I've heard the term used to describe the advertisements for things like alcohol, cigarettes, and soft drinks where the product isn't really even mentioned it's just associated with a certain lifestyle. Instead of "Try Bayer Aspirin for your headache" it's more like "Here's a bunch of happy people. Coke"
When did this start? It seems like it's far more common now than it was in the early days of television.
I can tell you what it is: as you say, it is associating a lifestyle with a product, but its' roots are more psychological than that, specifically it is advertising aimed at Maslow level 5, aka inner-directness. Maslow's pyramid/hierarchy of needs lays out 5 levels of motivation. In order, they are Survival (where do I get my next meal from? how do I stop this tiget eating me?); Security (oi, you stay off my land which feeds me and is clear of vermin!); Socialisation (hey, mate, are you coming to the cinema after study?); Respect - aka Other-directness ('I'm good at this, don't you agree); Self-Actualisation - aka Inner-directedness ('I don't give a stuff what you think, I'm reading Eat, Pray, Love'). ;) The idea is that you go through these in order in your life, generally getting more motivated and (presumably) better financially rewarded as you go. Source: any description of Maslow's hierarchy of needs/Maslow's pyramid.
When did it start: in the early 1980s (so we are within the time rules), though I am afraid you'll need someone else to give precise dates. Source: "Century of the Self" by the BBC had a good description but is unavailable to buy.
Classic example: 'Because I'm worth it'. The original L'Oreal ad featuring 'because I'm worth it' was a monologue by a woman to camera, written by a female ad executive, lasting approximately a minute, justifying a choice of hair colouring product and ending with 'Because I'm worth it'. The change here is that hair colour change - classically seen as a choice designed to raise your worth in the eyes of a man, i.e. an-Other person (Maslow 4, Other-directness), is now raised above that and transformed into a choice and a value option of the woman herself (Maslow 5, Inner-directness). Obviously, there are sound financial rewards - if you can transform your product from 'it'll get them into your pants faster' to 'I need this to define myself' people will both buy more regularly and pay a premium. Source: Malcolm Gladwell, I forget which book.
'Lifestyle' comes into it because in buying for yourself you are defining your lifestyle - which very quickly becomes 'buy [x]'s fragrance and you are defining yourself as like them...'. Now, note, not all modern advertising is lifestyle advertising - there are still large chunks that consciously aim at maslow 2-4. But Maslow 5 has been so successful that enormous chunks of the advertising industry aim squarely at it, every time....
Maybe 1968.