Great Falls tribune. [volume] (Great Falls, Mont.) 1921-current, 1922-10-22
Great Falls Ad Club Finds Advertising
Benefits Consumer as Well as Merchant

doing enough business in proportion
to his rent and other fixed expenses
charges that taxed bis business to
about the same degree, whether he
sold 500 or $1,000 worth a month.
Advertising Reduces Selling Costs
So the local merchant began to adj
vertise. And his competitor adver-
tised. Competition made them both
buy more closely. Competition made
them both fight for more business.
And getting more business, they were
better able to complete-not only with
each other, but with those outside
businesses which SO aggresslvely
sought to take the trade away from
home. The upshot was such that the
alert local merchant can now sell SO
much more merchandise, that his cost
of doing business has gone down from
so per cent, or thereabouts,. to where
today it averages. the country over
less than 80 per cent, inclusive OF a
Shining examples may be given
truth: A shoe store, spending $4,000
a year on advertising, has been able
to double it's business. Buying twice
as many shoes, it can now buy closer.
But that is not all. On its former
volume of 100000 the fixed expen-
ses were about $4,000 or 30 per cent.
On double this volume, its fixed ex-
pense are the same, plus Sl0.O0O tor
advertising, or about $4,000 all told.
Thus the cost of doing business is
now 20 per cent instead Of 30 per
cent. And the merchant can now sell
n pair of shoes, which cost him 81,
at a retail price OF $3.50, and make
more money than he formerly could
by selling the same pair at $3.50.
This means a 20 cents saving for the
consumer, and 6 cents greater pro-
fit to the seller.
Likewise. most manufacturers are
grasping the golden opportunity that
judicious advertising offers. For in
stance, a plant that has been doing
a business of $350,000 per year used
to have 20 drummers running about
the country to sell that output. These
20 statesmen cost approximately 500
900 per year, and they merely scratch
ed the surface of the potential market.
At last the manufacturer decided to
take a chance. He let 10 statesmen go
and appropriated $4,000 for advertis-
ing. Now his volume of business IS
even bigger. Instead of $4,000 his
selling now costs him only $4,000,
and accordingly the public benefits.
Advertising Increases Profits.
But the greatest savings to the, con-
sumner comes when the manufacturer
becomes a benevolent giant. In ad-
yertising one such business-the big
gest of its kind in the world-$30O,O 900
o year is spent. The product is one
that everybody needs. Many. a wom-
an who sees the large advertisements,
saws: "My-if they would only cut
the price Of their goods, instead of
wasting so much money on advertis-
ing"
That is the fallacy. This is the
fact: In each 81 worth Of goods
about one cent goes to advertising.
This mounts up to 100000 on a $50
900. 900 business. An increase of $lO,-
O00,0 90 in one year has resulted. n
manufacturer has been able TO. put III
per cent more into raw materiasi and
to pay % per cent higher wages. In
other words. a l per cent expenditure
on advertising has resulted in more
than 25 per cent greater income to the
employees and considerably more than
10 per cent better value to the con-
sumner. And, n addition, the manufac-
turer made a profit which, without
the expenditure on advertising, would
have been we'll nigh impossible.
When a large cereal manufacturer
came out with an announcement that in
the future every package was to be
covered with a wax cover some would
be economists said: "Phew-how can
they so increase the cost of their goods
and not raise the p%rice?' The an
swer is simple. SO big has their vol
ume of business become as a result of
advertising, according TO their own