Evening star., 1939-06-25
Low Per Unit Cost
OF Advertising Cited
By Fund Report

Average Of All Lines
Estimated at Less
Than 3 Per Cent
By the Associated Press.
NEW YORK, June 24.-Total ex-
penditure for advertising In the
United States probably amounts to
less than 3 per cent Of the aggre-
gate sum paid by the ultimate con-
sumer, the Twentieth Century Fund
reported today.
The report was based on q study
OF the costs Of distributing goods
just completed by a research staff
which pointed out, however, that
advertising varies so greatly 1t is
hazardous" to make generaliza-
tions, advertising costs ranging from
a fraction of per cent of the SELL
ing cost to 18 per cent.
One striking fact uncovered, the
fund reported. was the low per unit
cost Of advertising in some Of the
most intensively advertised lines.
For example, "the average (advertis-
ing) cost for cigarettes selling at IA
cents is little more than half a cent
a package"
Cost Of advertising a popular and
nationally exploited soft drink was
given as less than 16/ 1000 of a cent
per scent glass.
A country-wid baking concern
reported advertising expenditures Of
less than 1/10 of a cent for each
l0-cent package Of crackers.
Costs $40 Of . Cent.
Cost Of advertising a standard
breakfast food was given as $40 Of
a cent for a l5-cent package.
For mans shirt of popular
brand, selling at $l95, the adver-
tising expense is estimated at $40
of a cent a shirt.
A nationally advertised bed sheet,
selling at SITS, Is listed as carrying
an advertising expense Of / cent
Advertising's place as a social
force was estimated as follows:
Advertising is needed to educate
the consumer to use new products,
particularly those of q technically
complex nature. Air conditioning,
hydraulic brakes on motor cars, the
Of vitamins in diet have
all been made familiar to the con-
sumer through advertising.
But it is just as true that the
consumer has been bombarded with
bombastic claims about useful prod
ucts and with a lot of nonsense
about useless or harmful ones"
The report listed as examples
whose production cost and inherent
qualities do not vary greatly from
one brand to another" such prod
ucts as cigarettes, toothpaste, shaw
ing cream, packaged medicine, cos.
metics and many other drug store
items, bread. gasoline and possibly
automobile tires. The report adds:
Regarded Is Necessary.
advertising as a technique of SELL
ing Is clearly necessary in the mar
keting of many kinds of goods. It
is q useful selling method which,
like other selling methods, can be
used for bad as we'll as good ends.
1t may, and often does, make large
scale low-cost distribution possible.
1t may, and usually must result in
maintaining standards of quality"
The fund also delved into the
matter Of chain store and single
store merchants. The latter group
maintained their numbers since 1929
and in 1885 operated 86 per cent of
the Nations stores, they said.
Evans Clark. executive director of
the fund, said although less than
one out of IL of the 900 900 retail
stores of the country (employing
100000 persons exclusive Of pro-
prietors, and doing $33, 200 0OO, 900
business were owned by chain sys-
TENS. chain stores handled nearly
% per cent Of the total retail trade.
Newest development found was
the "supermarket" combining all
forms of food under one roof, and
usually doing a minimum gross
business of 5000 a week.
MiddIeman Defended.
Studying the much discussed sub
ject of the toll taken of trade by
the "middleman" in our economic
system, the fund estimated this cost
at less than one-fifth of the cost of
distributing goods from producer to
consumer. On the question of
whether the "middleman should be
eliminated" the report concluded:
THE Intermediary function is an
essential part of the Nations dis
tributive system. If 1t were not
performed our economy in its pres
ent form would hardly exist
However, 1t was found the increase
OF chain store systems and the tend
ency toward manufacturers outlet
activities have tended to bring a
decline in wholesale businesses.
Willard Thorp, director of eco
nomic research for Dun g. Brad
street and formerly director of the
United States Bureau of Foreign
and Domestic Commerce, is chair
man OF the funds Special Commit
tee on Distribution. The fund is a
private research organization en-
dowed by the late E. A. Filene, Bos-
ton merchant.