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Nat io n al Lead Co mpan y ADVERTISING DEPARTMENT T. HOWARD SAR1NE, MANAGER Ml BROADWAY Ne w Yo r k b October 21, I953 APPROVED BY; EXECUTIVE GOMMITTEE Mr. D. A. Merson, Vice President National Lead Company Building NOV 4 1953 - Dear Mr. Merson: I am submitting herewith the proposed paint adver tising program and budget for 1954. The proposal sets forth in full detail the reasons for the recommendations made. These have been discussed with the Sales Department and have their complete approval. If you have questions, we shall only be too glad to discuss the whole subject with you. The appropriation requested totals $1,627,182 as compared with a budgeted $1,368,113 for 1953, an increase of $259,069. Very truly yours, Ends. NL 000039889 "DUTCH BOY" PAINT ADVERTISING 1954 The basic recommendation for 1954 is a stepping-up of advertising activity...more consumer impressions for "Dutch Boy". The seriousness of our present situation, competi tively, is clearly indicated by the facts contained in my memorandum of July 31, 1953* They can be summarized as follows: 1. Since 1947, when we entered the ready mixed paint business, our space advertising has shown a fairly consistent reduction in number of pages...an actual dollar expenditure decrease of 15%. 2. During this same period the other nationally ad vertised paint brands have shown a correspondingly consistent increase in advertising expenditures. Eight companies in 1947 spent 1,748,200. Last year the same eight spent 4,608,000. Here are the actual percentage increases shown by competi tion: Sherwin-Williams Pittsburgh Glidden Pattersonr-Sargent DeVoe Dupont U. S. Gypsum 147% 199% 56% 131% 115% 750% 43% 3. Our competitive ranking in dollar expenditure for space advertising has gone from third place in 1947 to a tie for seventh in 1952. No reliable figures are yet available for 1954, but we do know that Sherwin-Williams has already contracted for a network television program that will involve a maximum expenditure of more than 2,000,000 or a minimum of 1,500,000. We all recognize that, due to consistent advertising over the years, the "Dutch Boy" name and trademark have become a priceless asset to help the Company secure its share of the consumer paint business. It is the one important reason why a dealer is willing to add the "Dutch Boy" line and in most cases displace a lesser-known competitive line. However, this advantage can be seriously reduced--and even lost--if we continue to fall so far behind competitive promotional pressure. It has happened before to others. It can happen again. ..to us. NL 000039890 There is another important basis for our recommenda tion. Since 1947, when we started from scratch to develop a line and get distribution, a great deal of progress has been made. N 26126.01 - < Especially this year, the Sales Department has done an outstanding job of getting new dealers and converting part line dealers to full-line. What this means is that we are not only increasing our actual and potential dollar volume but we are also giving our advertising a chance to be more effective. More and more people, influenced by "Dutch Boy" advertising, are going to be able to find convenient dealer outlets where they can buy the type of "Dutch Boy" Paint they need. At the same time, we are going to need more adver tising impressions to keep these new dealers and these expanded dealers happy with the "Dutch Boy" line. There is still another sound argument for increasing advertising pressure in these times. That is the tremendous expansion in potential market. While not specific to our busi ness, it applies just as effectively. Disposable income has increased from 169-5 billion in 1947 to 234 billion in 1952. Of course, all advertisers are shooting at this increased buying power but some of it is definitely going into paint. Our objective should be to divert a larger and larger share to "Dutch Boy". This can only be done effectively by an ex panding program of promotion and sales effort. The Advertising Theme _ T Last year, in view of the need for directing atten tion to the interior line, it was agreed that 1953 advertising should be devoted almost exclusively to the promotion of interior paints using the Color Gallery as the vehicle. The soundness of this plan was demonstrated by the sales increases of many "Dutch Boy" dealers, the greatly increased volume of consumer inquiries, and by the rapid extension in the distribution of Color Galleries among representative paint outlets. There is little reason to question that concentration on interior paints and the Color Gallery proved the right step to take in 1953, particularly in view of the limited number of insertions. Along this line, I want to make the point that every brand name survey on paint shows "Dutch Boy" in an "also ran" position among interior paints (except on the Pacific Coast). It is a clear indication that we need a lot more promotion to bring home to people that we are not only makers of house paints but of inside paints, too. In spite of this year's evident success of "Dutch Boy" advertising featuring the Color Gallery, there has been an ex pressed opinion that emphasis on the Color Gallery was obtained at the sacrifice of product emphasis. The best way to settle this question was to go out _nto the field and find out what homeowners and paint buyers NL 000039891 _3 - wanted to see in "Dutch Boy" advertising. That is what was done. Five different copy appeals for interior paints were tested among representative magazine readers both on the Eastern seaboard and on the Pacific Coast. As a result, we have been able to develop a type of ad that gives major emphasis to Flat Wall Enamel, as a product, but at the same time features the Color Gallery as a useful tool in selecting appropriate color schemes. We believe that some of our advertising in 1954 should be devoted to House Paint. This year we dropped ex terior paint advertising, except in the Country Gentleman, because we felt all five ads were needed to push the interior story. It was never our intention, however, to make this a continued policy and the expanded schedule, now being recom mended, enables us to restore the House Paint advertising without seriously handicapping our interior promotion. Also tested was another series of advertisements de voted exclusively to selling "Dutch Boy" exterior paints to homeowners. Once again, we found that ads built around the thought "home, the place you love the best, deserves the best protection... `Dutch Boy'" have maximum homeowner appeal. Media Recommended With some of our most aggressive competitors in vesting heavily in other forms of advertising -- television, radio, and newspapers -- it becomes necessary to analyze the respective advantages of each type of medium. National Lead Company has been a magazine advertiser for nearly half a century. The prestige and country-wide recognition given the "Dutch Boy" trademark is convincing proof of what magazine advertising can do. Here are some notewortliy facts about magazine advertising: 1. In 1952, as for every year since 1939 magazines led all. media in national advertising volume. 2. Of the total number of advertisers spending more than $25,000 in 1952, eight out of ten used magazines. 3. Of the total number of national advertisers spending $25,000 or more in 1952, 7 out of 10 invested the largest share of their budgets in magazines. ... *'** 000039892 4 In 1952, nearly three out of four used only one advertising medium...end more than three-quarters of them chose magazines for that one 'medium. 5. Of the more than 31 million dollars spent by adver- -4- tisers in the Building Materials and Equipment field during 1952, more than 82$ was spent in magazines. While there is every reason to believe that other media radio, television, newspapers, billboards - would be helpful in selling "Dutch Boy" Paints, there still can be no question but that magazines, with their well-printed color pages so ideal for visually showing the desirable effect of paint, should continue to be the primary medium for our advertising. Since next year's advertising will feature both in terior and exterior paints, it is essential that the magazines to be used reach both men and women. For survey after survey has indicated that men are the most important factor in the selection of exterior paints, and women occupy the same position when it comes to choosing an interior finish. The problem of selecting the best magazines for "Dutch Boy" is greatly simplified by the fact that there are three large-circulation, immensely popular magazines that have almost equal man-and-woman readership. The Saturday Evening Post, Better Homes and Gardens, and American Home are an pre-eminent in the field of home maintenance and equipment. The Saturday Evening Post has been the backbone of "Dutch Boy" advertising for more than 40 years. With 4,200,000 circulation, over 70$ of these readers being homeowners, it is no wonder that paint dealers and salesmen alike, recognize The Post as the number one medium for promoting the sale of products going into the home. Better Homes and Gardens grows and grows and grows. Better Homes is more than three and one-half million big -- one of the three biggest man-woman magazines. Three out of four Better Homes readers own their own homes. Better Homes leads all magazines in the amount of editorial lineage devoted to home and family subjects. Better Homes has more readership among dealers selling building materials and household equip ment than any other magazine published. American Home reaches homeowners at a lower cost per reader than any of the other magazines. American Home reaches more readers in the upper income groups than ary of its rivals. American Home has been used consistently for many years by leading paint advertisers including Shervdn-Williams, Pittsburgh Plate Glass, Glidden, Devoe & Baynolds, Patterson-Sargerrt, Boston Varnish, and U. S. Gypsum. In the farm paper field, a change is recommended. For many years, "Dutch Boy" has been a regular advertiser in The Country Gentleman. Recent changes in the farm paper set-up dictate the use of Farm Journal in place of Country Gentleman. Here are some of the reasons: NL 000039893 - 5- 1. Farm Journal now has the largest circulation of any national farm magazine. 2. Farm Journal has the largest circulation among farmers in the upper income groups. 3. Farm Journal is edited on a sectional, basis in order to guarantee editorial content customtailored to the area served. 4. Farm Journal has the largest circulation in those sections of the country where our distribution is best and where paint sales are highest. 5. Farm Journal carries a greater volume of advertising than ary national farm magazine. Space and Insertions In view of the need for adequate representation for both the interior and exterior lines, it is recommended that insertions be increased from five to eight pages in each of the three general magazines and in the one farm magazine. This permits five advertisements devoted to interior paints and three to exterior. St It also provides enough flexibility to assure some "Dutch Boy" advertising every month of the year but one (December). It gives us a heavier concentration of adver tisements in the spring and fall plus good representation throughout the rest of the year. 4 ?. Program Cost The amount budgeted for national magazines and trade advertising in 1953 was $389,313. Proposed budget for 1954 calls for an expenditure in this category of $603,182, an in crease of $213,869 or approximately 54$ Part of this is in creased space and production costs. This year's program, for example, would cost $15,000 more if repeated in 1954* Qn the other hand, if we look at the total paint advertising budget, including the Pacific Coast, the increase is only about 20$. Expenditures Other Than Space Since we entered the mixed paint field an ever in creasing percentage of our advertising budget has been diverted to miscellaneous purchases other than space media. In 1947 it was 63$. For the last four years it averaged 77$. In the interest of making some of these funds avail able for the recommended increase in space advertising, each item has been carefully screened. Everything suggested is, in our judgment, necessary to the conduct of business. NL 000039894 - 6- Significant reductions have been made in the following: Window & Store Displays $10,000 Color Cards $32,000 Color Gallery $15,000 Cooperative Advertising This has become a formidable slice of our budget. Starting in 1947 with an expenditure of $36,933, last year it reached $121,442. One of its bad features is the complete lack of control on our part of the amount of money spent. Once we have set the policy of offering a 2% allowance to all dealers, we have nothing to say as to how many dealers use their allowance. Of course, we can restrain our branches from pushing cooperative advertising. But, in our case, where we have no local newspaper advertising of our own - such as all our competitors do - I doubt the wisdom of putting on the brakes. Because it should be remembered that the Company is getting this local advertising at half price, since the dealer matches us dollar for dollar. Due to the fact that we have added so many new dealers and others have become more active advertisers, I $ , .feel it is necessary to increase this part of the budget to 150 000 _ ? T-? Cooperative As part of the cooperative program next year we are suggesting the production of three 20-second television films that we plan to merchandise to "Dutch Boy" dealers in areas where stations are available. It is our feeling that many of the new stations will be actively soliciting local advertising and this will give us some opportunities to observe the selling effect of T-V paint advertising at comparatively low cost. Special Fund Our budget has always provided a contingency fund but my experience has been that this has been needed to take care of price increases over original estimates and the many unexpected items that cannot be planned a year ahead. Every year we are offered certain propositions that look like good possibilities, for example, an experimental T-? program. Or, it might be a likely plan to secure store traffic for dealers. Usually, only a few thousand dollars are involved but with the budget earmarked for other things and the contingency fund needed as stated above there is no opportunity to give these programs a try. NL 000039895 -7- I would like to set aside a special fund of $35,000 in the 1954 budget for such, possible participations. It would be clearly understood that any use of this fund would require approval of top management for the specific proposal being suggested. Pacific Coast Budget The Pacific Coast Branch has submitted its suggested budget for 1954* Also included is the separate budget for Schorn Paint. Practically all the items are standard expenditures that represent either their share of the items we provide such as display material, color booklets and other promotional material, or special material required for their stores and export activities. This, I approve and recommend. The controversial item is the amount of $75,000 re quested for supplemental consumer advertising in their territory. I have had extended discussion on this with both Mr. Roberts and Mr. Harrier. I fully sympathize with their desire for this extra advertising which stems from the consistent advertising of their chief competitor, . P. Fuller, and others, plus the fact that this year we featured Color Gallery while they felt the need of straight product promotion. However, I maintain, first, that the same amount invested in national advertising is much more vital to the Company's in terests. And second, that our 1954 proposal answers any claim that "Dutch Boy" national magazine advertising does not do full justice to the needs of the Pacific area. t f Actually, the four magazines we have selected de liver a total of over 2,000,000 copies in the Pacific Coast Branch territory. If the eight insertion program is approved that will make a total of 16,000,000 impressions. This compares with the 500,000 circulation of Sunset Magazine being used by W. P. Fuller. Of course. Fuller is using other media as well but the total is not so overwhelming in the face of our proposed campaign. Also, the type of advertisement we propose to use next year is in line with their request for specific product advertising. For the past several years, the Pacific Coast Branch has borne its proportional share of expense on items such as color cards, displays and other promotional, material which they have adopted from our Eastern production. NL 000039896 It is now suggested that a similar charge be made to the Pacific Coast operation for the share of space advertising going into their territory. It seems only equitable that the well-established Pacific Coast operation should absorb a 15% share (based upon percentage of circulation in the seven western states) of our national magazine expenditure, upon which they have been getting a "free ride". - 8- This would approximately replace the $75,000 they request for regional advertising. Summary Advertising appropriations that were adequate in the immediate postwar period will no longer do the job of selling paint in an extremely competitive market. With rubber-base paints offering new, highly appealing advantages, with color systems blossoming on every hand, with dealers being given a choice of a half-dozen well-advertised brands, it's tougher than ever to keep pace. While the "Dutch Boy" brand is one of the most honored in the paint industry, it has lost position in the last seven years; lost place in the veiy period when, for the first time, "Dutch Boy" was offering a full line of readymixed paints. "Dutch Boy" is now in the position of needing new dealers, to a greater extent than ever, and depending upon the active interest and demand from the millions of homeowners who now do more of their own painting than ever before. "Dutch Boy" interior finishes are an important part of the line, and since interior painting goes on the year round, it is extremely important that our advertising schedule be planned so that it continuously sells the paint buyer -- both dealer and consumer. This kind of consistent and per sistent campaign calls for a minimum of eight insertions in leading magazines. "Dutch Boy" can no longer afford to be out-advertised by paint companies with nowhere near the product nor the re sources possessed by National Lead Campary. We hope you will agree with us that the time has come to redouble our promotion effort behind the "Dutch Boy" line. _ * NL 000039897 -9- PAINT ADVERTISING - 1954 Eastern Budget National Magazines Trade Papers Direct Mail Dealer Cooperative Advertising Advertising Handbook Classified Phone Book Listings Dutch Boy Dealer Magazine Color Cards Booklets and Folders Signs Window and Store Displays Painter Caps Exhibits Office Expense Salaries ^Miscellaneous Branch Expense Rent, Light, Etc. Contingency Fund Special Fund Color Gallery Pacific Coast' Branch Schorn Paint | 463,708 64,474 ---- 150,000 12,000 32,000 18,00) 50,000 68,000 50,000 35,000 5,000 15,000 4,000 70,000 15,000 105,000 10,000 40,000 35.000 $1,242,182 ....- 35,000 / $1,277,182 / > 310,500" , -... 39,500-" / v $1,627,182 1953 Budget $ 313,600 75,713 35,000 110,000 12,000 32,000 16,000 92,000 60,000 31,000 45,000 5,000 15,000 4,000 62,000 10,000 95,000 10,000 40,000 $1,063,313 ___ 50,300 $1,113,613 220,000 - 34,500 $1,368,113 r. Label art work, ad proofs, cuts, travel expense NL 000039898 - 10 - Saturday Evening Post Better Homes & Gardens American Home Farm Journal National Magazines - 1954 Circulation Space Cost 4,620,479 8 4-color pages 3,782,049 8 4-color pages 3,130,746 8 4-color pages 2,880,010 5 4-color 2/3 pages 3 2-color 2/3 pages 14,413,284 Art, Cuts Type-setting 1183,309 137,620 106,164 54,950 1482,043 56.665 $538,708 T NL 000039899 - 11 - Trade Papers - 1954 Mixed Paint Line: American Paint and Wallpaper Dealer Paint Logic Hardware Age Hardware Retailer American Lumberman Building Supply News American Painter & Decorator National Painters Magazine Painter & Decorator Circulation Space Cost 27,018 4,200 34,879 31,698 24,233 24,211 68,364 58,338 151,450 10 2 pages 4 2 pages 6 2 pages 6 . 2 pages 7 2 pages 6 2 pages 8 2 pages 8 1 page 6 1 page Art, Cuts, Type-setting $ 6,600 1,360 3,887 4,256 4,679 4,200 5,280 3,264 --2.250 $35,776 12.500 $48,276 Dry Pigments and Oils: American Paint Journal Oil, Paint & Drug Reporter Paint Industry Magazine Paint, Oil & Chemical Review Official Digest Paint & Varnish Production 3,533 10,813 2,510 2,332 4,384 2,100 9 2 pages 9 7,,xl0,, units 6 1 page 9 1 page 12 1 page 12 1 page Art, Cuts, "type-setting $ 1,620 964 590 1,008 1,020 .-A,256 $ 6,558 2.6AO $ 9,198 Sweet's Architectural Catalog Miscellaneous Publications Trade Papers (above) $ 5,000 2,000 -ili-474 $64,474 NL 000039900 - 12 - Pacific Coast Branch Dealer Presentation Dealer Aids National Advertising Expense Industrial Advertising Painter Advertising 15% of National Advertising Export Advertising Hawaiian Island Advertising Cooperative Advertising Cooperative Adv. Production Color Gallery Distribution Dealer Merchandising Plans Dealer Signs Dealer Electric Signs Telephone Book Listings Window Displays Cooperative Display Service Color Planning Service Cooperative Color Booklets Stuffers and Mailers Compary Store Advertising Compary Store Displays Company Store Signs General Office Contingency Fund 10,000 10,000 5,000 10,000 16,500 10,000 10,000 15,000 500 6,500 2,000 2,000 NL 000039901 Sehorn Paint Dealer Presentation Dealer lids General Advertising Cooperative Advertising Cooperative Adv. Production Dealer Signs Telephone Book Listings Window Displays Color Books and Folders Company Store Advertising Company Store Signs Contingency Fund mk $ 1,000 2,500 IS,000 3,000 500 1,000 500 3,000 4,000 3,000 800 2.200 139,500 1252 1 500 1,000 20,300 2,000 500 1,000 500 3,000 1,500 800 ' 3,400 $34,500 ML 000039902