Freakonomics Radio
441. Does Advertising Actually Work? (Part 2: Digital)
Nov 26, 2020
Steve Tadellis, a marketing expert from UC Berkeley, and Tim Huang, a research fellow with insights into the attention economy, delve into the world of digital advertising. They tackle the effectiveness of digital ads versus traditional TV, revealing surprising truths about ad spending and consumer behavior. The discussion highlights challenges in quantifying success and skepticism around the industry's claims of engagement. They also explore the risks of a potential digital-ad bubble and emphasize the need for diverse economic strategies in marketing.
48:21
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Quick takeaways
- TV advertising may be less efficient than assumed, with minimal impact on sales despite large investments.
- Digital advertising platforms like Google and Facebook have gained significant profits, indicating the shift in advertising towards online channels.
Deep dives
Effectiveness of TV Advertising
Despite the conventional belief that TV advertising is highly effective due to significant investment, research by a marketing professor reveals a different story. The study suggests that increasing TV ad spending would lead to only a 1% increase in sales, challenging the industry's assumptions. While objections from the marketing industry exist, the findings suggest that TV advertising might be significantly less efficient than previously thought.
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