The most powerful advertising medium ever invented

The original Golden Age of advertising spanned a few decades in the mid-20th century and was epitomized by the ad below for a small shirt-maker in Maine. The eye patch was a last-minute addition and even though the shirt was ordinary, the man was not. “How did he lose his eye?”

Mass magazines like Life, the Saturday Evening Post, and then later TV, used imagery to create brands with significant value. But it was a shotgun approach and only worked because everyone was reading the same magazines and watching one of the three networks.

Internet advertising is steadily replacing all other mediums and for good reason. Instead of buying pages or time slots and crossing your fingers, advertisers now pay for clicks and impressions. Before the ad is even placed in front of the buyer they know someone is interested based on location, age, gender, and previous behavior. Better still, the cost is not set by the website – the price is set by auction. Most of the risk has been removed from the advertising game.

That’s why the trend revealed in the following table continues. Advertising dollars are moving to where the returns are highest.

Three powerhouse companies dominate this new medium: Google, Facebook, and Amazon. (It is irritating that the first two have changed their names to “Alphabet” and “Meta.”) But strangely this trend gets very little attention on Wall Street. Lots of attention is directed at the technology these companies have created and deployed, but very little to the effectiveness of what they are actually selling—a new way to advertise.

Here’s how new. All three companies have millions of advertising clients, while CBS television has a few hundred. “Millions of advertisers” is new and means that small businesses now have access to a nation-wide, or even a world-wide, advertising medium. 

But aren’t all ads annoying? Not if they are well-targeted. In the first golden age, ads cluttered up magazines and TV shows. Only occasionally did one appear that hit its target—the interested buyer. The internet allows advertisers to limit who sees the ad, increasing the odds that the ad is more likely to be of interest to the audience seeing it. As Artificial Intelligence is employed, more ads will be interesting instead of annoying.

My first job was at a major radio station in Detroit (WJR) writing ads, and my first successful business was based on direct mail advertising. That was at the tail-end of the first golden age of advertising, and maybe that’s why we at Dock Street have a better appreciation for this new golden age.

Best regards,

Daniel A. Ogden