The Postindustrial Age
by
Charles Lamson
Beginning around 1980, the postindustrial age has been a period of cataclysmic change. For the first time, people became truly aware of the sensitive environment in which we live and became alarmed by our dependence on vital natural resources. During the acute energy shortages of the 1970s and the 1980s, a new marketing term, demarketing, appeared. Producers of energy and energy-consuming goods started using advertising to slow the demand for their products. Ads asked people to refrain from operating washers and dryers during the day when the demand for electricity peaked. In time, demarketing became a more aggressive strategic tool for advertisers to use against competitors, political opponents and social problems. The California Department of Health Services, for example, is one of many organizations today that actively seek to demarket the use of tobacco.
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Then, following a period of unprecedented boom in the West and bust in the East, the Berlin Wall and the Iron Curtain came crumbling down. This finally ended the cold war and with it the need for a defense driven economy. Ogling the huge, new, untapped markets in the former Warsaw Pact states, Western financiers and marketers rubbed their hands in glee. To expand their power globally, big multinational companies and their advertising agencies went on a binge, buying other big companies and creating a new word in the financial lexicon: megamerger.
By now, European and Asian advertising had caught up with the United States. TV was suddenly the hot medium, and agencies focused on growth, acquisitions and superior creative executions. For several years. Young & Rubicam in New York and Dentsu in Japan alternated as the largest advertising agency in the world. Then two brothers in London, Charles and Maurice Saatchi started acquiring agencies globally. In rapid succession, a number of high-profile U.S. agencies disappeared under the Saatchi & Saatchi umbrella---big companies such as Ted Bates Worldwide and Dancer, Fitzagerald, Sample. Saatchi & Saatchi was suddenly the largest agency in the world. Then followed more buyouts as the big agencies from Europe, the United States, and Japan emulated the the merger mania of their huge multinational clients. Names of agency founders disappeared from the doors, replaced by initials and acronyms: WPP Group, RSCG, TBWA, FCA, DDB Needham, and FCB, to mention just a few.
The European agencies fueled their growth by establishing huge bulk-media-buying conglomerates, although their now-sophisticated clients stopped looking to the agencies for research and marketing advice. Rather, they expected extraordinary creative executions to give their brands an edge, and their agencies delivered. Awards at the Cannes International Advertising Festival disclosed the blossoming of creative advertising from Spain and confirmed the creative leadership of the British who were only slightly ahead of the French.
Unfortunately, the euphoria of this period was short-lived. Sparked by unprecedented layoffs in the defense industries, the United States, as well as much of the world fell into an economic recession. While it was technically short-lived, some regions of the country felt the effects of it from the late 1980s well into the mid-1990s. The mergers temporarily stopped, the business world sucked in its collective belt, and management turned to new theories of total quality management (TQM), reengineering, and downsizing---theories aimed at cutting costs and increasing efficiency, all in the name of better customer service. But to many employees of the period, they were simply euphemisms for "you're fired." And all too often the struggle to maintain profits resulted in reduced customer service.
Two related economic factors characterized the marketing world of this period: (1) the aging of traditional products, with a corresponding growth in competition, and (2) the growing affluence and sophistication of the consuming public, led by the huge baby boomer generation.
The most important factor was competition, intensified by lower trade barriers and growing international trade. As high profits lured imitators into the market place, each offering the most attractive product features at a lower cost, consumers became the beneficiaries of more choices, higher quality, and lower prices. The priests of positioning, Al Ries and Jack Trout, foresaw this competitive struggle in the 1980s. They published Marketing Warfare, which portrayed marketing as a war that businesses must be prepared to wage. Ries and Trout outlined four strategic positions in the marketplace: defensive, offensive, flanking, and guerilla. Companies had to operate from one of these strategic positions, they said, based on their relative strengths and weaknesses.
On the demand side, newly affluent consumers concerned themselves more with the quality of their lives. With their basic commodity needs already met, the baby boomers were now interested in saving time and money to spend on more leisure-time activities or on products, services, and social causes that represented the kind of people they aspired to be.
By the mid-1980s, an avalanche of ads---especially in the toiletry and cosmetics industries was aimed at the "me" generation ("L'Oreal. Because I'm worth it."). At the same time, the nation's largest industrial concerns spent millions of dollars on corporate advertising to extol their social consciousness and good citizenship for cleaning up after themselves and protecting the environment.
As the U.S. economy slowed, many companies were chasing too few consumer dollars. Clients trimmed their ad budgets, and many turned to more cost-effective sales promotion alternatives, such as coupons, direct mail, and direct marketing, to build sales volume. By 1990 advertising had lost 25 percent of its share of the marketing budget to other forms of marketing communications.
As the 1990s unfolded, this recession deepened. The traditional advertising industry found itself threatened on all sides and suffering from overpopulation. Clients demanded better results from their promotional dollars; small, imaginative, upstart agencies competed for (and won) some big accounts that had never been available to them; TV viewers appeared immune to conventional commercials; and a plethora of new media options based on new technologies promised to reinvent the very process of advertising. In three short years, the advertising agency business lost over 13,500 jobs. Major clients such as Coca-Cola defected from Madison Avenue, giving various portions of their business to specialists in small, regional creative shops and media-buying services. But the setback went far beyond the agency business. Throughout the media world, newspapers, magazines, and TV networks all lost advertising dollars. About 40 magazines went out of business during the two-year slump.
By the mid-1990s, U.S. marketers had begun shifting dollars back from sales promotion to advertising to rebuild value in their brands. In 1994, ad budgets surged ahead by 8.1 percent to $150 billion nationally. And throughout the rest of the 1990s, ad spending increased about 7 percent every year until the year 2000, when U.S. advertisers spent $247.5 billion, a whopping 11.3 percent increase over the previous year.
But then the bubble burst. In 2001, the combination of a mild recession, the collapse of the stock market, and the bust of the dot-coms all contributed to a record decline in advertising activity. On September 11 of that year, terrorists attacked the United States and suddenly all marketing and advertising seemed to stop---not just in the United States but also around the world. The end result: 2001 was the worst year in recent times for the advertising industry. Spending in the United States declined 6.5 percent to $231 billion, and overseas spending dropped 8.6 percent to $210 billion.
A year later, though, the economy seemed to be turning around and marketers were again starting to spend money on advertising. By 2005, U.S. advertising expenditures had reached $264 billion, more than completely recovering from the 2001 decline. But hardly anyone thought the problems were over. Technology, evolving lifestyles, new fears over security, and the rising cost of reaching consumers had already changed the advertising business forever. With the explosion of the Internet, we had entered a new electronic frontier---what Tom Cuniff, VP/Creative director at Lord, Deatsu & Partners, called "the second creative revolution."
*SOURCE: CONTEMPORARY ADVERTISING, 25TH ANNIVERSARY ED., WILLIAM F. ARENS, MICHAEL F. WEIGOLD, CHRISTIAN ARENS, PGS. 45-48*
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