In their new book Phishing for Phools, the Nobel laureates George Akerlof and Robert Shiller survey the many ways in which marketers induce the consumers of everything from medicines to cinnamon buns to part with their dollars. Akerlof and Shiller assert that marketers appeal to our weaknesses and tendency for self-indulgence – what they term "the monkey on the shoulder". The stories of three giants of advertising showcase these devices – some of which the modern reader will surely recognise.
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Albert Lasker: Lasker's father, Morris, was a nineteenth-century German Jewish immigrant; he started out as an itinerant peddler, advanced into merchandising, and then made a fortune in wholesale groceries, flour mills, and real estate. Albert was born on May 1, 1880.
[Lasker] barely graduated from high school. Morris, luckily, figured out what to do with a boy like that. He made use of some connections in Chicago, and shipped young Albert off, at 18, to Chicago: to the Lord and Thomas advertising agency.
One of Lasker’s early campaigns shows us advertising in its infancy. The Wilson Ear Drum Company was in trouble. A glance at its advertisement indicates why that was the case. On the side is a picture of an ear (and also the device, which fits into the ear).
The ad is headlined: “DEAFNESS AND HEAD NOISES RELIEVED BY USING WILSON’S COMMON SENSE EAR DRUMS,” followed, in very light print, by: “New scientific invention, entirely different in construction from all other devices.” Lasker’s revision was bolder: “DEAFNESS CURED. Louisville Man Originates a Simple Little Device That Instantly Restores the Hearing – Fits Perfectly, Comfortably, and Does Not Show. 190-Page Free Book Tells All About It.” The copy that follows is patterned after a newspaper article: “Since the discovery of a Louisville man,” it says, “it is no longer necessary for any deaf person to carry a trumpet, a tube, or any such old-fashioned device, for it is now possible for anyone to hear perfectly by a simple invention that fits in the ear and cannot be detected. The honour belongs to Mr. George H. Wilson, of Louisville, who was himself deaf, and now hears as well as anyone.” The improved headline and copy were accompanied by a drawing of a man cupping his ear, with the expression of “the deafest man you ever saw”. The languishing Wilson Ear Drum Company was revived. Lasker’s career was on its way. He was writing advertising in a new form, copied from the format of news stories.
It addressed people’s natural scepticism regarding advertisements by showing the reason why they should be interested in the product.
It is called “reason why” advertising. This kind of advertising may sound as if it ought to be a good thing: telling people the reason why they ought to benefit from the product. But, of course, such “reason why” advertising may not be appealing to their real intellect, but rather to those monkeys on their shoulders: as the case of Wilson Ear Drums illustrates especially well. In 1913, the Journal of the American Medical Association pronounced that “as a cure for deafness [a pair of Wilson Ear Drums was] not worth 5 cents.”
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Claude Hopkins: Claude Hopkins, the second of our three "greats," considerably expanded the scope of "advertising" into modern-day marketing. His father, a newspaper editor, had died when Claude was 10, in 1876. Having worked his way through school, he got a start to his career as a bookkeeper at Bissell Carpet Sweeping Company.
When a famous Philadelphia copywriter produced nothing better than “A carpet sweeper, if you get the right one – you might as well go without matches,” Hopkins’s substitute ad was adopted instead. He next convinced Melville Bissell, his boss, to promote carpet sweepers as Christmas presents. Dealers were offered “Queen-of-Christmas-Presents” displays for free. Hopkins also sent 5,000 letters offering carpet sweepers as Christmas presents; he got 1,000 orders in response. And then he convinced Bissell to produce carpet sweepers of twelve different types of rich wood: from light maple to dark walnut. Two hundred and fifty thousand of them sold out in three weeks.
Such talent was too much for Bissell and Grand Rapids, Michigan, and, before long, Hopkins was off to the big city: to Chicago, to work for Swift and Company (the meatpackers). Although Louis Swift resisted spending his money on advertising, Hopkins managed one notable success. Cotosuet was a form of lard: neither better, nor worse, than its competitor, Cottolene. But Hopkins made it different.
In the food department of Rothschild’s Department Store he assembled the world’s largest cake, with Cotosuet. Purchasers of a pail of Cotosuet would be eligible for prizes; they also received a sample of the historic cake. More than 105,000 people traipsed up four flights of stairs to look at it. The promotion went national; and Cotosuet sales soared.
Going from job to job, with considerable success, in 1907 Hopkins was discovered, and hired by Lasker, who in a few short years had become the young star of Lord and Thomas.
Although Hopkins was already well-off, Lasker played to his weakness. Hopkins’s wife wanted an automobile, but he felt that it was too extravagant. Lasker offered to buy him the automobile if Hopkins would begin working for him. Perhaps Hopkins appreciated the automobile ploy as straight out of his own playbook.
Soon thereafter he joined full-time.
Together, Lasker and Hopkins took on campaigns. The BJ Johnson Soap Company came to Lord and Thomas for help. One of its soaps, at the time with lagging sales, was a combination of palm oil and olive oil: Palmolive. Lasker and Hopkins decided that they could do something with that; they invented the “beauty soap,” advertising Palmolive on the appealing, but also rather dubious, proposition that just the use of this soap would make women much more beautiful.
They began their campaign, but on a trial scale first. In Benton Harbor, Michigan, they distributed coupons exchangeable for a free bar of the soap. The retailers in the area were notified in advance of the offering. That meant that in short order customers would be asking for Palmolive, to redeem the coupons. The store was also being given ten cents for each coupon redeemed, which was more than its cost for the soap. Almost overnight, nearly every store in the area was stocked with Palmolive.
But Palmolive also got another, subtler dividend from the coupons.
By affixing coupons to their advertisements, Lasker and Hopkins could tell which ads worked; which ones didn’t. Just count the coupons that were returned.
This small test may have been ostensibly about the ads for Palmolive in Benton Harbor; but for the field of advertising as a whole this empirical method of Hopkins and Lasker was far more consequential. It demonstrated how to conduct a small-scale experiment (on the effectiveness of advertising), whose results could be extrapolated nationally.
Let’s consider also Lasker’s Hopkins-influenced work for oranges, which involved further innovation into branding and marketing.
Lord and Thomas created the “Sunkist” orange, a trademark contraction of “Sun Kissed.” But this branding was just the beginning of marketing campaigns that included items such as bannered railway cars; Orange Week in Iowa (to parallel a nonexistent Orange Week in California); and lectures on the health benefits of oranges. Before the 1910s orange juice was a rarity. Oranges were commonly cut in half and eaten with a small fruit spoon. Orange juice became a staple in the American diet when Lord and Thomas and the California Fruit Growers Exchange developed, and distributed, electric and handglass juicers; just send 16 cents in stamps to get a glass one, direct from Sunkist. In another marketing campaign, 12 Sunkist wrappers and 12 cents for the postage could be exchanged for one of those fruit spoons; this campaign proved so popular that it was expanded, so that, in due course, the wrappers could be sent in for each of the 14 items in a Rogers silver-plated tableware set.
We chose this example of oranges purposely because of its dividend in showing that even regarding the purchase of a few oranges, consumers will be influenced by the story that they are “Sun Kissed,” as they also partake in the narratives created more generally by marketing campaigns (save the wrappers, get the spoon; send the stamps, get the juicer).
Standard economics takes the textbook description of the purchase of oranges and apples as exemplary of the nature of all economic decision makwing. But that description misses completely how even the purchase of a lowly orange depends on the narratives in our minds. Then, it further ignores how others influence those narratives, often for their own purposes.
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David Ogilvy: A bit of biography, as with Lasker and Hopkins, puts David Ogilvy in context. He went to a rigorous Scottish preparatory school, Fettes College; but he subsequently did so little work in his first year at college, at Oxford, that he was "sent down". After a year, in 1931, as a pastry sous-chef at the Hotel Majestic in Paris, he returned to Britain to sell high-end Aga cookers. The pamphlet he wrote about his sales techniques – still considered a marketing classic – won him a place at Mather and Crowther (advertisers) in London. But after only a few years he went off to America, to work on polling for George Gallup. After the war, in 1948, on a shoestring, he started his own agency, Ogilvy and Mather. At the time he dreamed of five clients: General Foods, Bristol-Myers, Campbell's Soup, Lever Brothers, and Shell. In due course he would bag them all.
Two of his advertisements illustrate his trademark style of atmosphere and suggestion. His Rolls-Royce ad shows an elegant young mother in the driver’s seat of a Silver Cloud. She is slightly turned toward two equally elegant children, heading for the car, just outside the doorway of a fashionable grocery store. The extensive copy is headlined: “At 60 miles an hour the loudest noise in this new Rolls-Royce comes from the electric clock.”
Ogilvy is best known for “the man in the Hathaway shirt” campaign from the 1950s to 1970s. A large, colour picture shows a debonair man, in different settings, always with an eye patch. Every week, for years, [an ad in] The New Yorker would feature the man with the eye patch in a different guise: conducting the Philharmonic, painting, playing the oboe, and so on. Subscribers developed a habit of turning to the Hathaway ad; enticed by the saga of eye-patch man, they were curious about what he had been up to in the last week.
It is useful to note what Ogilvy himself said about the eye-patch ad. He did not know if it would work. But when he tried it, the sale of Hathaway shirts soared. He had the same empirical bent as Hopkins: he tried things to see what worked.
From Phishing for Phools: The Economics of Manipulation and Deception by George A Akerlof & Robert J Shiller © Princeton University Press 2015.
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