Trends in the Second Half of the Twentieth Century

motivation research the systematic investigation of the reasons people purchase products

subliminal persuasion persuasion that works by influencing the unconscious mind

global presence having strategic offices and representatives around the world

agency holding company a firm that owns full-service advertising agencies, specialty agencies, direct-marketing firms, research companies, and even public relations agencies

client conflicts serving companies that compete with one another

The growth of television brought millions of dollars into the advertising industry for the production of audiovisual commercials, as well as for the purchase of the time to show them. An entire research industry grew up around the agencies’ need to show their clients that the work they were doing was reaching large audiences and getting people to buy the products.

Proving that an advertisement causes people to make a particular purchase has never been easy, and it is sometimes impossible. Nevertheless, ad practitioners increasingly turned to a wide variety of consultants who applied motivation research, or used social science techniques, to learn what motivates Americans to buy certain goods. Some also studied whether subliminal persuasion, or quickly flashing messages, such as “buy popcorn,” that reach the mind at a level below the conscious mind, in fact worked. However, whether or not these consultants’ ideas about motivation research and subliminal persuasion actually did work, in the 1950s they became the subject of a number of books—notably Vance Packard’s bestselling The Hidden Persuaders—that aroused public anger against advertising for messing with people's heads without their knowledge.

Still, the U.S. ad industry grew strongly, and two trends are most notable. The first was a shift toward a global presence. As American businesses expanded their operations around the world after World War II, they wanted their ad agencies to work with them on creating ads and buying media abroad. Until that time, only a few of the very biggest agencies, such as J. Walter Thompson, had had a global presence, but with the increased demand, many of the large agencies set up offices in several countries. By the 1990s, owning an “international network" was crucial to being a major player in the ad industry.

The second notable trend was the formation of advertising conglomerates— known as agency holding companies. These are umbrella firms that own two or more ad agencies, plus research firms, public relations consultancies, or other organizations that contribute to the business of selling products, services, or ideas. Such holding companies offer clients a range of services beyond advertising. They own more than one agency under their conglomerate umbrella to be able to serve firms that compete with one another. Traditionally, companies would not think of giving business to an agency that has such client conflicts for fear that confidential infor­mation might be shared among employees and get to competitors. If a totally different agency network is involved, though, most advertisers don’t mind—even if both agencies are controlled by one firm. They accept the claim that those parts of the two businesses are kept quite separate.

Interpublic Group of Companies—recognized as the first agency holding company—was started in the late 1950s by Marion Harper. At the time, many people laughed at him for buying firms but not merging them into his existing firm. By the late 1980s, however, the agency conglomerate model had become the norm. The dominant holding companies are WPP (based in London), Omnicom (based in New York), Interpublic (also in New York), Dentsu (Tokyo), and Publicis Groupe (Paris). As Table 15.1 shows, the top eight holding companies (which are by far the biggest) have substantial business outside the United States. In fact, in 2006 only one, Interpublic, made more than half of its revenue in the United States.

Beginning in the 1980s, the multiplication of media channels as a result of cable television, satellite TV, video games, and (beginning the mid-1990s) the World Wide Web had far-reaching effects on the advertising industry. As we have discussed throughout this book, the enormous number of media outlets that were present in many homes (along with the presence of multiple TV sets) led audiences to scatter across them. That made it more challenging than ever for advertisers to reach the people they wanted as customers. The advertisers turned to their advertising agencies for help.

How did the ad agencies respond? What, in general, do ad agencies do? To answer, let’s start with a broad overview of the industry and then turn to our categories of production, distribution, and exhibition.

Table 15.1 The “Big Eight” Marketing Agency Holding Companies, 2008
Holding Company	Headquarters	Worldwide Revenues	U.S. Revenue	U.S. Percentage of Total Revenue
WPP Group	London	$13.6 billion	$4.7 billion	35
Omnicom Group	New York	$13.36 billion	$6.9 billion	52
Interpublic Group	New York	$6.92 billion	$3.79 billion	55
Publicis Group	Paris	$6.90 billion	$2.95 billion	43
Dentsu	Tokyo	$3.29 billion	$110.9 million	3
Aegis Group	London	$2.49 billion	$503.6 million	20
Havas	Suresnes, France	$2.31 billion	$701.8 million	31
Hakuhodo DY Holdings	Tokyo	$1.56 billion	0	0
Source: Advertising Age. http://adage.com/agencyfai		milytrees09 (accessed March 5, 2010).

Table 15.2 Advertising Spending By Media Industry, 2008 vs. 2003*

Industry	US$ Billions
	2008	2003
Broadcast television	47.8	42.3
Subscription television	28.9	16.7
Newspapers	43.6	51.3
Pure-play internet**	21.8	6.6
Broadcast and satellite radio	18.0	19.6
Yellow Pages	15.4	14.8
Consumer magazines	12.9	11.5 .
Business-to-business magazines	11:1—;
Pure-play mobile	1.2	°*1
Out-of-home***	8.1	cn k) (
Other entertainment-based advertising****	0.96	0.20
Total	209.76
•Numbers for traditional media industries include online advertising activities within these industries. **lndudes online revenues for firms (e.g. Salon.com) with no traditional media counterpart. ***lndudes billboards, kiosks, mall boards, transit ads, and other outdoor vehicles. ****lndudes cinema advertising, in-game video game advertising, and advertising on film, music, video games, and consumer book websites. Does not include advergaming or product placement in video games. These are considered marketing services, not advertising.