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Hello and welcome to Planet Money Summer School, the sweetest course in economic sense that Candy Cartwell you cooked up with your sister after Halloween. This is class number seven, advertising and race. I'm Robert Smith. It is our second to last class. Next week will be opening up our online final exam for your chance at a Planet Money diploma, which I'm told has real Latin on it.

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You cannot fake that.

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This week, we're going to consider an anomaly in economics in the classic economic models that we've talked about so far, you have perfectly rational and informed consumers who choose different products based on price and utility, as if we all know that the choices that we make get swayed by all sorts of factors that are more psychological than economic.

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And advertising fits into that category. Today in class, we wanted you to think about the economics and psychology of advertising. How much information do you have as a consumer and how much information does a company have about you as a segment of the market? Before we talk about that, though, we wanted you to listen to one of our favorite episodes that we have ever done. It was called This Ads for You and I cohosted. It was Sonari Glinton.

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It's about a man named Tom Burrell back in the 1950s. Tambra was in high school and he had to take one of those aptitude tests, you know, the tests to tell you what you should be when you grow up. And he takes the test and he scores superhigh in persuasiveness and artistic ability. And his teacher says, oh, persuasiveness, artistic ability. There's only one profession for you, advertising.

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Tom Burrell is not the kind of guy who shies away from things. And so he gets to college and he's like, bring on the advertising world. Well, a professor of his sits them down and tells them, you are smart, you are persuasive.

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The problem is there are no black people in advertising. Still, timbrell is not dissuaded.

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He sees an opening in the mailroom in the mailroom of Weight Advertising in Chicago, and he applies. And the good news, he is the only applicant. He is a shoo in.

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Well, except this is 1961. To Hire Me was a major senior management decision. The chairman, the president, the executive vice president, a senior vice president, they met and conferred over the issue of even hiring a a Negro.

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And then after they interviewed me, they met to determine whether they were going to go ahead with this, quote, revolutionary kind of move to hire a a Negro boy to work in the mailroom, in the mailroom, in the mailroom.

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That was a major executive decision that brought the chairman all the way back from his his home in Delray, Florida, to have a meeting to decide that.

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And after deliberating the decision was made, they let him in, he got the job.

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And now Tom Burrell was something that few people had seen before, a black man in advertising today on Planet Money Summer School, the story of Tom Burrell and how he changed the way people write ads and changed the way we think about advertising and more importantly, the way advertising thinks about us.

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Support for NPR and the following message come from American Express in 1850, American Express made a promise to back you in times of plenty. And during times like this, that promise still stands. American Express is proud to support small business owners through this unprecedented time. And whatever comes next to help your small business get back to business, visit stand for small dotcom. That's the powerful backing of American Express. Friends, how many of us have them? So if you're lucky, you have friendships that are affirming and that are like a place for you to be a fuller version of yourself.

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It is 1961, Tom Burrell has started his new job in the mailroom and he looks around at weight advertising in Chicago and he realizes this place is about as boring as you can get. It had these really safe kind of big brands that never took any chances.

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Robinhood Flower, Alka Seltzer, the Grand Ole Opry advertising period at the time was that to sell products, it had to be really sort of generic, nothing to spice. You don't want to offend anybody. One size fits all targeted at everyone who owned a television set with Alka Seltzer.

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Really just. As rollaway tried, it probably goes without saying that you could watch Alka Seltzer ads all day long in the 1960s and never see a non-white face, Burrell really liked the agency.

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He was really happy just to be in advertising. The people were good to him. They treated him well. And there weren't a ton of those awkward moments that you might expect from being the only black guy in that agency except for one.

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You know, it was the Christmas party. It's always the Christmas party.

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Robert, this is when the CFO of the company walks up to him and says, Tom, you know, we're happy you're here.

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And we're wondering if next year you would be willing or interested in singing some downhome songs.

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So what were you thinking when he said that? What did you think? I think I think I did the same thing I did. I think I laughed. I said, who's who?

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So you talk and he never it.

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For the record, he never sang at the office Christmas party. And he didn't really stay in the mailroom that long. He started writing copy coming up with folksy language to sell flour.

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He even made a big pitch for the agency's big account, Alka Seltzer. He had a really edgy idea that involved a sick monkey and Alka Seltzer. It was weird. It was crazy, but it never got made.

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After just a few years, Tom Burrell's ambition was too big for Wade advertising. He found another agency willing to let him do edgier stuff, Needham, Harper and Steers. And they they didn't have to fly the CEO in from Florida to approve his hire.

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Tom was the first black copy supervisor we had ever had in the agency. And, well, he's he's very tall. He's a good looking. He has a good voice. And he was very gifted, the creative guy. So we were we were drawn to him.

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Keith Reinhardt was copywriter there in the 60s. And I'm sure you know his work like a good neighbor.

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State Farm is there. And we got lots of letters from English teachers who objected to our use of like a good neighbor instead of as a good neighbor. But it stayed with us and they're still using it today.

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This agency would go on to be one of those big historic innovators in advertising.

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And Keith Reinhard says Tom Burrell was one of the best copywriters they had.

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And in a weird way, the advertising agencies work. These two were both colleagues, but they were also competitors. The two men were often pitted against each other to see who could come up with the best ideas.

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One incident I remember when we were both given the assignment to convince people to try Continental Airlines because they had wider seats, new wider seats, and we tried to crack it and Tom and his group just nailed it.

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I think it was Tom himself who came up with this idea to reprint the seat cushions of these new wider seats on Continental Airlines and a double page newspaper spread. And the headline simply invited readers to sit down on the newspaper spread and see how much wider it was, how much more comfortable. I mean, he really killed it.

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Remember, Robert, we're talking about the 1960s and Chicago. So the civil rights movement is going on. And in Chicago, there's sort of a Harlem renaissance. You got Ebony magazine, which is a really, really important media outlet for African-Americans, definitely at the time. And they're ad reps are going around saying this is a black magazine.

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The ads have to have black people in them. And that woke up a lot of people in the advertising world and the consumer market world in Chicago.

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So what they would do is they would write a script for a TV ad, say, build a set. And first of all, you would hire white actors like in this ad for crest there, these two white kids brushing their teeth at a sink.

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I never be great. Wasn't a good faith test. Greg used the same to take his mind with that flourished in my Silus crest. I had 42 percent pure cavities, so they would fill the ad with the white actors.

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And then at the end of the day, swap out the cute white kids for equally cute black kids and have them pretty much do the same ad I never could.

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Yeah. Then in a toothpaste test, we were on opposite sides. My side use crest. Yes, I do the same toothpaste, but without flaws, Dan and that's when I beat Jeff because my side had twenty one percent fewer cavities with Crest.

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Brill says it was pretty comical how little they thought about black consumers in these days. He taught me this one famous story of a State Farm ad that they wanted to change for Ebony magazine. Now, the original ad had a white couple laying in bed. There was a photograph on the side of the bed.

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And this is a family photograph.

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And so then they did a black version of that same ad, but they forgot to change the photograph. So you get this black man.

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He gets his white family photograph, the white family on the side. And so that was one example. Another example was Schaefers beer.

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It's not one that you have when you make more than one.

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A lot of brands like Schaefers like to rely on nostalgia, you know, thinking about the good old days.

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Well, for black people, the good old days weren't that good, especially when it was before the Emancipation Proclamation. And at the time, the line was.

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1856, that was a very good year for beer.

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It was a very bad year for black people and this ad is showing up in Ebony magazine, something really strategically wrong with this, talking about how good a year 1856 was for beer and it just screamed.

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Insensitivity, screamed, insensitivity. It was a horrible year for us.

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Robert, you can imagine just how weird this was. You got a black guy who's working at an all white advertising agency.

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And Tom Burrell is going home to the south side of Chicago, which is sort of erupting in the civil rights movement. And they're the slogans that the Black Panthers and there's this idea of black power. And, you know, he wrestles with this idea and he decides he's going to come up with his own slogan. That's especially meant for the advertising world.

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Black people are not dark skinned white people.

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You know, when we talk to people about Tom Burrell, they quote this almost verbatim back to us. He said, it's so often black people are not dark skinned white people. And in fact, Burrell decides to finally start his own advertising firm, really based on this principle of black advertising agency that understood and could sell to the black consumer.

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Now, I know this this seems immensely obvious now, but at the time it felt like, you know, a real slap in the face to these white agencies he worked for.

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I had some reservations about some of the things he was saying.

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You may remember Tom's colleague, Keith Reinhard, whether or not we as Caucasian creative people would be able to appeal to the black audience. I felt that we could and that we had in some cases. But it was pretty hard to argue with Tom when he said, you know, blacks are not white people with dark skin. I mean, we have a culture of our own and we need to express that.

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So Tom Burrell eventually got a partner, Emmett McBain, and they formed the firm Burrell McBain, one of the first all black ad agencies in 1971. It would eventually become Burrell communications. And the big brands came running desperate brands like Jack Daniels, Ford and one of his big first clients was Philip Morris and the Marlboro Man.

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And this was a big problem selling the Marlboro Man to African-Americans.

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The Marlboro Man was this rugged cowboy who was always filmed on horseback in like a Utah like landscape smoking cigarettes.

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The Longhorns come to Marlboro Country, Marlboro, 100 in the big gold.

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I don't even know where to start. I mean, first of all, when you start talking about Longhorns, you've lost me. You've lost me on Longhorns. I'm done, and then when you start talking about 100 years ago, you lost me on that, too, because that's the last thing I want to do, is go back 100 years ago with a bunch of of rural cowboy white guys.

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That doesn't sound too safe.

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So Phillip Morris wanted to create a black Marlboro man. And of course, that came the Timbrell.

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What did you do to make it make it appeal to someone like you?

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Well, I took it out of my own country and I put it into the city. That's one thing, and the Marlboro Man became a very cool city city dude, very well, very stylish, well dressed, cool, had a big cool factor going.

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Gone was the cowboy hat, the big belt buckle. The new black Marlboro Man has a sweater and he sits there and he stares out not at the range, but at a swanky library. It is Urbain. It is urban. It is definitely not a cowboy scene.

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We change the line, which is almost blasphemy.

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We change that line from come to where the flavor is and the line was simply where the flavor is. So we're basically saying that the city where black people are is where the flavor is.

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What Burrell did was take this general marketing had and he tailored it for a black audience, but he really didn't want to be, you know, finishing someone else's work. He wouldn't be doing something bigger. He had a bigger vision to craft an ad in a campaign from the ground up.

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And he got the chance. In fact, he got the biggest chance that an ad agency can get. If you've seen Mad Men, you know what this means. McDonald's called.

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McDonald's called. Well, actually, this guy called Paul Taraghi.

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You're in charge of marketing at McDonald's for quite a while, right?

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I started the marketing department, McDonald's, and in the 1970s, McDonald's had one goal and one goal only grow aggressively grow.

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It had already conquered the suburbs. It wanted to move big into the cities.

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It well, it became apparent that the black consumer was growing in numbers and importance and felt that we needed somebody that was specialized in that area.

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So I think this is one of those moments where the phrase call Tom Burrell came out in the conference room. Yeah, it wasn't like there were, you know, sheets and sheets of black advertising agencies at the time. And when Tom Burrell finally sat down with McDonald's, he had to explain to them not, hey, guys, you need to sell the black people. That part they got.

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But it was the way that African-Americans interact with your restaurants is different than the way white people do in the commercials at the time. They would show white families piling into the car. The idea was that McDonald's to them was a treat, a destination in the black community. McDonald's meant something completely different.

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McDonald's was not used as a place where the family would go. The McDonald's was used as a place where working people would go and take a break, whatever. They had a chance. It was a place where children would go very often by themselves. The average check for a family going to McDonald's on these special occasions was larger. The frequency was less. The average check in the black community was a lot smaller. I mean, kids running in and out getting French fries.

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And Tom had this big realization, which was that McDonald's wasn't just a place to eat. McDonald's was also a place to work. It was a major employer in the city. And so we launched a series of ads known in the industry as Calvet because it was about this kid named Calvin. Hey, isn't that Calvin?

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I haven't seen him for a while. One of the ways in I heard he get a job. Yeah.

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Dig that 80s hip hop beat. Well, it shows a young black teenager. He's strolling through the hood, which looks strangely like the Brooklyn set on the backlot at Paramount covid-19.

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Looks like responsibility's been good for him. I'm just glad somebody believed in him enough to give him a chance.

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One way he's working. Welcome to McDonald's.

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May help you, Robert. It sounds kind of funny. Now, the ads are a little bit cheesy and straight ahead. But the thing is, they were really successful and they ran for a decade. And you followed Calvin as he worked his way up to becoming a manager at McDonald's.

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Calvin, how are they used to hang out on the corner? So you don't know that yet? You know, I'm pretty sure that in the alternative universe that Calvin is living in, he owns a McDonald's. Well, he probably owns like a whole chain of McDonald's or something like that.

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As somebody who watched a lot of TV in the 80s, it couldn't happen to a nicer kid.

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By the time this ad aired, Tom Burrell was certifiably famous. He was this huge name in advertising.

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And you know what happens when you're a huge name in advertising? You also get a lot of criticism.

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And there were people at the time who said, look, yeah, you made a success in this industry, but you made a success in this industry by selling brands that weren't exactly high end luxury brands or health food stores. And I had to ask him about that.

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In your early success, some of the accounts that you got were, you know, the Marlboro Man we just talked about, Jack Daniels. The obvious question would be, you know, these are not the best things for for African-Americans. I mean, that's right. And this is how you're making your living. How do you feel about that?

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Oh, I struggled with that and I struggle with it.

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But I ended up dropping the cigarette clients pretty early on in his career. What's important to note is that at the time, Broo realized the kind of platform that he had with McDonald's. You know, he had a theory that he wanted to work on. It was called positive realism, which meant putting regular black people in real life situations on television.

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It had that kind of positive effect, even though arguably we were selling things to them that, as we see now, were not good for them. But there were no things that I recall selling that I declined to use.

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And once people saw that he was successful with doing that with McDonald's, a lot of the other big American blue chip brands came running to him American Airlines, Toyota, Procter and Gamble, General Mills, Sears, and his slogan that black people aren't dark skinned.

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White people became kind of gospel in the advertising world, but not just relating to African-Americans. The general principle was one size doesn't fit all in. Each group needs to be taken into account.

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What Burrell did opened the door for the kind of ethnic microtargeting that we see today.

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Robert Klara is contributing editor at Adweek.

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And the way that he did that was by making mainstream brands not just aware of the black community as a very viable community of consumers, but he also furnished them with a means to reach them that was new and effective. And then once that in and of itself became a mainstream thing, the natural evolution of that trend was then for advertisers to say, oh, well, then there must be other groups that we can reach out to. And the idea of specialized advertising, targeted demographic advertising grows out of that.

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But you wouldn't have had that if you didn't have the initial awareness of the broader demographic group that Burrell helped to create.

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Timbrell is basically retired now, though he does some consulting, sort of trying to help major brands understand how to use or not use hip hop. After all this time, he still has to teach the same lessons he was teaching 50 years ago.

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UUNET marketing if you're not targeting. And so this whole business about one size fits all.

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I mean, there's still a kind of a movement on the part of wishful thinking clients to say, hey, can't we just talk to one group of people because it's so much easier.

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But the whole thing is that it is that we now have the ability to really get in and talk to people on an more individual basis.

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Now, marketers realize it would be ridiculous to just try to sell to the black guy or the white guy.

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It's about selling to the young black gay guy who lives in West Hollywood, plays golf, listens to Frank Sinatra and likes public radio.

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Wait, wait, wait, wait. You play golf? Yeah, of course I play golf. Well, the idea, Robert, is that more and more you won't be thinking, who is this ad really? For now you're supposed to think this ad is especially for me, the great Sonari Glinton episode from 2015.

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Coming up, we talked to an economic historian about how advertising fits into our understanding of economics and how it has a different resonance with black consumers.

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Some are schoolers, let's put on our economics cap now and think about how advertising works, it does not make products better, doesn't make workers more productive. If anything, advertising actually makes products more expensive. But it does act as this little grease in the gears of the market by solving what's known as an information problem. As consumers, we don't know everything that is for sale. We don't know all the features. We don't know how much things cost.

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Think of how long it would take to search for all that information. Advertising, in theory, anyway, makes that a little easier.

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But there are other more subtle signals from advertising. And to discuss that. Let's bring in our economic expert today, Travon Logan, who teaches economics at the Ohio State University. Hey, Professor. Hi, how are you? I'm doing pretty great after that episode. Professor, one of your areas of research is the time period right before the Tomball era. And one of the interesting things you found is that this information problem that we talked about that all consumers face was even more of a problem for black consumers.

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Many people don't realize that the end of discriminatory businesses came with the Civil Rights Act of nineteen sixty four, which banned racial discrimination in places of public accommodation, which would include almost all businesses that are open to the public. And so before this point, you could be a business that simply did not solicit at all, or in fact would not serve African-American consumers or consumers of any particular group, if you would like. It could be completely discriminatory. And so this created a very significant information problem, especially for African-Americans who would travel, say, over the roads in the 1940s and 1950s.

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And it gave rise to Victor Green's Green books, which were travel guides for African-Americans to navigate through, particularly places in the United States. And it was not just in the South to find places that they could, for example, gas stations that where they could use a restroom, where they could find local pharmacies that would serve African-American customers, where they could have go to restaurants, where they would be seated and served and not barred from entering due to their race.

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And so those travel guide solved the information problem because you didn't know what businesses were there. Part of what's interesting about what Tom Burrell is doing is he's taking these really large firms and really they're making a really blanket statement to the public via this targeted advertising to African-Americans that clearly they're non-discriminatory and that solves this information problem at a much larger scale.

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But it does so in the context of the post Civil Rights Act era, which is fascinating, because if you you have to think about what happens before the Civil Rights Act, the mindset of black customers to know how effective advertising is in the 60s and 70s that actually acknowledges their existence and says, we want you to be our customer.

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Yeah, it's a big deal in two dimensions. When they talk about sort of the advertisements in Ebony magazine, there are two different types of firms that are advertising there. Right. So one example would be Ebony Fashion Fair, which is a cosmetic company, which is for African-Americans. They're advertising in Ebony magazine. So they have a captive audience there. And it's an African-American business advertising to African-American consumers. At the other end of the spectrum, you now see in these magazines really big mainstream products, Procter&, Gamble, Johnson and Johnson Products, Crest and other sorts of things that everyone uses.

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Being targeted in using African-Americans in the advertisement themselves sends a very strong signal to black consumers that this market is valued by this particular firm.

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One of the economic theories about why advertising exists is that it does provide an advantage to companies by providing a barrier to entry. So if you take Coke and Pepsi and McDonald's and Burger King's, they spend so much money on advertising that it makes it difficult for anyone to move into that field and challenge them.

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How does this end up being part of the calculus when it comes to advertising to to different groups, different demographics?

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Yes, and I think that certainly if you're appealing to the masses, you're certainly not going to ignore the large white demographic. But the question is how much of that black demographic can you ignore? And this is where the competitive marketplace comes into play. What if your competitor starts paying attention to them? Now, you have this problem because you may not necessarily want to do racially targeted advertising, but certainly if your competitor does, they're going to increase their market share by default.

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And so that would encourage you to also start to target that market. And so what you end up with is competition for the large market, but also now competition for the small. Demographic and once again, in the same sort of competitive processes that play there already. We can put that concept onto our list of vocabulary words this week, market segmentation, dividing up a market into smaller groups so you can increase sales. Also on the list, information problems.

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Thanks so much, Professor. Thank you. Travon Logan is a professor of economics at the Ohio State University and Associate Dean in the College of Arts and Sciences, our University of Michigan team, Justin Wolfers and Betsey Stevenson. We'll return next week for our last class on all of the bad things that can happen to you in the world. Volcanoes feature prominently. Oh, and I almost forgot the assignment this week.

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Tell us a story of the most micro targeted ad you have ever received.

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Do they know that you raise pigeons while unit? And how do they know that?

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Let us know where Planet Money at NPR. You can also find us on social media, Facebook, Instagram, Twitter and Tic-Tac who helps fund the content on the Planet Money Stream. Today's class was produced by Lauren Hodges with help from Alexi Horowitz Gozi Sound Design from Isaac Rodriguez and editing by Alex Goldmark. I'm Robert Smith. This is NPR. Thanks for listening.