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About The Sunday Oregonian. (Portland, Ore.) 1881-current | View Entire Issue (July 11, 1915)
TnE SUNDAY OREGOXIAN. TOTITLAXD. JULY 11, 1915. - 13 CUSTOM MAKES THE LcVW Letter No. 9 er.ence on "Publicit"y World COEI MANY hundreds of delegates, representing the advertising interests of the entire world met in Chicago during the week of June 21st and discussed all phases of publicity. Their deliberations covered newspaper advertising, magazine advertising, billboard advertising, streetcar advertising, mail order house advertising and premium advertising. As President of the Sperry & Hutchinson Company and the Hamilton Corporation I was invited to present the views of these two important factors in the premium division of the advertising world and to place definitely before the men whose whole business is to expend the hundreds of millions of dollars of advertising appropriations annually, the cogent facts that have led to the growth of the profit-sharing policy in business and to its present universal use. The address was as follows: About six months ago I lived In Chi cago and felt and thought as only Chl cagoana can. I had that general feel ing: of buoyant optimism and those thoughts of great things which are characteristic of Chicago. In addition, however, being a banker, I had the banker's habit of having the financial view of things, which is to be pessi mistic when you are loaning money, and optimistic when you see the de posits coming in. There was some thing very attractive about the al mighty dollar, and I might say, that all of that attractiveness Is not worn off yet, even though I am now a mem ber of the effete New York class. I have been transferred not trnsfig ured. On behalf of the Sperry and Hutch inson Company and The Hamilton Cor poration, of which I am now the offi cial head, I thank you for the honor accorded me. of participating in this meeting and appearing on your pro gramme, but bow to you aa a student young In experience in premium ad vertising. In making this change, I have dis covered twenty years of premium his tory in the records of my company, which I am trying to digest and com prehend. I have been and am yet a stockholder in both manufacturing and merchandising corporations and have had the experience of living in hope of dividends. As a banker I also had much to do with credit ratings which Involved distribution and sell ing. Many a time have I urged upon a merchant or manufacturer that his salvation lay in Improving his selling organization and increasing his out put. I now come back" with something practical to offer him as a remedy rather than a mere suggestion, namely the trading stamp and coupon. According to our esteemed educator. Nicholas Murray Butier. of Columbia University, thero are several types of minds. There is the Bourbon type. which "Forgets nothing and learns nothing." There is the mind "Open at both ends which remembers nothing and learns nothing." And there is "The mind which reaches the conclu sion first and listens to the evidence . afterward." It is the working of these minds in the great mass called "public opinion" that causes confusion and discord and wrong conclusions, and it is in about this condition that all forms of advertising find themselves todav. I, therefore, feel It is espe cially fortunate that through an or ganization of the far-reaching import ance of - the Associated Advertising Clubs of the World the opportunity is given us to hold this meeting and be permitted to unite in praise of the open mind which is ready to receive freely and fairly what each division of advertising has to say, and is willing to estimate new facts, new ideas, new movements, new tendencies, and new teachings, without being entirely sel fish. The giving of premiums has an ori gin that is shrouded in tradition. When it began we do not know. As a mat ter of history, premium methods were used in Assyria before the Christian era, in early Rome and ancient Athens. Biblical lore also informs us that even Adam and Eve and Satan had an ex perience with premiums in the Garden of Eden the premium In this case be ing "the apple of knowledge." In these early days they were not called premiums, perhaps, nor was the cus tom in as general use. nor as perfected a state as now. but it did work to the end of establishing a business friend ship and business confidence and in meeting competition. The modern method of advertising now includes the use of newspapers, magazines, billboards, dead walls, cir culars and signs; and all of relatively recent origin. Premium advertising is therefore reallv the oldest form known to man. and the great principle that was then involved is the same today the creating of publicity by a gift made wtih the idea that the recipient would not forget the giver, and that at some future time the latter might be favored. , Now let us pass from the ancient to the modern days and consider the scope of premium advertising as It ex ists. We all know there have been real advances in the advertising field, such as would not have been dreamed of a few years ago. While the pre mium method, in a crude form, has been In vogue for so long a time, it is really only within the last 20 years that the use of the premium, as a means of advertising, in a way that could be measured, has become gen eral. 1 say 'general" advisedly, for the reason that it Is probably true that there is no plan which is used by more business men. from the little retailer to the big merchant, from the small manufacturer to the great master of. industry, than the premium plan. Premium-giving Is primarily of two sorts one where the actual merchan dise Is given away by the merchant, and the other where the merchant or manufacturer gives a trading stamp or a coupon, which is redeemed either by the merchant or manufacturer, or by a trading stamp or coupon com pany, whose business it is to furnish these coupons or stamps to the manu facturer or dealer. The basic principle underlying the use of the premiums is that human na ture is ever prone to Insist that it shall be considered a part of the busi ness equation. If by use of some added value a buyer can be held to the con tinuous purchase of some particular article to the exclusion of others, then the manufacturer who is willing to grant that added value will succeed in The audience of premium advertising representatives gave attentive hearing to the above. No statements were made that the premium business was an incubus; that it was a detrimental element in trade; that it added to the costs of merchandise without aiding in its distribution or any of the other slurs and baseless accusations that are brought against profit sharing by the few who, for personal profit, are desirous of seeing the premium business driven from the field of legitimate advertising. William Woodhead, president of the Asso ciated Advertising Clubs of the World, in an informal talk at the conference of the National Premium Advertising Association, in the Auditorium Theatre in Chicago, placed the stamp of official approval on the premium plan by declaring that in his judgment the system of using premiums as a means of advertising or service was of vital importance and as legitimate as other forms of advertising. This is to extend my personal and official appreciation to the members of the Associated Advertising Clubs of the World for their courtesy and fair treatment to a branch of their profession which has been ruthlessly and uncompromisingly assailed by a few special interests. ' GEORGE B. CALDWELL, President. IF THE PEOPLE ARE DEPRIVED OF PROFIT building up his sales. Increasing the aggregate. The "added value" which many manufacturers are willing to give In return for the consideration of continuous patronage is the trading stamp or coupon. The proposition Is so simple that It does not require any great explanation once the theory is understood. If hu man nature were not human nature, but were distinctly something else, then the coupon might not be of bene fit. In such a case neither would ad vertising nor any form of service: but because a man or a woman likes to fpel that their patronage Is of soma value, because he or she Insists that this value shall be recognized by the manufacturer, the latter has found-it advantageous to use the coupon or trading stamp as a discount fur cash sales or continuous patronage. It is advertising. It is profit sharing, and It minimizes debt and promotes thrift. Lt me say right here tbat it la not the manufacturer or the coupon com pany' tbat has mad the giving of coupons a success the success comes from the other end from the con sumer. It is the consumer (the people, if you will) who has made the giving of coupons not only desirable, but. in many cases, an absolute necessity. We have today those who decry premium advertising as being -subversive of the best there In In the busl. ness. as being something, perhaps, which is not scientific Sometimes it Is considered by the thoughtless as "something -for nothing." It has been denounced in some quarters as vicious, a sort of catch-penny affair, which was foreign to legitimate enterprise. Those who once decried the possibility of the trolley, the automobile, the telephone, the wireless, the aeroplane, are of the same type as those who now say profit sharing is a delusion. Those who take this view make no note of the human element In trade; they would reduce everything in life to strict rote and rule: they would figure statistics on the graves of their ancestors; they would try to measure the beauty and grandeur of the Hock ies with an agate rule. When you forget the human element you forget that which has made this world Jlvable. When you try to measure human nature as you measure a yard of goods you attempt the im possible. It is the study of the human element, the effort to ascertain what the people want, the digging down into the depths of human desire and the attempt to draw conclusions from that Inex haustible well that has made premium advertising what it Is today. No man who is not a student of human nature, who has not learned in part what the : child wants, what the boy or the girl wants, what the woman In the home wants, would ever have had the genius to establish premium advertising on a basin that would have differentiated it in a successful way from other forms of advertising. The premium advertising plan Is based upon the theory, "live and let live." The great manufacturer cannot continue forever to take his toll from those to whom he sells without giving back something more In return than the goods which he sells. It is a poor manufacturer who does not recognize this fact. He is contesting the co operative theory so highly regarded by wise merchants, both at heme and abroad. The big wholesaler .who sells goods year after year knows he has to return something to his customers. When a buyer comes to the city he Is taken in charge by the wholesale house; he is Winer! and dined and taken to the theater. This Is repeated lit the case of every buyer. It adds greatly to the cost of doing business, and yet It Is good business In Itself, because the wholesaler knows that the buyer likes to get a little more than he would be entitled to by strict business meas ure, and this method appeals to the human side of life. Premium advertising carries the principle into trade and establishes the law that If the customer Is entitled to some little "extra" once In a while, at the whim of the merchant or manu facturer, he Is entitled to something of a definite value all the time for his cash payment, or for his continuous ItatronaKe. It is placed on a fixed Hsis; there is no guesswork about It. The customer knows what he Is en titled to. If only be conforms to cer tain rules. Premium advertising. whre the manufacturer ormerchant gives some thing directly of value, or gives a token which Is redeemable in some thing of value through his own house, or a token redeemable by some third party, is essentially the same thina. It matters not whether it Is called a trad ing stamp or a coupon, and you cannot be consistent and approve the one and damn the other. This is pure advertising with the addition that It also performs service. A merchant lets It be known that he will give a certain premium or a cer tain token, and this brings trade to his store. Frequently the big depart ment store will advertise sales at lower than cost price for the purpose of getting people into the store, when In the natural order of things they may buy other Koods. The premium acts the same way. This Is service ren dered to the merchant. The coupon packed" by the manufacturer further protects the merchant, because today In our first-class trade-marked goods, it has frequently eliminated the evil of substitution. Is there anyone who can success fully contend that there is anything inherently wrong in this system? Is there any reason why such a plan should be condemned? Is It not Just as legitimate as any other form of service or advertising? There In no form of advertising that has not In It some element of uncer tainty. Advertising Is not un exact science, and the man who would try to reduce It to a fixed mathematical rule faces a hopeless task. Premium giving is one of the most honest of all forms of advertising, be cause it frankly admits as Its original promise that It depends upon the de sire of men or women to seouia the additional profit. It frankly admits that without a correct understanding of the sentiments that sway mankind Its very purpose would be defeated, it proceeds on no false assumption. It knows that In every person, however that person may personify self abnegation, there Is some selfish feel ing. In a way it appeals to this feel ing. It appeals because It Is human. Other forms of advertising may be conducted on an assumed high plane, but when they are analyzed they get down to the question that Is uppermost In the minds of every being on earth "How can It profit me?" Advertising which does not benefit the one whom it seeks to reach has missed Its aim. If premium advertising does any thing. It benefits the one who takes advantage of It- The benefit may he small or It may be great, but it Is di rect, and through the use of the premium there Is a more absolute method of measuring tho percentage of efficiency than there Is In the case of. other kinds of advertising. The serv ice and the result of the advertising effort Is measured by the redemptions. In the case of tokens, so surely, so cer tainly, that by comparison the ordinary keyed advertisement falls very short. To illustrate this point: After 15 years, from 19m to the present. 'the Sperry & Hutchinson Co. issued 21.691. 757. 424 tokens or stamps and redeemed IS.0)9.451.15S. or M per cent. And It must be understood that the remaining 16 per cent constitutes a continuing liability against the company, and that many of those stamps will be redeemed subsequently possibly the entire amount. We are still redeeming many stamps. Issued years ago. which are not accounted for in the report of pre vious redemptions. In the past month we received a quantity of stamps sent In for redemption by a woman who had collected them before the San Fran cisco earthquake and who only recently unearthed them. A few dsvs ago there were sent In for redemption some of the first stamps the company ever put out Issued nearly J8 years ago. Because of the constant redemption of old stamps, it Is necessury for the company to maintain a reserve, which It has done, by setting aside fl.0Hfl.0U4 representing the entire total of unre deemed stamps for the past five years. In 1914 our percentage of redemp tions was over 90 per cent. In the past month they were over 93 per cent. Kventually they are certain to prove much greater than those indicated by the figures here set forth. Kvery out standing stamp Is a liability atralnst the company, no matter h.ow long ago they were Issued. Thus It can be seen that the state ment that we make our money out of the lapses on redemptions is falaclous. With these redemptions now 91 per cent, we still face every probability that a still greater number eventually will be redeemed. What other method of advertising today can show an ef ficiency ss high as otra? There have been those who seek to make a particular kind of publicity the only one which can come within the definition of advertising. With all due respect to the newspapers, it may be said that at times they have endeav ored to create - a sort of monopoly in the advertising business. At one time they were prone to denounce all ad vertising except that which was con ducted throUKh the press. Magazine advertising was decried: the billboard came under the ban: It was declared to be unsightly, unsanitary and a prolific means of scattering paper over the streets: but the billboard stuck, and today Its utility In the advertising field Is generally admitted. F.ven the newspapers, which at one time de nounced it. are now using It to ad-vani-e their Interests. Newspapers are likewise using the coupon and the premium, and in this I recognize reci procity and co-operation. lie would be an ardent advocate In deed who did nut admit that there were some defects in premium adver tising. There are defects, but they have been magnified out of all propor tion to their real size by the enemies of this kind of advertising. The news paper publisher could find many de fects In his own field: the magazine could pick out many faults: the agency system Itself has been and is today the object of severe criticism. No one plan, no one system, has every virtue and no faults, but If the premium plan be measured up with other kinds of ad vertising as a method of creating an actual service, which after ail Is the real aim of proper advertising, or at least a majority of It. then premium advertising will be found to stand high. It does produce results. The testimony of thousands who have tried It and the continued use today by mer chants, manufacturers and big houses of National repute, demonstrate this fact beyond any possibility of a doubt. The past year s business was the largest In the history of the firm. The statement hns been made that as competitors of newspaper advertising, the premium system had reduced or diverted the money, publishers would have received, to the premium houses. This statement, understand. Is that of a competitor. Let me refer to this question Just a moment, for It Is cer SHARING STAIMPS AND tainly Important. If true. Tha Bureau of Corporations at Washington In Its 1914 report states, with reference to the Tobacco Trust, that since it.' -ilsso-lutlon. competition has developed and certain kinds of expenses have been Increased by the court's decree. The advertising bill In 1911 was 1 1.000.000. For the seven successor companies In 1913. It was II1.0"0.ouo or more than twice as much. It Is but fair to say that In this Item of advertising was in cluded their premium business, but this did not amount by any means to the sum paid newspapers, trade Journals and magazines. 1 have made some in quiry among merchants using the trad ing stamp, and manufacturers' packing coupons, and the showing la Increased advertising. Not In every case, but taken aa a whole. In this connection It may be pointed out that an Increase In the amount ex pended for advertising may be mad, without there being an actual Increase In the percentage, based on the volume of business. If the gross business In creases very materially, the expendi tures for advertising may be enlarged In actual dollars. So thnt an attempt to figure comparative advertising by percentage alone, in many cases will prove misleading. May I state aa my opinion. In answer to the question whether the premium Increases the cost to the consumer by adding to the price of the merchan dise, through Injecting a new interest the premton company ? With but slight reflection It can be seen that the premium acts quite to the contrary ot this claim. It Is an actual fact also, that the coupon lessens the cost of the article. In that the premium so ob tained is a discount to the consumer In the form of some household necessity. r of some little luxury. Many of the larger manufacturers of this country have built up their business in pre miums, having furnished an article of equal merchandise value with that of their competitor of exactly the same cost to the consumer, giving In addi tion a premium. In no case do we find a manufacturer who has associat ed his commodity with a premium plan, either Individual or co-operative. In creasing the cost of his article to the consumer, nor do we find, un the other hind, tiott - premium - giving manufac turers reducing the cost of his com modity or even attempting to give a better value at the same price as the premium - glvlnr manufacturer. Some manufacturers have claimed to put the value in their goods and consequently no premium, but the consumer hns been Judge of this, and we sec daily the larger and better organizations giving premiums even Marshall Field Ar Co. while the number of coupon collect ors la rapidly multiplying. As for tha coupon company so termed, considered as distinct from the manufacturer of any commodity, wo must bear in mind two important fea tures of modern business, namely, spe cialization and profit sharing, spcclnlt satlon has long been demanded In our professional, ni well as In our com mercial life. Here Is where the coupon company renders its service. i'rofit sharing hss come about In Its present form because the consumers, both In dividually and collectively by virtue of their mere living have had to buy and have helped to rnsnufa ture or produce through their labor the capital so stored up or accumulated i In any or ganisation) and are the original heirs to share In Us benefits. The Coupon Company specializes In premiums as applied in selling goods and having perfected Its orgnnlxutlon offers expert advice and assistance to manufacturers who are willing to share their profits not Increase the price of their article nor decrease Its value with the consumer. So adept have these premium organizations become In the science of merchandizing, that many manufacturers who have long maintained their own premium service have now turned to the co-operative premium organization, and In this way are enabled to offer better values to the consumer through this co-operative premium method than through their In dividual service. When one Considers the premium organization operating for a larK number of manufacturers In a co-operative way, it Is epy to de termine, upon slight reflection, the great saving effected in premium pur chasing power as an organization. There Is a decided advantage nnd sav ing In printing and distributing a uni form coupon In large quantities, and there Is a further saving In eliminating certain unnecessary premium stations, replacing them by others conveniently arranged and within easy accosa to the consumer. The coupon company then exists on the saving afforded a group of manufacturers desiring to share their profits with the consumer by working ro-operatively In a co-operative premium plan. The same principle applies to retail merchants. Who. then, pays the expense of the premium? The Initial expenditure of the premium Is paid by the manufac turers or merchants using the service, but eventually It comes out of the rocket of his less generous competitor, n tbat the latter loses the business, and the former, by Increasing his sales, reduces the cost of production snd shares It with his customers. The manufacturer and retailers who do not give premiums know too well the value of the premium and Its pulliivs: power with any consumers through the busi ness they have lost. The opposition of any association to coupons or premiums Is In Itself a rn-onnluun of their force and a very good reason for one to sup pose that we will ever have premiums, as there will always be merchants who will oppose them. On floo.000.000 of merchandise sold COUPONS, "WHAT WILL TAKE THEIR PLACE ? by merchants riving premiums, two to three million dollars Is returned to those purchasing goods for cash of these merchants. It is conservative! v estimated that In 1914 over tl0O.no0.0ui was given out In the shape of premiums, this $100. 000.000 being an actual return to the consumer which ho never wouid have received without the existence of the premium plan. The various verbal and written state ments In condemnation of premium giving are as naught In comparison with tha many commendatory state ments made daily In favor of premiums by b consumers, who accept coupons both In packages from the manufactur er and ever the counter from the re tailer Millions of consumers wbo re deem coupons with manufacturers and premium organisations, day after day. are praising the premium received and seeking new channels to receive more premiums. If the co-operative principle Is to prevail, and it will, premium advertis ing is here to stay, not because we want It. not because some one does not want It. but because It responds to a public demand. If vou have ever tried artificially to stimulate a desire In the minds of the people for some thing they did not want. you can understand how absolutely futile would be all the vast expenditure of moneys by the premium advertising concerns In this country. If the germ of de mand had not already been Implanted In the human breast. Vou cannot make the people take something thev don't want. You mutit Influence a few of your friends who would be inter ested for your sake, but you cannot crest a National Inquiry unless the soil Is already fertile. I.ert are bar ren of vegetation, not because nature would not implant the seed, but be cause tha seed would not grow when Implanted. Our organization could do nothing with a public mind that was barren, that would not respond to our suggestion We might as well draw down the blinds, close our doors, lock them, and throw away the keys to our offices and to our factories. If the peo ple primarily old not demand premi ums, but when they do demand them we are doubly armed against all op position. We have our own strength coupled to the support of the publio which demands premiums. Our mission Is not purely altruistic we do not profess to give the world something for nothing. We are In the business of premium advertising to make money, but In making thai money we believe that we really give more to the people who patronize us than any other business orgniuxat Ion In the world, and the best part of the entire proposition s that the people believe us, because there are more users of premium methods of advertising today than there ever were before In the his tory of the world, and there are more individual responding to the human Interest appeal In premiums than there ever wero before. For one to properly consider the scope of premium advertising, he must have the capability of broad resiropec tion. and be aide to visualize an Im mense future. Looking backward one can see the wonderful results already attained, and can realize how almost universal la the use of the premium In some form or other. And for consid eration of the future, one must scan the horizon with a prophetic ee. Judging the future by the past, he can discern such Immense strides In the field of premium advertising as will make lis present una seem small by comparison. Life always has Its prom ise of better things, but that promiso Is more alluring In the premium form of advertising than In others. I n doubiedly there will be many changes, many improvements, and If possible, complexity, which now exists In some cases, will give way to simplicity. Small business houses will continue to be aided by an agency conceived In the spirit of fair plav. lug business will lift Itself to greater thine, by depart ing from much of that which is now seiflsh. and giving stronger play to the feeling that should guide all people In their associations with others that of giving not the least that must be alveu. but the greatest which possibly tan bs offered. L'ntil the department store shall cease giving Its service, shall elim inate Its walling rooms. lis concerts, and its free deliveries: until big wholesalers shall stop giving a dis count for rash or allowing a large buver a better prlca than the small one; until the banks shall di away with the custom of allowlns Interest on savings accounts or money deposited before a certain d.its: until the big na tions of the earth shall refuse longer to insert the Favored Nations Clause In their Treaties In short, until the desire and the Instinct of men shall undergt a change, and he emerges to a different Individual from the one now familiar to us, premium advertising will have its place in commercial In tercourse. Methods may change, forms may differ, dtslriuution Ideas and mer chandise scheme all may be altered; but until man himself has become a new being, we premium advertisers will have our place In business, re sponsive to a demand which Is fast becoming- universal. Finally, let me say a business that lives today on memories needs neither the aid of the newspaper, the bill board, nor the trading stamp Just a hearse! legislation cannot save it! Class leg islation never has received the approv al of anvone but a elfi.h or prejudiced mind, and It never will. You cannot make people happy by an Act of Con gress, but ou can by giving them premiums, and by so doing. ou ran share profits with them and not only hold but Increase your trade.