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Advertising is a bit of an anomaly in economics. It doesn’t make a product better. It doesn’t make workers more productive. If anything, advertising just makes products more expensive. So why does it work so well?
It comes down to solving an information problem. For consumers, advertising acts as a shortcut for decision-making, even if it doesn’t always steer you to the right product.
In today’s class, we’ll consider how different communities have different needs from advertising through the story of Tom Burrell, one of the first Black advertising executives.
Burrell started in the mailroom in the 1960s…and even that was breaking a color barrier. As he rose up the corporate ladder to manage big accounts, he noticed that advertising was failing to meaningfully connect with Black consumers. In his words, Burrell said that ads were treating Black people like “dark-skinned white people.” They were featured as actors but not seen as real consumers with different needs. He ended up creating the Black Marlboro man and the iconic series of McDonalds ads starring a young Black man named Calvin.
After the story, we talk with Trevon Logan who teaches economics at The Ohio State University and has studied advertising before and after the Tom Burrell era. Logan points out the massive information problem among Black consumers that existed before Burrell stepped in….and how it led to the targeted advertising we see today.
Concepts:
- Information problems
- Market segmentation
- Targeted advertising
Assignment:
- Tell us a story of an ad that you felt was very narrowly targeted toward you. How did it signal that and how do think the advertisers got that information? Tell us about it. #PMSummerSchool
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Landing Page Copy:
We consider the strange economic world of advertising: why it exists and how it evolved to target narrow demographics. We feature the story of one of the first Black ad executives, Tom Burrell, and how he steered the advertising industry to a different way of viewing who it talks to and the messages it uses.
Concepts:
- Information problem
- Market segmentation
- Targeted advertising
