Evolution of Advertising

Darwin famously declared that through natural selection, only the animals most suited for their environment would survive.  This belief in the evolution of plants and animals due to survival of the fittest is widely accepted today.  In the past 88 years the television has undergone significant evolution from simple black and white pictures, to the stunning HD and 3D televisions made today.  With the significant advancement of the television came the development of company advertisements broadcasted directly into people’s homes through the television.  Through similar methods of evolution as plants and animals, advertising has coevolved with the developments of the television in order to adapt to the various technologies that have entered every day household.  The transformation of the TV industry has been increasingly minimizing the role of advertising leading companies to develop new ways of broadcasting their products into people’s homes.

For the first half of my childhood, commercials were simply something that people deal with. Growing up, commercials were able to reach vast audiences, and people had little choice to avoid boring commercials.  You could either change the channel, or simply watch them.  Thus, until the beginning of the 21^st century, commercials went hand in hand with watching TV.  However, new inventions would allow people to skip commercials.

With the invention of DVR’s in 1999 the television world underwent a profound change.  No longer do people have to be in front of their TV at the same time every week to watch their favorite show.  Even more notable, people are now able to fast foreword through commercials.  When this happened many advertising agencies panicked thinking that commercials would become useless.  However, the DVR did not have as profound an impact on commercials as many thought (1).  Many companies decreased their ad spending in 2001 as a response to the DVR, but commercial spending has significantly increased to all time high levels since then (2).  Although commercials were able to make it through the rise of DVR’s without significant decline, a new age of technology has once again made companies wary to the effectiveness of commercial advertising.

The rise of Netflix, HBO and other TV outlets where people can watch a show without commercials has began to alter how we watch TV. Now, someone can sit in their dorm room and watch, for example, 5 seasons on Breaking Bad on Netflix.  This is 62 episodes, or roughly 46 hours and 30 minutes of television, without ever having to watch one commercial.  Because of this convenience, more and more people are turning to Netflix every day to watch their TV shows.  Instead of panicking, some companies have begun to figure out how they can evolve along with the change in how people watch TV shows.

Surprisingly, one of the advertising responses to the new commercial-less TV outlets has its origins with the beginning of television. In the early 1950’s the most prevalent form of advertising came in the form of companies “sponsoring entire programs that showcased their products” (3).  Companies such as General Electric paid money to have their products placed in television shows and used by people in the shows.  This was an initial way for TV shows to gain money before the idea of set commercial breaks was invented.  This product placement would remain in television but would become less impactful as more companies dedicated their advertising efforts towards commercials.   However, product placement has once again risen as a major form of advertising for companies.

Product placement has become a major form of advertising in today’s media outlets.  Product placement expenses for companies have grown from $190 million in 1974, to 3.458 billion in 2004 (5).  While there are no exact figures on the spending in 2013, the new Super Man movie, “Man of Steel” received $150 million for product placement alone (7).  And the best part of product placement—if done correctly—it seems natural in a TV or movie setting, yet also makes people desire the product.  For example, when its not mere coincidence that James Bond has frequently drives Ashton Martin cars.  Ashton Martin reportedly paid $35 million to have Bond drive their car in the 2002, “Die Another Day” (6).  This paying for product placement has great benefits for TV and movie producers because it allows them to cover significant portions of their budget, while companies also benefit from having their products displayed.  This mutually beneficial relationship has been in movies for a long time, and will only continue to present itself in TV shows.

My prediction is that product placement is the future of advertising in the television market as more and more people turn to watching TV on Netflix and TV channels without commercials. Although product placement is not as direct as commercials, it still places products directly into the homes of viewers.  Furthermore, people cant just skip over product placement, rather it is integrated seamlessly into a show.  Perhaps viewers receive the less direct form of advertising better, especially if someone on TV they admire is using a product.

1. http://people.howstuffworks.com/culture-traditions/tv-and-culture/effects-of-dvr-on-advertising1.htm

2. http://blog.stonestreetadvisors.com/2011/04/17/tv-v-internet-ad-spending-2000-present/

3. http://www.qualitylogoproducts.com/lib/history-of-tv-ads.htm

5. http://www.slideshare.net/nagz428/product-placement-252709

6. http://www.businessinsider.com/heres-how-james-bonds-relationship-with-product-placement-has-changed-2012-10?op=1

7. http://news.moviefone.com/2013/06/05/man-of-steel-product-placement/