Advertising has existed since 3000 BCE, when shop owners in ancient Babylon hung outdoor signs carved in stone and wood so that customers could spot their stores. Merchants in early Egyptian society hired town criers to walk through the streets, announcing the arrival of ships and listing the goods on board. Archaeologists searching Pompeii, the ancient Italian city destroyed when Mount Vesuvius erupted in 79 CE, found advertising messages painted on walls. By 900 CE, many European cities featured town criers who not only called out the news of the day but also directed customers to various stores.

Other early media ads were on handbills, posters, and broadsides (long, newsprint-quality posters). English booksellers printed brochures and bills announcing new publications as early as the 1470s, when posters advertising religious books were tacked onto church doors. In 1622, print ads imitating the oral style of criers appeared in the first English newspapers. Announcing land deals and ship cargoes, the first newspaper ads in colonial America ran in the Boston News-Letter in 1704.

To distinguish their approach from the commercialism of newspapers, early magazines refused to carry advertisements. By the mid-nineteenth century, though, most magazines contained ads, and most publishers started magazines hoping to earn advertising dollars. About 80 percent of these early advertisements covered three subjects: land sales, transportation announcements (stagecoach and ship schedules), and “runaways” (ads placed by farm and plantation owners whose slaves had fled).

The First Advertising Agencies

Until the 1830s, little need existed for elaborate advertising, as few goods and products were even available for sale. Before the Industrial Revolution, 90 percent of Americans lived in isolated areas and produced most of their own tools, clothes, and food. The minimal advertising that did exist usually featured local merchants selling goods and services in their own communities. In the United States, national advertising, which initially focused on patent medicines, didn’t start in earnest until the 1850s, when railroads linking the East Coast to the Mississippi River valley began carrying newspapers, handbills, and broadsides—as well as national consumer goods—across the country.

The first American advertising agencies were newspaper space brokers, individuals who purchased space in newspapers and sold it to various merchants. Newspapers, accustomed to a 25 percent nonpayment rate from advertisers, welcomed the space brokers, who paid up front. Brokers usually received discounts of 15 to 30 percent but sold the space to advertisers at the going rate. In 1841, Volney Palmer opened a prototype of the first ad agency in Boston; for a 25 percent commission from newspaper publishers, he sold space to advertisers.

Advertising in the 1800s

The first full-service modern ad agency, N. W. Ayer & Son, worked primarily for advertisers and product companies rather than for newspapers. Opening in 1869 in Philadelphia, the agency helped create, write, produce, and place ads in selected newspapers and magazines. The traditional payment structure at this time had the agency collecting a fee from its advertising client for each ad placed; the fee covered the price that each media outlet charged for placement of the ad, plus a 15 percent commission for the agency. The more ads an agency placed, the larger the agency’s revenue. Thus agencies had little incentive to buy fewer ads on behalf of their clients. Nowadays, however, many advertising agencies work for a flat fee, and some will agree to be paid on a performance basis.

Trademarks and Packaging

During the mid-1800s, most manufacturers served retail store owners, who usually set their own prices by purchasing goods in large quantities. Manufacturers, however, came to realize that if their products were distinctive and associated with quality, customers would ask for them by name. This would allow manufacturers to dictate prices without worrying about being undersold by stores’ generic products or bulk items. Advertising let manufacturers establish a special identity for their products, separate from those of their competitors.

Like many ads today, nineteenth-century advertisements often created the impression of significant differences among products when in fact very few differences actually existed. But when consumers began demanding certain products—either because of quality or because of advertising—manufacturers were able to raise the prices of their goods. With ads creating and maintaining brand-name recognition, retail stores had to stock the desired brands.

One of the first brand names, Smith Brothers, has been advertising cough drops since the early 1850s. Quaker Oats, the first cereal company to register a trademark, has used the image of William Penn, the Quaker who founded Pennsylvania in 1681, to project a company image of honesty, decency, and hard work since 1877. Other early and enduring brands include Campbell Soup, which came along in 1869; Levi Strauss overalls in 1873; Ivory Soap in 1879; and Eastman Kodak film in 1888. Many of these companies packaged their products in small quantities, thereby distinguishing them from the generic products sold in large barrels and bins.

Product differentiation associated with brand-name packaged goods represents the single biggest triumph of advertising. Studies suggest that although most ads are not very effective in the short run, over time they create demand by leading consumers to associate particular brands with quality. Not surprisingly, building or sustaining brand-name recognition is the focus of many product-marketing campaigns. But the costs that packaging and advertising add to products generate many consumer complaints. The high price of many contemporary products results from advertising costs. For example, designer jeans that cost $150 (or more) today are made from roughly the same inexpensive denim that has outfitted farmworkers since the 1800s. The difference now is that more than 90 percent of the jeans’ cost goes toward advertising and profit.

Patent Medicines and Department Stores

By the end of the 1800s, patent medicines and department stores accounted for half of the revenues taken in by ad agencies. Meanwhile, one-sixth of all print ads came from patent medicine and drug companies. Such ads ensured the financial survival of numerous magazines as “the role of the publisher changed from being a seller of a product to consumers to being a gatherer of consumers for the advertisers,” according to Goodrum and Dalrymple in Advertising in America. 8 Bearing names like Lydia Pinkham’s Vegetable Compound, Dr. Lin’s Chinese Blood Pills, and William Radam’s Microbe Killer, patent medicines were often made with water and 15 to 40 percent concentrations of ethyl alcohol. One patent medicine—Mrs. Winslow’s Soothing Syrup—actually contained morphine. Powerful drugs in these medicines explain why people felt “better” after taking them; at the same time, they triggered lifelong addiction problems for many customers.

Many contemporary products, in fact, originated as medicines. Coca-Cola, for instance, was initially sold as a medicinal tonic and even contained traces of cocaine until 1903, when it was replaced by caffeine. Early Post and Kellogg’s cereal ads promised to cure stomach and digestive problems. Many patent medicines made outrageous claims about what they could cure, leading to increased public cynicism. As a result, advertisers began to police their ranks and develop industry codes to restore customer confidence. Partly to monitor patent medicine claims, the Federal Food and Drug Act was passed in 1906.

Along with patent medicines, department store ads were also becoming prominent in newspapers and magazines. By the early 1890s, more than 20 percent of ad space was devoted to department stores. At the time, these stores were frequently criticized for undermining small shops and businesses, where shopkeepers personally served customers. The more impersonal department stores allowed shoppers to browse and find brand-name goods themselves. Because these stores purchased merchandise in large quantities, they could generally sell the same products for less. With increased volume and less money spent on individualized service, department store chains, like Target and Walmart today, undercut small local stores and put more of their profits into ads.

Advertising’s Impact on Newspapers

With the advent of the Industrial Revolution, “continuous-process machinery” kept company factories operating at peak efficiency, helping produce an abundance of inexpensive packaged consumer goods.9 The companies that produced those goods—Procter & Gamble, Colgate-Palmolive, Heinz, Borden, Pillsbury, Eastman Kodak, Carnation, and American Tobacco—were some of the first to advertise, and they remain major advertisers today (although many of these brand names have been absorbed by larger conglomerates).

The demand for newspaper advertising by product companies and retail stores significantly changed the ratio of copy at most newspapers. Whereas newspapers in the mid-1880s featured 70 to 75 percent news and editorial material and only 25 to 30 percent advertisements, by the early 1900s, more than half the space in daily papers was devoted to advertising. However, the recent recession hit newspapers hard: Their advertising revenue fell by half, from a peak of $49 billion in 2005 to $24 billion in 2013—as car, real estate, and help-wanted ads fell significantly.10 For many papers, fewer ads meant smaller papers, not room for more articles. Some good news for newspapers in 2013, however, was that while ad dollars declined by 6.5 percent from 2012, circulation revenue—mostly from online growth and initiatives—grew almost 4 percent.

Promoting Social Change and Dictating Values

As U.S. advertising became more pervasive, it contributed to major social changes in the twentieth century. First, it significantly influenced the transition from a producer-directed to a consumer-driven society. By stimulating demand for new products, advertising helped manufacturers create new markets and recover product start-up costs quickly. From farms to cities, advertising spread the word—first in newspapers and magazines and later on radio and television.

Second, advertising promoted technological advances by showing how new machines—such as vacuum cleaners, washing machines, and cars—could improve daily life. Third, advertising encouraged economic growth by increasing sales. To meet the demand generated by ads, manufacturers produced greater quantities, which reduced their costs per unit, although they did not always pass these savings along to consumers.

Appealing to Female Consumers

By the early 1900s, advertisers and ad agencies believed that women, who constituted 70 to 80 percent of newspaper and magazine readers, controlled most household purchasing decisions. (This is still a fundamental principle of advertising today.) Ironically, more than 99 percent of the copywriters and ad executives at that time were men, primarily based in Chicago and New York. They emphasized stereotyped appeals to women, believing that simple ads with emotional and even irrational content worked best. Thus early ad copy featured personal tales of “heroic” cleaning products and household appliances. The intention was to help female consumers feel good about defeating life’s problems—an advertising strategy that endured throughout much of the twentieth century.

Dealing with Criticism

Although ad revenues fell during the Great Depression in the 1930s, World War II rejuvenated advertising. For the first time, the federal government bought large quantities of advertising space to promote U.S. involvement in a war. These purchases helped offset a decline in traditional advertising, as many industries had turned their attention and production facilities to the war effort.

Also during the 1940s, the industry began to actively deflect criticism that advertising created consumer needs that ordinary citizens never knew they had. Criticism of advertising grew as the industry appeared to be dictating values as well as driving the economy. To promote a more positive image, the industry developed the War Advertising Council—a voluntary group of agencies and advertisers that organized war bond sales, blood donor drives, and the rationing of scarce goods.

The postwar extension of advertising’s voluntary efforts became known as the Ad Council. This organization has earned praise over the years for its Smokey the Bear campaign (“Only you can prevent forest fires” ); its fund-raising campaign for the United Negro College Fund (“A mind is a terrible thing to waste”); and its “crash dummy” spots for the Department of Transportation, which substantially increased seat belt use. Choosing a dozen worthy causes annually, the Ad Council continues to produce pro bono public service announcements (PSAs) on a wide range of topics, including literacy, homelessness, drug addiction, smoking, and AIDS education.

Early Ad Regulation

The early 1900s saw the formation of several watchdog organizations. Partly to keep tabs on deceptive advertising, advocates in the business community in 1913 created the nonprofit Better Business Bureau, which now has more than one hundred branch offices in the United States. At the same time, advertisers wanted a formal service that tracked newspaper readership, guaranteed accurate audience measures, and ensured that papers would not overcharge ad agencies and their clients. As a result, publishers formed the Audit Bureau of Circulations (ABC) in 1914 (now known as the Alliance for Audited Media).

That same year, the government created the Federal Trade Commission (FTC), in part to help monitor advertising abuses. Thereafter, the industry urged self-regulatory measures in order to keep government interference at bay. For example, established in 1917, the American Association of Advertising Agencies (AAAA) tried to minimize government oversight by urging ad agencies to refrain from making misleading product claims.

Finally, the advent of television dramatically altered advertising. With this new visual medium, ads increasingly intruded on daily life. Critics also discovered that some agencies used subliminal advertising. This term, coined in the 1950s, refers to hidden or disguised print and visual messages that allegedly register in the subconscious and fool people into buying products. Noted examples of subliminal ads from that time include a “Drink Coca-Cola” ad embedded in a few frames of a movie and alleged hidden sexual activity drawn into liquor ads. Although research suggests that such ads are no more effective than regular ads, the National Association of Broadcasters banned the use of subliminal ads in 1958.