The Man Who Sold America: The Amazing (but True!) Story of Albert D. Lasker and the Creation of the Advertising Century

by Jeffrey L. Cruikshank

  Foreman’s directors, who included Lasker, Hertz, and William Wrigley, were dismayed by Traylor’s proposal, which would guarantee the bank’s deposits but cost the stockholders dearly. But by Saturday morning, the bank’s liquidity was in peril, and Lasker, Hertz, and Wrigley were forced to put up enough money to keep the bank operating through the day.

  By this time, the crisis had attracted national attention. Recreating a climactic meeting in the second week of June, Time magazine reported that “newspapermen, lolling in the marble lobby of the Foreman Building, grew impatient for definite news of what was taking place on the [thirty-eighth] floor,” where members of the Federal Reserve were huddling with the Foreman bank directors and representatives of the other leading Chicago banks.10

  What took place on that thirty-eighth floor, according to Lasker, was high drama, in which he commanded center stage. “The room was full of the heads of banks and clearing houses on a Sunday afternoon,” Lasker recalled, “and I made a talk for about fifteen minutes that made financial history in Chicago; they are never going to forget it.”11 Melvin Traylor demanded that the Foreman directors pay First National to take over the struggling Foreman. Lasker responded that they would never sell Foreman “down the river,” and ended by exclaiming to Traylor that he’d never before seen “Shylock performed by a Christian.” (In the immediate aftermath, Lasker denied making the inflammatory comment; later, he admitted that he had.12)

  But First National’s was the only offer on the table, and in the end, Foreman was indeed sold “down the river,” with its directors, Lasker included, compelled to post a $2.6 million indemnity fee. The bank’s individual depositors were thus saved, but the directors—as well as the entire Foreman family—lost huge sums on the transaction, and six smaller banks associated with Foreman were forced to close their doors. This led to sixteen additional bank closings in Chicago neighborhoods over the next two days. The Chicago State Bank Examiners rushed to reassure jittery Chicagoans that the merger had “eliminated the only sore spot in the Chicago banking situation,” and that additional closings were not imminent.13

  Lasker, Hertz, and two other non-family-member directors of the bank were named directors of First National a month later.14 But this episode—along with the unhappy experience of lending money to his stock market-playing friends—sparked a new kind of cynicism in Lasker. “Most of the unhappiness I have had in life,” he observed several years later, “has been from people I have helped.”15 Increasingly, he felt detached from business, which he saw as having lost its moorings, with no clear course back to a safe harbor.

  Mary and Gerhard’s marriage survived the crisis of the Foreman bank failure, but within another couple of years, they had arrived at a crisis of their own, and Mary—an energetic and highly intelligent young woman—needed something to take her mind off her marital difficulties. Flora decided that something should be a job at Lord & Thomas, and she demanded that Albert hire their daughter.

  Even though he had entertained ideas a decade earlier of setting Mary up in the newspaper business—perhaps even joining her there—his reaction to this proposal was an emphatic no. “Now, look here,” he told Flora, “I have given you and Mary and the children everything I have in the world. I have shared it with you. It has been yours first. But the one thing I have kept for myself is my career. Now don’t you start on my career; don’t you try and bring nepotism in my career. It won’t go.”16

  Lasker thought this was only a whim on Mary’s part and didn’t want to indulge it. It was not that she couldn’t do the work, he felt, but that she wouldn’t keep it up once she started. Flora believed otherwise—and she told Albert that continually for the following six months. “She’d come into my room every night,” Lasker recalled, “and start over again. She was a very determined woman.”

  Albert approached business manager David Noyes and asked him to get him out of a tight spot by meeting with Mary. “I am going to tell my wife,” he said, “that I am going to send my daughter in. Of course it is all nonsense, and you write me a long memorandum why you can’t do it. I will take it home and show my wife; I know she won’t upset my organization.”

  After several days, Albert had not yet received the memo from Noyes, so he tracked down his business manager to see what had happened. “Mr. Lasker,” a sheepish Noyes said, “I just didn’t have the courage to tell you that I hired her. I meant to give her ten minutes, but she stayed four hours, and she is the best prospect we ever had. She has more advertising in her than any human being.”

  With that, Mary Lasker was on the payroll, at the modest salary of thirty dollars a week. Albert decided that the best tactic was to keep his distance from the firm’s newest employee. He did, however, leave a note on her desk on her first day of work (October 29, 1935):

  My darling Mary,

  Welcome to Lord & Thomas. I hope we have a long business association together—if we do, we will both get much joy from it.

  Both as father and employer I give you this advice—try to learn from everyone (high and low), try to be of service to every one (high and low). He finally leads who first learns to serve. And remember—we spend our lives learning. Above all, be yourself—your best self. Always think of the other fellow’s viewpoint and try to get him to think of yours. Learn to walk before you run. Believe in yourself—and believing, strive to learn every day and grow creatively every minute so that you will justify your belief.

  All my love,

  Father17

  Lasker later concluded that Noyes had been right about Mary’s advertising talent. “It’s the darnedest story,” Lasker told his ghostwriter in 1938. “A little over two years, and I have never known anybody who has been in the business ten years and been [as] successful, and who has gotten as far as she has in proved performance. She is the sensation of the line in Chicago.”18

  As good as Mary was, however, her talent could not salvage her career at Lord & Thomas. Intermittent bouts with alcoholism impaired her performance, as did the bluntness she inherited from her father. The end came in 1941, when Mary fought with one of the agency’s managers, and Albert—fearing a charge of favoritism—felt he had to side with the manager. He fired Mary.19

  Edward, meanwhile, had also launched what appeared to be a promising career at Lord & Thomas. After graduating from Yale, Edward decided to go to work for the family firm because he couldn’t come up with a more interesting career.20 His father believed that before trying to advertise products, Edward needed to learn more about why people bought them, and secured a job for his son in England as a salesman for J. Wix & Sons, a subsidiary of American Tobacco. After several years abroad, Edward returned to work in the New York office, where, upon his request (and with the intercession of American Tobacco’s George Washington Hill), he became a mainstay of a growing new department at the agency: radio advertising.21

  In the late 1920s, Pepsodent toothpaste—which had been on the market for a little more than a decade—was losing ground to its increasingly formidable competition. Its owners, including Albert Lasker, were far from happy about this.

  Peposdent had been founded in 1916 by Douglas Smith, the Chicago-based entrepreneur who had already amassed a fortune from the sale of typewriters and patent medicines around the turn of the century. When his cash-cow, Liquozone, was exposed as a fraud, Smith scrambled to find other products to bring to the market.22

  One of these new products was Pepsodent, which according to Smith was brought to him by a chemist from Lincoln, Nebraska, who told him the formula would make a good toothpaste. The product even came with its own “reason-why” argument: it removes film on teeth.23

  But the company had a poor relationship with both retailers and wholesalers, and sales were almost nonexistent. In fact, toothpaste sales in general were quite low, mainly because very few people practiced—or even knew about—oral hygiene. Although the first toothbrush was patented in the United States in 1857, only a small minority of the population owned a toothbrush
until after World War I.

  When Smith acquired the toothpaste, therefore, he faced an uphill battle. Hopkins, who had so successfully marketed Liquozone for Smith years earlier, was now a fixture at Lord & Thomas, so Smith decided to hire the agency to see what Hopkins could come up with. Initially, Hopkins tried to turn the account down, saying that the product was overpriced and that (as he later wrote) he did not “see a way to educate the laity in technical tooth-paste theories.”24 Under pressure from Smith, however, Lord & Thomas took the account.

  For the first several years of the relationship, the agency’s efforts on behalf of Pepsodent were limited, reflecting Smith’s modest ad budget. Hopkins focused on the fact that Pepsodent contained pepsin, which allegedly digested the mucin plaques that were the “source of most tooth troubles.” Ads placed by Lord & Thomas in dental journals asserted that “the whole object of Pepsodent is to dissolve the film,” through a somewhat mysterious digestive process. As in the case of Liquozone, Hopkins’s claims generated some unwanted attention. As one researcher from Columbia University’s College of Physicians and Surgeons icily put it:

  We have found that none of these digestive claims is warranted in any degree. “Pepsodent” is devoid of the digestive power on dental mucin plaques that is commercially ascribed to it. Mucin plaques cannot be digested from teeth by any advertised use of “Pepsodent” . . .

  Our results make it evident that “Pepsodent” is put on the market in utter ignorance of the dental and biochemical principles involved, or with intent to mislead the multitude that may usually be deceived by plausible advertisement.25

  Hopkins shrugged off the complaints, probably because by 1919—with total sales of around $2,000 per week—Pepsodent was still just bumping along.26 At this point, however, Lasker took a personal interest in the account. In consultation with Hopkins, Lasker made an astounding proposal to Douglas Smith. Smith needed to invest $1 million in advertising, Lasker asserted: an enormous sum for a relatively unknown and untested product. Lasker offered to front the money himself and told Smith that if he was satisfied with the results, he could pay Lasker back with company stock. If Smith wasn’t completely satisfied, no repayment would be necessary.

  No entrepreneur could pass up that offer, and Smith soon gave Lord & Thomas the go-ahead. Hopkins, too, demanded and got stock options, and from that point forward, Lasker and Hopkins were deeply involved in the fate of Pepsodent.

  Hopkins already understood the challenges that Pepsodent presented. At the time, all toothpastes were all made from sodium bicarbonate and flavoring. So how could Pepsodent differentiate itself from the growing number of competitors?

  Hopkins decided to employ a tactic he later called “altruistic advertising,” by which he meant a “test for the good of the parties concerned.”27 In various test cities, Hopkins tried hundreds of “altruistic” ads, and systematically recorded the responses to every ad. Overall, his success was outstanding. In the first test, Pepsodent spent $1,000—and recovered its money before the advertising bills came due. The experiment was repeated in other cities, with similarly successful results. Within a year, Pepsodent had established a demand nationwide, and within four years, a worldwide market.

  Part of this success was an accident of timing. The U.S. government began including toothpaste in the ration kits distributed to soldiers on the front lines in World War I, which contributed to a rapidly expanding public awareness of dental hygiene. In addition, nearly 70 percent of all toothpaste advertisements in the early 1920s touted Pepsodent, which certainly built the brand’s momentum.

  Later in the decade, however, Pepsodent began to falter again. Competitors like Colgate and Forham’s increased their share of the advertising market—and also their attacks on the frontrunner. Meanwhile, there was another important contributing factor to what turned out to be a steady downward slide for Pepsodent. Research conducted in the late 1920s confirmed that the product was overly abrasive and could damage teeth. (Colgate capitalized on this research in a series of pointed ads.) Pepsodent’s research labs worked furiously to come up with a new formula to reduce abrasiveness; meanwhile, its marketing gurus scrambled to develop a novel marketing angle.

  By 1929, Pepsodent sales were down 38 percent from their 1922 peak.28 The brand was in such a dramatic freefall, in fact, that there was talk of taking it off the market. Just in time, Lord & Thomas hit on a new marketing strategy, involving the fast-evolving medium of radio. This successful gambit reversed the company’s fortunes—and in the process, helped change the face of advertising.

  By the time Lord & Thomas began to investigate advertising Pepsodent on the air, radio was far from a new medium. The earliest wireless broadcasts were transmitted on Christmas Eve in 1906, and regular radio broadcasts by wireless enthusiasts began the following year.29 But well into the 1920s, radio was still thought of primarily as a means of point-to-point information transmission—for example, communication among ships or between military command centers and the front lines of battle.

  After World War I, radio frequencies in the United States were turned over to civilian control, and the number of radio stations mushroomed. Educational institutions, companies, and individuals—all began experimenting with a wide variety of formats, including talk, music, and comedy broadcasts. Over the next decade, as broadcasters learned to use radio to its best effect, programming gradually become more formalized. One especially popular format grew out of a vaudeville model, in which two men would perform a “song and patter” routine that could be shortened or lengthened to fit available broadcast time.

  Advertising on radio remained the exception rather than the rule. In part, this was owing to the untested nature of the new medium: nobody, not even the broadcasters, had any idea how many people were listening to their shows. In addition, many radio buffs objected to the idea of bringing advertising “into the home,” arguing that radio was a more intimate medium than newspapers. Somehow, advertising on the radio felt more intrusive than advertising in print and therefore should be discouraged.

  The first radio advertisements appeared in 1922, when American Telephone and Telegraph offered to sell airtime in a scheme it labeled “toll broadcasting.” A real estate company took AT&T up on the offer in August of that year, and many other organizations soon followed suit. These fledgling radio ads rarely mentioned the price of a specific good or service; rather, much like public radio sponsors today, they attempted to promote a positive institutional image.

  By the late 1920s, broadcasting had begun to resemble today’s industry. National networks (including the National Broadcasting Company, or NBC, formed by David Sarnoff’s Radio Corporation of America [RCA]) were established, and the concepts of programming, advertising support, and market research had taken root. In fact, the first books on radio advertising appeared in 1927, although major advertising agencies generally weren’t deeply involved in radio advertising until the early 1930s.

  Some of Lord & Thomas’s earliest experiments with radio came at the behest of the irrepressible George Washington Hill. American Tobacco’s first network show debuted in 1928: the Lucky Strike Radio Hour (which later became the well-known Your Hit Parade). The show consisted of popular songs of the day with minimal orchestration, interspersed with American Tobacco commercials. Hill insisted on the minimal arrangements, believing that they would help listeners relax and leave them more receptive to his commercials.30

  As far as Lord & Thomas was concerned, the Lucky Strike Radio Hour was more of a vanity piece than successful advertising. Lord & Thomas’s American Tobacco account history makes no mention of radio campaigns, and Lasker later asserted that radio was not particularly successful for the company.31 But Hill was driven first by his own convictions. By mid-1936, he was spending about $350,000 a week on radio advertising, and was thoroughly convinced of radio’s efficacy.32

  By that time, Lasker, too, was a convert, owing largely to the results achieved by another client: Pepsodent.

  Pep
sodent’s first forays into radio were initiated by a new recruit: Walter Templin, previously head of the Manhattan Electrical Supply Company, an early manufacturer of radio receiving sets. The Manhattan Electrical Supply Company became a significant client of David Sarnoff’s RCA, one of Thomas Logan’s key accounts. Logan had been favorably impressed by Templin’s work, and after his firm’s merger with Lord & Thomas he recruited Templin to join Lord & Thomas in Chicago to work with the Pepsodent Company.

  The timing of Templin’s arrival at Lord & Thomas couldn’t have been worse. He had taken a month off after leaving New York to travel in remote areas of Canada, and during his northern wanderings Logan died. By the time Templin arrived in Chicago, therefore, his champion was buried, and Lasker—the man he would now be dealing with at Lord & Thomas—was confined to Mill Road Farm with yet another serious bout of depression. In addition, Kenneth Smith, who had taken over management of Pepsodent from his father, was largely absent from the company at this time; he left to spend the winter in Palm Beach only weeks after Templin arrived and spent much of the following spring in London.