertising history.

Table of Contents

Papyrus and bronze metal paintings were used in ancient times as a way to advertise services and products. As these types of literature pre-dates the printing era, the mass production of ad material was limited compared to the reach of modern advertisement. With the advent of print, radio, and television platforms, we have seen a veritable bombardment of adverts, this has only compounded with the rise of Internet advertising.

Print

The first newspaper advert in America was soliciting to sell a piece of real estate in 1704 on Oyster Bay Long Island. It was announced in the Boston Newsletter, a publication that has been around for more than 3 centuries.

Prior to the impact of print media by the internet, newspapers, and magazines were the undisputed platform for delivering advertisements to a majority of the population worldwide. This was a time when television and radio were in its Nascent stages. Although America and parts of Europe were adopting them as part of common household appliances, this was not the case across other parts of the world where print ruled.

Radio

With the introduction of radio that allowed broadcasting audio via airwaves during the early part of the 20th century, the technology owners would play phonographs over the radio and in return would mention the name of the companies that offered the records. This was a form of advertising, the earliest example of this is by a company name Wiley Allen that provided records to Charles Herrold who is credited with launching entertainment broadcasts in 1912.

The first paid commercial radio advertisement presented on airwaves was in 1922 for Hawthorne court apartments in Jackson Heights, it aired on WEAF in New York.

With time, the soft-spoken radio advertising has led its way to the obnoxiously loud and cacophonic ads of the modern era, like the one usually put forth by car dealers, or “Going out of Business, and everything must go” sales.

Television

With television budding and slowly making its way into American homes, advertising on it was a natural progression, more so, because it was an amalgamation of print and radio. Televisions ability to broadcast pictures and convey sounds enabled to exhibit certain clarity that might otherwise be non-existent in other forms.

The first television ad was aired during the time of world war 2 in 1941 which apparently cost around $9.00 to make and viewed by 4000 people in New York.

The advertisement was for Bulova watch, the ad starts with the map of America and a Bulova watch imposed on it, this is shown for the first five seconds – like print, and a voice-over says ‘America runs on Bulova time” – like on the radio. The entire commercial lasted 9 seconds.

Television commercials have come a long way from the first $9.00 Bulova advertisement. Today a 15-second time slot can fetch millions of dollars.

Networks demand top ad dollars during their coveted shows. One such yearly ritual of these programs is the NFL Superbowl which has come to demand not only money but also the quality of the commercials that are put forth, in terms of their message and extravaganza of the commercial itself. They tend to be talked about in offices, online, and the news about their effectiveness, style and impact.

Billboards

As George Costanza once said to Cosmo Kramers question of “What reason do you have to get up in the morning”? to which he replied, “Id like to get the Daily News”.

If you are like George Costanza and like to get the daily news, you inadvertently skim over some ads in the morning newspaper. (this is a dying habit for many as newspapers have lost their glory to the internet ) Then you grab your morning cup of joe, jump into your car and turn the Radio to get a daily dose of audio sales pitch. The Advertising industry realized your eyes could be borrowed en-route your destination and hence began the everpresent Billboard along the highways.

The Billboard itself has taken up a few avatars following its birth. In its earliest form, it appeared as the handbill with the invention of type printing by Johannes Gutenberg, when adverts were printed and hand-delivered, hence the name Handbill. The handbill morphed into a Billboard.

In the early part of the 20th century, the Automobile revolution led to increasing and frequent travel. Billboards rose to prominence, as lodges and Motels made use of them to attract travelers and inform them of their presence ahead. This is all too common in current times, although now the products or services vying for our attention in addition to motels are fast foods restaurants, car dealerships, hair replacement doctors, strip clubs, mortgage lenders, banks, movies, politicians, attorneys, doctors, tourist traps ( ‘South of the Border’ anyone? ) etc.

Prior to the rise of Digital billboard, print ads were hand painted by artists and had a unique flair, and the term Billboard Artist had a whole different meaning. Artists painted them based on predesigned pattern drawings to keep it consistent among multiple boards, regardless, no two boards would be a replica of each other. As technology progressed, hand-painted billboards gave way to the digital poster.

Print billboards were quick, had a consistent look and could be produced in large quantities, this gave the path for Billboards to sprout like weeds on the American landscape.

Prints have once again paved the way to digital billboards which have the ability to change the advertisements shown, now when you are cruising along the highway at high speed instead of grasping on a single ad, you are shown multiple in a span of few seconds. Digital billboards are like TV ads with moving images and eye-catching lights, none so more prevalent at iconic time square, the electronic billboard Mecca.

According to the Wall St. Journal, the cost to rent a time square billboard for a year would set you back $1.1 to $4 million dollars. For companies that would be money well spent as time square welcomes approximately 50 million visitors

Internet Advertising

Banner Ads

With the pervasiveness of the internet, companies and individuals have obviously decided to monetize online real estate. In terms of net activity, the time spent is high when compared to television. Globally Japan leads way in the number of users accessing the internet on a daily basis which stands at a whopping 91%.

Below are the top 10 countries whose percentage of residents use the internet on a daily basis.

Banner ads will jog our memories to the infant stage of Internet advertising, the unpleasant attention-grabbing 476 x 56 sized texts and images we are inundated with were first introduced in 1994-1995, one of the first banner ads had a click thru rate (C.T.R) of 44%, as with any new medium the initial response is one of curiosity, today a similar advert would clock in at a C.T.R of less than 1%.

A multitude of changes have taken effect since the early days of internet advertisement, analytics were ballpark figures based on a users IP address, there was a lack of A/B testing, and analytics were non-existent. Although banner ads are still used by advertisers they tend to be offputting.

POP-UP Ads

Banner ads’ ugly, loathed and detested cousin, the POPUP advertisement. They were first introduced in the late ’90s by a company that was providing free web hosting for users’ web pages. As with any free service provided online, there comes a time for a business to bring in revenue to pay for the costs associated. At this juncture, there are two options – request donations, like Wikipedia or in recent times ask users for Donations via sites like Patreon or Kickstarter.

At the time these options were unavailable, hence the business model turned to serve ads on the hosted pages, but the page’s content could be questionable. The contents of a particular page may not be in line with the advertiser’s target audience, if the page was to be about sexual interests or about drugs, it would be unfavorable for an advertiser that is promoting clothes, cars, or education. The popup ad was introduced as a way to not associate an advertiser with a particular page hosted.

Search

Before the rise of social media juggernauts like Facebook, Instagram and snap chat the undisputed king of online advertising was search. Amongst search engines, googles dominance is unmatched, with a market share of 63.1, 11.6% by Yahoo and Microsoft had 24.3%. When searching, a users intent is quite apparent, this gives an unprecedented view into their objectives which are targeted by Advertising, this form has not only enabled search engines to profit immensely but has lifted business revenue.

In the last few years, search-related advertising is being fragmented into desktop vs mobile. With the exponential rise of smartphones, now advertisers have to split budgets based on not only their search word and location but also the device they are using.

Advertising R.O.I

The U.S leads the world in advertising spend, with an estimate nearing $200 billion in 2016. The second closest is China with half the amount. These numbers are projected to grow in the coming years.

Historically Television took the crown for the most advertised medium, which is losing ground to digital, of the projected $207 billion advertising dollars for the year 2020, 82 billion will be spent on television. On the whole, all traditional media is losing ground to new digital trends.

R.O.I for Newspaper Advertising

To say the internet and digital media had a downward effect on traditional print media is an understatement. There was a time when classifieds section of local newspapers were the go-to source for everything from job hunting to yard sale announcements. This demand was high during the weekend issues.

For newspapers, Classifieds were their cash-cow. Approximately 40% of revenue was generated by the classifieds section. Regardless of one’s interest in current news, sports, or the stock market, a newspaper was purchased for the classifieds section if you had to engage in job hunting, sell or buy a car, etc.

Before the rise of online classified sites like Craigslist, the norm was to go through the classifieds section of the local papers highlight the ones that interest you and make time-consuming calls to engage in negotiation of required purchases.

The estimated decline in revenue for newspapers was approximately 20%, which translated to about U.S $5 billion in the early 2000s.

A Nielsen study found that the R.O.I on every $100 spent on newspapers advertisement had a return of $109. Conversely the R.O.I on the same amount spent online was $218.

This is a clear indication of how the internet is eating newspapers proverbial lunch.

R.O.I for Radio Advertising

Technology has had changes to the most common and widely used mass media, in the form of Satellite and Internet Radio. Some of the advertising spend has transferred to these newer areas.

In order to bring back faith and to prove that radio is not dead but the return on investment in traditional radio advertising is substantial, a large radio network has been guaranteeing ROI on their radio network advertising.

In 2017 Westwood One, one of the largest radio network operators in the U.S started to guarantee ROI with undeniable proof that the ad campaigns will and have worked else they were willing to run more ads without having to spend more money on part of the advertiser.

They partnered with Nielsen marketing that analyzed data from purchases made within households and connected them with sales data, this was in-turn examined with Nielsen radio ratings to try and match how advertisements in a particular geographical area made an impact to selective campaigns.

This study of matching advertising with sales data concluded that every $1 spent on radio ads yielded sales worth of $12.

R.O.I for Television advertising

Television has the most reach globally amongst all traditional media. With millennials opting to be “Cord Cutters” there is a false sense that watching T.V is on the decline. Research by Thinkbox shows the deep reach television has, with approximately 70% of a countries population is reached weekly by T.V. Nearly everyone has an encounter with T.V on a monthly basis. With this kind of societal penetration and the average time spent watching T.V compared to other forms, gives television the clout and command to demand higher advertising prices.

While the Internet has brought mass changes to how consumers and advertisers operate, there is one area that it has lacked in terms of appeal, which is the Trust factor. Studies have shown T.V advertising to be deemed as ‘Trustworthy’ compared to Online Ads.

Although sometimes, advertisers walk a fine line in showing what a product does or not, the general consensus is T.V ads are more believable than the internet, because of the prevalence of internet scams.

Digital ROI

Google

There are many metrics that can be extrapolated from Google Adwords’ dashboard, which is their advertising platform. In order to calculate ROI, the following formula is used.

R.O.I = ( Total Revenue – your cost of the goods sold / cost of goods sold ). There is a science to how one can advertise using Adsense. It is not as easy as buying ads and watch sales go up. There is a lot of know-how that will yield a good ROI, such as targeting the correct keywords related to your business or product, your competition to those keywords and geographical location of the target.

For some companies revenue is not the only deciding factor. It could be the number of clicks, or users that signed up for a service or newsletter. Adsense has been a tremendous money maker and catapulted Google as one of the Giants of online advertising. The numbers below clearly prove it.

Ad Agencies

There is another player other than the media owner and the product promoter in the world of advertising that has been pivotal and continues to do so in the lifecycle of advertising,- its the Ad Agency.

J.Walter Thomson company is considered to be the first ad agency that offered wide array of services which included copywriting, visual artists, market researchers. You can thank them for creating the Grilled Cheese sandwich for their client Kraft and coining the phrase ‘A Diamond is forever’ for the diamond merchant De Beers.

Ad Agencies do more than just help their clients creatively, there is a liaisoning aspect with media owners to accommodate their campaigns and help facilitate the arduous process of purchasing advertisement slots, setting up contracts, negotiating terms of payments. Agencies have relationships with media owners and purchase time slots or space on behalf of advertisers.

As New York turned into the financial and corporate capital, advertising agencies to further their services and grow, formed and set up shop on Madison Avenue. This began in the 1920s, but the 1960s was the heyday of Madison Avenue and ‘Made Men’. It was the term used for the spiffy looking men who ran and worked in these agencies that resided on Madison Avenue, not for the exhibition of ‘madness’. Ironically the term was created, self-promoted and popularised by the advertising industry.

The exponential rise of new age advertising with the likes for Google and Facebook has steered the process in a new direction for digital advertising. Now small businesses and individuals with considerably smaller budgets who lack a media team can forgo the big ad agency hurdle with the ability to set up and run campaigns based on variables of their choice. These are mainly targeted based on region and keyword.

Who is spending on advertising the most?

Following are the largest corporate spenders in American Media.

Rank	Marketer	Total U.S ad spend in Millions
1	Comcast	5,745
2	Proctor and Gamble	4,387
3	AT&T	3,520
4	Amazon	3,379
5	General Motors	3,244
6	Verizon	2,643
7	Ford	2,454
8	Charter Communications	2,420
9	Google	2,413
10	Samsung	2,405

What media sources are the advertising dollars going to globally?

Globally the lions share of advertising money is split between television and digital, with digital inching a little further. Newspapers are a distant second, with radio and magazine taking in 6.1 / 5.1 percentage respectively. A modicum of it taken in by cinema.

The report on the U.S front is a little different. Digital advertising spend has surpassed television advertising. It was projected to be 107.3 billion in 2018. The actual figures came in higher, with an estimated spend of $111.14 billion. The higher results are because of an increase in search-related advertising.

Google is the primary factor for this jump, which reported a rise in search ad revenue in 2018 at 34.42 billion, an increase of 19.4% from the previous year.

The United States leads in advertising spending, with China and U.K following. Top three world markets by advertising dollars spent on digital media.

In conclusion, there is no end for advertisers to slow down or reduce the number of ads to expose us to. As new mediums are introduced, advertisers are ready to take them over. Two such fledgling platforms are the home speaker and virtual reality mediums. With V.R advertisers will have the opportunity to be “In our Face”.

Sources and other related articles.

https://www.emarketer.com/content/us-ad-spending-2018