440. Does Advertising Actually Work? (Part 1: TV)

In this episode of Freakonomics Radio, the effectiveness of television advertising comes under scrutiny. The podcast features contrasting perspectives: an economist who highlights how a major retailer squandered millions on ineffective newspaper ads, and advertising professionals who argue for the industry's worth. Through innovative research utilizing a "border strategy," which compares sales in neighboring TV markets with different ad exposures, findings reveal that most brands overspend on TV ads, seeing only a 1% sales increase for every 100% boost in spending. This challenges the notion of high returns on advertising investment and suggests many businesses could enhance their profits by trimming their ad budgets.