KEEPING UP PROFITS

Wanganui Chronicle, Volume 74, Issue 242, 13 October 1931, Page 12

KEEPING UP PROFITS

VALUE OF ADVERTISING BIG FINANCIAL RESULTS HOW TO MEET BAD TIMES. Mr. Gilbert Hodges, president of the Advertising Federation of America, described, at a luncneon given in his honour in London recently, how a moderate expenditure in advertising can produce big financial results. Mr. Hodges spoke of the efforts that advertisers had made to stimulate trade during the present world depression. He said that the Advertising Federation of America had made a survey of the experience of advertisers during the past two years, and this autumn it would publish the results in public addresses throughout the nation. The results proved conclusively that fearless, intelligent advertising paid big dividends in bad times, as well as in good. He then gave the following facts: — ‘‘The American Tobacco Company increased its advertising appropriation in 1930 by £1,000,000, and as a result increased its net profits by £2,500,0u0. The cigarette industry as a whole has continued to expand right through the worst years. These companies did not just spend a lot of money for advertising —they used their heads, worked hard, and spent wisely. They succeeded in tapping some of the vast unused consumer purchasing power of to-day. They kept all their employees on the pay-roll, made more money for stockholders, and did their share toward general prosperity. Increase in Profits. “Cluett Peabody spent 45 per cent, more for advertising collars in 1930 than in 1929, and the appropriation is still larger for 1931. In 1930 the company earned 20 per cent, more profits than in 1929, and still larger profits are indicated for 1931. “The Coca Cola Company keeps up its continuity of advertising through good years and bad. In 1930 it increased its appropriation by £200,000, and net profits increased by more than another million. In the first half of 1931 the earnings were even greater than in 1930. “The story of Life Savers Fruit Drops is interesting. For five years this product was put up in ordinary form. But in 1930 they started making the fruit drops with a hole in the centre, like the other Life Saver products —exactly the same ingredients, but a different shape. This was news which made good advertising copy. But how about the depression! For this company there was no depression. A good advertising story sells goods at any time. So the advertising appropriation was increased 15 per cent., resulting in increased sales of 149 per cent. This is what I call good merchandising and profitable courage. “ Other Striking Instances. Mr. Hodges continued: —“The Lambert Pharmacal Company, makers of Listerine products, have an unbroken 10-year record of constantly increasing the advertising appropriation over the preceding year. Sales and earnings have expanded accordingly, and 1930 and 1931 were no exceptions. Profits are well maintained. “In the automobile industry one company has successfully fought against the tide of depression. Any manufacturer with a real improvement in his product has the makings of a depression beater. But the product must be sold, not merely offered to the public. Studebaker brought out freo-wheeling and surprised the trade with a heavy advertising campaign. And it worked. The number of cars sold and the net profit to the company are greater so far this year than in 1930, which is saying a lot. “These are only a few instances. The list could be extended at great length of well-known companies whose records prove that it is profitable to maintain or increase their selling and advertising efforts during the present bad time. Creation of New Ideas. Another large group which has shown particular ingenuity in the creation of new ideas and in the development ot new markets is the steamship and railway companies. The steamship companies have found a goldmine in the week-end cruise. The Baltimore and Ohio Railroad has attracted a new clientele between New York and Wash ington by installing air-cooled cars, so that the windows may be kept closed, thereby shutting out noise, dust and heat. This was well advertised. “The Jersey Central Railroad has demonstrated the value of colour in railroad operation. They have produced a tram all in blue —engine, cars, equipment, napkins and goblets. They call it “The Blue Comet/* and thin have secured a brand new patronage through vigorous advertising of this train to Atlantic City. “Then there is the instance of the owner of a chain of restaurants —Childs and Company. This company has conic out with an advertising campaign offering all one can eat for 60 cents or one dollar. Sales immediately jumped ahead of all record. “There are many other instances ot sound thinking, smart advertising, and aggressive selling. The time for special effort through advertising is when the clouds are darkest, when men’s minds need to be reassured, recaptured. In all this you will agree there is a contest between the depression and the inventive genius of the world. ’’