~,..,:.~How ads sell complete systems• ~ -- Q.••.-
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B,:\-S E.+~J .' BUt\':\-J.O~ Can sales costs be reduced? -.,. r\:GC'(>
1:6 rd £.'2'.1;<:" .- How to question consumers
33486873
,
DECEMBER,; 5,1958-\:'
THE ATTACK:~F A PRINTE~3 ,=.~ ~ PAGE ~~
Free TV will die,own commercialTelevision as an advertising me
fast fadeout. That's the opinion ofpoints to five strong omens as prprediction
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The 'lead article in the Decemberissue of Fortune which went on salelast week; features nine pages of crit-icism about television called, "TV:The light that failed." Here, in essence,is what it says.Present-day programing is so bad
that "the staples of TV today are pap."The situation is caused by basic .faultsin the economic structure of the tele-~ision industry. As a result, "the stateof 'free' TV is sure to bring the alterna-tive [Pay TV] into being, and soonerrather than later."The future of commercia·l television
as an advertising vehicle is doomed,as Fortune sees it, because of five con-trolling factors:~ Broadcasters are caught in a cost-price squeeze.~ TV's declining economy is now re-flected by a buyers' market in themedium.~ TV can grow no more because itsaudience is Dear the saturation point.~ The rate structure is threatened be-cause the audience is getting choosier.~ A growing number o.f sponsors ques-tion the value of TV advertising.
.=.= -71 -5 2.
~ '"\.·J-er?-~'of its
ortune~ '. .;
>::>.ctto44.
ag2z~::E. 1-
Fortune's publisher, Ralph D. Paine, Jr..__The .cost-price .squeeze, that is.pinch-'ing broadcasters is unlike the financial:problems facing other industries; TV's'predicament is something special. TV'profits last year took a nose-dive forthe first 'time in history. The nation's500 biggest industrial corporationscame through 1957 with a slight in-
ease in profits. But while TV broad-asters enjoyed a 5.2 per cent increase
'enues, their cost of doing busi-ent up even faster. As' a re-
suic, me pre-tax profits of TV, stationsand networks went down 15:6 per cent.The networks were especially hard
hit. Their profits were only $71,000,000last year, a decline of $14,000,000.And 1958 is :<Iikely to be even worsebecause, in addition to the recession,the expansronof the American Broad-casting Co. has 'put a heavy strain onnetwork rate structures.Meanwhile, a' buyers' market has
now developed in television, dirnmingany hopes the industry may have hadabout' solving its icost-pricing squeezeby raising its rates. This year, primeevening ·time on both, NBC and CBSwent begging' well -intb October, farlater than ever beforev-A Significantnumber of shows hiia':'to be put onunsponsored, or with only a fraction oftheir expected number of. sponsors.Third, the television- "audience" is
almost at the saturation'[point. A full90 per cent of all Americans now haveaccess to television at horne. Expert,opinion within the medtunrholds thatthis percentage will not nse, much; thepeak will probably be reached in thenext 12 months. After that,' the audi-"eilce will increase in number only asthe population g.rows. ~Fourth, the audience is getting
(Continued on page 12)
Many advertisers, agencies support the Fortune articleG. A. Bradford, advertising consultant,
General Electric Co.: "I agree with theFortune article in that there has been adeterioration of programs 'on a generallevel. There are isolated instances of goodprograming; this past week-end (Novem-ber 29-30), for instance. TV is excellentfor some .purposes=some product lines goover better than others. We have a dif-ficult time measuring the TV sales effec-tiveness for major appliances. We havenor-cut back on our. programing but weare very much concerned with its cost.From an audience standpoint, I believethat in a year or two, in spite of its-initial failure, there will be a place forpay-TV."
H., C. Botsford, asst. director of adver-
10 SPECIAL REPORT
tising, General Motors Corp.: "There's no'way of proving the worth 'of n' adver-·tising-our sales could be the result of ad-vertising in any medium. In order to havea well-rounded advertising program, wecan't ignore TV. Xaturally, we're con-cerned with the mountinz cost c: T,-. ~-with all media." -
Richard Pinkham.charge of radioagreed with Fa·sponsors' and ag':graming has increas·networks has deer,agencies to pro;mental and diller1ham said. "The oe..-wrd::.the public. the FCC
So. He:llat the
n TY pro-that of theup to theg, experi-
on TV, Pink-are obliged tothemselves to
retain the vitalitv of the .rnedium.'P , •.. ' . , ~·I ·~\Cv
Pinkham disagreed, however; 'wiill For-tune's statement on the Orson \Velles"series." The reason this shotv wasjnotcontinued, Pinkham stated, w"a~ ~~atWelles never made more than "two fiJfns.After Fountain of Youth, ABC serif':W"1'lles'Jff to make another pilot. Abc;iti.t[jfiine
nths later, Welles returned with a p,i.1otwhich. Pinkham says, ABC has never per-mitted him to see.
George Abrams, vice-president and ad-vertising director of Revlon, Inc.: "TheFortune article contains a lot of ~i.Mt-gerations and half-truths. However," 1fully agree with one thing' in the articli:':"the mediocrity of program's. TJ:.:.e[e.is, .a
Continu.erl on page 12), '. (." ..
'" '~;~
----~- ::>~INTERS'INKBATTLEPAGE-------------~...-...;,
ertorrned -a disserviceerficial editorial- TvB
t by poin I Tvfi's president challenges Fortune's- aim that televisionis weakening. He cites a more at-active set of dollar figures, and sponsor confidence.er industry leaders support his defense
Pete- ion Bur-
-thefraternity should be-~ ere superficialityrticle." Cash gavethe nation's broad-
e at TvB have always respectede's objective analyses of otheries. but now that we have had
an opportunity to see Fortune's analy-sis of an - dnstrv ith which we havefirst-hand ' -or~g knowledge, we mustbegin to question the thoroughness ofthese other industry analvses.We cannot belie;e that the editors
\ of Fortune appreciate the disservice\ they have performed for their importantI readers by providing such a superficial,J biased editorial concerning a l*-billion-
TvB's Norman' Cash protests to Fortunedollar industry. Nor can we believe thatthe same Fortune editors would allowsuch immature, misleading writing tobe published concerning any' other in-dustry-including their Qwn. .It is both our duty and obligation to
report some .of the information we pre-viously provided Fortune but which
failed to appear in their article. Ac-cording to Fortune, "the networks wereparticularly hard hit ... profits droppedfrom " 5,000,000 to $71,OOO,OQO,"Fortune fails to mention the' invest-
ment that the networks made in newprograms, new facilities, electronic tapeand color. These can easily account formuch of the $14,000,000 profit declineand attest to their interest in betterservicing the advertiser and the public.Fortune compares television with the
"500 largest industrial corporations"with no effort whatsoever to comparetelevision with the performances ofsuch other means of mass communica-tion as magazines, newspapers or radio.Such a comparison, if restricted to theTime-Life-Fortune bloc, would haveshown a-decline of more than $17,000,-000 revenue in the first ten months of1958-with not published 'informationconcerning profit from this revenue.We doubt that Fortune considers
profits a measure of quality. Everymeasurement shows that 1958 will seenetwork television. enjoying a healthyincrease in business with an all-timerecord high in revenue. Already thefirst three quarters of 1958 show anincrease of 10 ..6 per cent in networkgross time sales,Fortune's second point, that "some
time-periods and programs were latein being fully sponsored this year,"completely overlooked and showed noappreciation of the third-quarter reces-
(Continued on page 13)
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.. Others defend the selling power of commercial televisionFGW :\Iotor Co, spokesman: "We con-
sider TY the best ad medium for automo-biles, Edsel has re-ente~ed TV as alter-il~te sponsor (with Mercury) of the EdSjjllivan'Sho",; Lincoln has re-entered as.spP[lS(ir of the CBS series, Leonard 'Bern-'stein' and, the New York Philharmonic,Many TV shows. are mediocre, but wehave no trouble in selecting programs toour liking."
Westinghouse Electric Corp. spokes-Ipan:'''We're spending more money in TVthan ever; our interest in TX is strongeri11llli ever.. A company as large as West-inghQuse"'"must I be big in TV. Wejhoroughly disagree W'ith Fortune in that'I'V'Ts nor-good for Dig-ticket.items. Even, ,~.1 -o-vjovectfrom Fortune's theory is
DECEMBER 5, '57· -
Our successful corporate-image campaignon TV. Pay TV 'will never come about inmy opinion."
Lever Bros. spokesman: "The fact thatwe're spending more money than ever inTV should speak for itself."
R. E. Krings, advertising director, An-heuser-Busch: "Our interest in TV is notwaning, although we do believe audiencesare becoming more selective, and thatsponsors therefore must be more selec-tive. vVe have been a spot advertiser inthe past, but will sponsor U.S, Marshallnext year, which illustrates our beliefthat we terns still have audience appeal."
John B. Simpson, v.p. & national direc-
tor of broadcasting, Foote, Cone & Beld-ing: "We find the Fortune article on TVto be quite contradictory within its con-tents. It strongly criticizes the mediocrityof TV programs while at the same timeit refers to 'fine westerns like Gunsmoke,a genuinely funny comedy like the PhilSilvers Show, or a well-done situationcomedy like Father Knows Best.' Theselection of these examples, oddly enough,is the selection of programs the publichas made, according to rating services,some of the most popular shows. All ofus would like to present only this typeof high-calibre program,"
Max Banzhauf, director of advertising,promotion and public relations, Armstrong
(Continued on page 13)
11
',,:1'r
1 A PRINTERS' INK BATTLE PAGE ,.
. as TV loses its capacity to excite. its audience will shrink
/
r
choosier; a growing number of view-ers refuses to watch shoddy programs.This will put an even greater strain onTV's economic system because risingprogram costs require bigger audiencesto justify the greater outlay.
An example in cosmeticsFinally, Fortune continues, there is
mounting evidence that television issomething less than all things to alladvertisers. The classic example oc-curred in 1955 when Phildp Morrisdropped I Love Lucy, then the topshow on the air, because it wasn't sell-ing cigarettes.The case of Hazel Bishop, the first
major cosmetic firm to go into networktelevision, shows how TV's law ofdiminishing returns c!'h operate-evenfor cosmetics, which usually do quitewell in the medium. Hazel Bishop'sTV budget in 1953 was $3,300,000and the firm enjoyed 'a profit of near-ly $2;000,000. But from 1955 through1957 Hazel Bishop's TV budgetsranged from $4,300,000 to $5;600,000and the company's annual lossesamounted to $1,000,000 or more.Even more disenchanting ds the view
of Albert Sindlinger of the researchfirm of Sindlinger & Co. He said thisOctober, "We have come to the con-clusion that television is, dependingupon the product advertised, an aw-fully powerful negative. It can be aFrankenstein with some products. It isnot good for automobiles and appli-ances; it is spectacularly good for suchitems as cosmetics, coffee and soap."Sindlinger cited his firm's experience
with the Edsel last yea-r. The first pic-tures of the new car were, given widecirculation in magazine ads in Septem-ber. Sindlinger surveyed public interestand advised Ford in October that there.
was a market fO!" 191.000 Edsels, Fordthen promoted the Edsel with a TVspecial. A week later- Sindlinger tookanother survey and found ::h.:-!t the p0-tential market had shrunk to SS.OOO.The five factors that jeopardize the
future of commercial television haveincreased the awesome pressures with-in the medium. Ratings become ofparamount importance because theysustain the thesis that, though n- isthe costliest of all media, it has a 10\\-
cost-per-thousand. Sponsors, accus-tomed to a rating of at least 23.0 for a$100,000 program, still insist on thesame results even though there are nowthree competitive networks instead oftwo. The mounting pressures on spon-sors and networks has weakened theirwill to experiment.Yet, Fortune predicts, as the medium
loses its capacity to excite, to create,and to lead, its audiences will inevitablyshrink. Then, more pressure to stick to"successful" formats and eschew theunknown may well follow. The result:The disastrous cycle ofeconomic pres-sure making programs shoddy, shoddyprograms reducing the television audi-enoe, smaller audiences increasing theeconomic pressure . . .The 'evolution of TV has been af-
fected by 'a score of happenings overthe past year or so: The exodus ofcreative talent, the con-sequent rise inrun-of-the-mill pifograming, the erosionof the network leadership of the east,and the 'Corning of age of the westernsource of supply,the packagers. Theprecipitating incident was the depar-ture of Sylvester (Pat) Weaver fromthe chairmanship of NBC in 1956.It was during his regime that NBC
was overtaken by OBS. With his de-parture, one man wasn't just loppedoff the payroll; an entire programing
philosophy was abandoned. PIa:was replaced by play it small anda strategy favored by RC-\David Sarnoff who once tolCrosby, "We're in the same posrtia plumber laying a pipe. We'I"~responsible for what goes througpipe."Left to himself, the average Sf:'.
wants something that has a1worked rather than somethinzmight work He sets himself -censor, too. Dick Powell said re"The Alma-Goodyear theater is -show I've ever had where thehad complete control and, be~I'll never let that happenhad to submit stories toand they were turned downdown and turned down. lthe opposite. All their 5,,-,"finished without any trouble
Good talent displaced by haFor such reasons there has
sustained exodus of talent frThese defections 'cut two "-3.'1_TV's appetite for material is ~ever, more and more progbesupplied by hacks and secor;This fall the interplay b
economics and shoddy prognimmeasurably strengthenedemergence of ABC as athird network. An NBC execntirecently that the added comper;ABC "has only brought aboutstandards. The networks aretry anything new. They can't -:the business."The restraints imposed on
by its own commercial intune concludes, will simphthe raising of a new empirepeting one of Pay TV, and -ing of a new set of kings .
.._-------------------------------------------------------------------------------------------------------------------------------------------------------------
Advertising men agree television needs more courage.great lack of programs with striking origi-nal quality . . . no program that wouldcause a viewer to say: 'I must stay hometonight and watch . . : Not since the$64,000 Question (although quiz showshave reached the point of diminishing re-turns) has such a program existed. I be-lieve firmly in TV as a good advertisingmedium, and do not go along with rat-ings that take in merely viewership. TVcosts, with the three-network competi-tion, should not be further increased."
John P. Cunningham, chairman of theboard, Cunningham & Walsh: "Unhappilythe Fortune article is all black-all nega-tive. It is unfair to all the responsiblepeople who are laboring daily to raise thestandards of this vital medium.
12 SPECIAL REPORT
"There are areas, however, where theindustry might dig up a little more cour-age. Courage to divert the money, nowspent in bidding against each other forold talent, to the discovery and develop-ment of new talent."Courage to face the economic neces-
sity of re-runs, without apology but ratherwith enthusiastic promotion-particularlyof the many good shows I've missed."
Ernest _ Jones, president. Macvlanus,John & Adams: "The IT medium hasmany problems all the way from pro-graming to economics.. But it is a power-ful communication and can do some thingsbetter than any other medium. It all de-pends on how you use it."You have to isolate TV in terms of
its use, the same as newspapers and
.>
magazines. And you have to useyou do any Other medium-the ri •at the right time. When you docomes just as powerful as any odium, and when you don't, itjust as bad."I don't think you can look at
something that is all things to allat all times:'
P. Lorillard Co. spokesman: "1'baby industry with a tremendpetite. It cannot be expected toBen Bur's live every day. Xonit has to improve. This haspeated constantly. It has a stagg.pact and many of its areasnificent, Our sales from it? ~Ia _no less. A look at our IT eiiwill show our faith in the medium,
I
•..---------------::- PRINTERS'INKBATTLEPAGE---------------,
ls a brilliant distortion, out of focus
thatsubtract
ges" n _ -ay print. ean. Equally ovedoo red was thethat advertisers in ·ested 5.5 per
cent more dollars in network television. the third quarter this year than theyid in the third quarter last year, de-
spite business uncertainty and cutbacksother media.Fortune's third point, that "the tele-
audience is almost at the satura-.• " implies the advertiser
reach no more per- - anything is - 5e =her._-\.5
tember, 1 5::Ameri --
s:on sets and ~. approximately tezrom Fortune's ••near-saturation t: de I!E'Z-::'- -e. This - arare feeling for - stry has totout its cir - in the minormillions.
udience size is not staticIf the number of television homes
increases by only one per cent thisyear. it would be a bigger increase than
300,000 circulation level that For-e has attained after 30 years. And
if, as Fortune predicts, the TV audi-ence mereases only as the populationgrows, television mIl enjoy a gain ofnot 300,000 but almost 1,000,000 newviewers next year.Fortune's fourth point is that "the
audience is getting choosier." But For-tune presents no evidence in supportof this point. Research (Xielsen) showsthat viewing time went from four hoursfive minutes a day in 1955. to five hoursnine minutes a day throughout 1957.
Also censored from the Fortune articlewas the nine per cent increase in net-work audience in the first ten monthsof 1958 compared to the same periodin 1957.Fortune's fifth point cites Philip
Morris' dropping "I Love Lucy" be-cause "it's wasn't selling cigarettes."Fortune ignores Philip Morris' currentexpenditures of $6,346,317 (Jan.-Sept.'58) in television. Fortune also ignoresthe rapid re-sponsoring of "I LoveLucy" by other advertisers.Fortune cites the sales decline of
TV advertiser Hazel Bishop in 1955.But Fortune neglects to mention that1955 was the same year that Revlonstole much of the Bishop marketthrough sponsorship of "64,000 Ques-tion" -using the same medium.Elsewhere throughout the television
industry, other broadcasting spokesmenechoed similar sentiments ranging froman €I' to disappointment about the For-tune article. In Washington, presidentHarold E. Fellows of the NationalAssn. of Broadcasters told PRINTERS'Ixx:"Fortune builds a 'strong argument'
by reaching a conclusion first and thenworking back ever so carefully, pickingand choosing only bits and pieces thatfit. Fortune skims over the centralfacts: People spend more time withTV than any other single activity ex-cept working or sleeping; they are in-vesting in receivers at a rate of $1,250,-000 a year. Advertisers spent $1,300,-000 in TV last year and the mediumhas emerged from the recession withbillings higher than ever before."Other industry leaders branded as
"flagrant errors of fact" several sectionsof the magazine article. RCA chairmanDavid Sarnoff flatly denied the quotein which he purportedly once told TV
critic John Crosby that networks arein the same position as a plumberlaying a pipe; we're not responsible forwhat goes through the pipe." Sarnoffdispatched a letter of protest to HenryR. Luce, Fortune's editor-in-chief."On various occasions I have com-
pared the transmission of wireless com-munication to a system of pipes laid bya plumber," the electronics pioneer ad-mitted. But in a terse, 27-word para-graph, arnoff told Luce:"I categorically deny that I ever
made the quoted statement to JohnCrosby or to anyone else. It is in directconflict with my convictions and rec-ord."
Fortune wasn't out to 'axe' usABC president Oliver Treyz told
PRI!\"TERS'INK, "This Fortune piece is,for the most part, a brilliant distortion;most of the text is clearly out of focus.However, we disagree with some re-ports that suggest Fortune was out to'axe' the networks." 'JThe most comprehensive criticism
came from CBS. Although the networkcould not speak for the broadcast in-dustry as did the manifesto from TvBpresident Cash, the CBS appraisal wasa detailed, 2,000-word critique.In an interesting observation in its
closing paragraphs, the CBS commen-tary said, "Nor is Fortune handicappedby any need to state both sides of thisfiery hot [Pay TV] potato. It has con-veniently at hand Skiatron's 'initialpoll' of California television-set ownerswhich purported to show that the view-ers' only reaction about Pay TV wasthat 90 per cent wanted it as soon aspossible. There have been far morepolls with reverse findings ... Noneof these, curiously, finds space in For-tune's article."
... Other ad men tell why they're spending more in televisionCork .Co.: "We are in TV and have beenfor a long time. Weare not suffering fromany pangs of disenchantment. The con-stantly rising cost of TV makes us do alot of questioning and comparing mediavs media, but I would like to know, ifTV lost profits during 1957 and 1958,what., the drops were in the magazinemedium and among manufacturers andadvertisers themselves. Has Armstronglost faith in TV? No!"
Herminio Traviesas, vice-president inrge of TV, BBDO: "The article is
written from an extremist's viewpoint, tosay the least. TV has its problems justlike any other advertising media. Thoseof us working in TV are most aware ofsome of its shortcomings which weremagnified in Mr. Smith's article."
DECEMBER 5, 1958.:*
Arthur P. Hall, v.p., public relationsand advertising, Aluminum Co. of Ameri-ca: "We feel that TV is a good way toadvertise and have recently stepped upour programing. vVe also feel that spon-sors have every right to censor scripts andstories, as some infringe on companypolicy and many may be against companyprinciples. We read scripts too, and per-haps it is only fortunate that we havebeen getting the right ones." [Alcoa wasmentioned in the Fortune article alongwith the Goodyear Tire & Rubber Co. inthe sponsorship of The Alcoa-GoodyearTheatre. Goodyear was cited as beinghabitually intrusive in the programs itsponsors while Alcoa was said to be easyon censorship.]
K. C. Zonsius, director of advertising,
Goodyear Tire & Rubber Co.: "We see asynopsis of the stories we are to sponsorand I feel our acceptance-rejection rateis not too bad one way or the other. Idon't want to get into a controversy withthe young m n [Dick Powell], but I thinkhis statemen is an exaggeration." [For-tune used a "quote from film packagerDick Powell which stated that Goodyear,on The Alcoa-Goodyear Theatre, turnsdown script after script.]
John Camp, product advertising man-ager, cheese division, Kraft Foods Co.:"Kraft has not lost faith in the TVmedium, not by the amount of money weare spending in it. What better way toshow our product? We have always beenbig in ;rV and we have been having goodresults.
13
