Perth Amboy evening news., 1918-09-05
By Hon. Wiuiam 3. Celver,

~
BY Hon. William B. Celver.
| Chairman, Federal Trade Commission
Discontinuance or wen sharp cur
tailment of advertising because OF
temporary wal conditions, would seem
to imperil the most valuable asset that
any business has-namely, its good
will. No more faulty logic can be
found than that which would impel q
manufacturer to cease building FOR the
future by means of advertising simply
!, because the output of his factory IS
for the time being, restricted; or be-
cause diversion of his facilities to
war work has operated to withhold his
goods from accustomed markets. II
modern business there can be no sufh-
cient-unto-the-day policy.
In advertising the business man has
built up the intangible or spiritual side
of his business, If such 1t may be des-
ignated, as distinct from the material
side. 1t is the spiritual side, as repre-
scented by goodwill, that is slower OF
growth and that is the more seriously
jeo~pardized by neglect-neglect which
could take no more disastrous form
than al interruption to advertising.
For example, If 1 have the requisite
capital / can build alongside the plant
of the Columbia Graphaphone Com
pany a factory equal in all respects to
the Columbia mandatory. Assume
that I can turn out an instrument
comparable in every way to the Co
lumbia product ana in equal numbers.
Yet 1 am not ever a going concern. !
cannot sell that instrument to the
public in profitable quantities until l
build up the goodwill that b Colum
bia Company has acquired by years OF
advertising.
Goodwill, in my estimation, is far
more valuable than the physical prop
erty with which it is linked. The
physical property is. In a measure,
| useless without the vitalizing spark OF
goodwill. The Proctor & Gamble
plant might be completely destroyed
by fire, and yet the havoc would not
extend to the commercial identity rep
resented by the name Ivory Soap. Far
! from sustaining loss, the goodwill in
herent in the word Ivory" would, II
+, anything, be enhanced by reason oil
that trait of human nature which
makes the public the more ehger to
obtain that which is denied to 1t oil
which is ~obtainable only over diff
Guilty.
That, at times such as the present.
there should be some hesitancy re-
garding advertising policy may be be-
cause 1t has never been scientifically
determined what proportion of adver'
Using expense is an operating charge
and what proportion a capital charge
In my estimation, only a small part
If any, of advertising expenditure IL
properly chargeable as a current item
of sales expense; but is, rather, wher
translated into terms of goodwill, {
permanent investment and hence +;
capital charge. Given this conviction
1t must appear1Quite as short-sightec
to discontinue advertising merely be
cause the var has ~momentarily In
terrupted distribution as 1t would b'
deemed unwise of manufacturer Il
junk a portion of his factory equip
ment because there had been inter
ruption 10 its use.
The manufacturer who has con
verted his factory to war work anc
has therefore interrupted the produc
ii onof his original line, does not tea
down and discard his expensive ma
chinery to save the insurance pre-.
miums or other similar expenses. II
would be just as sensible for a manu-
facturer, whose commercial integrity
Is founded upon advertising, to eaban-
| don his advertising campaign in order
| to save the carrying charge on his
| greatest asset-good-will.
| Many 'Sales' Made Long in Advance
Not the least of the considerations
| certainly, that argue for the continu-
| ance without interruption of the adj
| yertising of all the concerns that will
come back after the war, Is that sales
are in reality made long In advance
of the actual transaction that we COM
monty refer to as the sale" This
will be especially true in the wal
period.