“Data Driven Thinking” is written by members of the media community and contains fresh ideas on the digital revolution in media.
Today’s column is written by Michael Lowenstern, Managing Director of Digital Advertising for R/GA.
Around last Christmastime, I was listening to one of my favorite podcasts, NPR’s Planet Money. The topic was – and I paraphrase – “Why Economists Hate Christmas.”
The economist being interviewed explained his argument: When buying something for yourself, you know what you want, you go out and find it, and you exchange money for it. The amount you exchange is generally equal to your perceived value of that item; presumably, you wouldn’t have bought it otherwise. But when buying a gift for someone else, you could exchange $50 for something that has no value to the person receiving the gift – like a toaster or a Power Ranger. That inherent value disequilibrium actually has an economic term: deadweight loss.
Like everyone else probably listening to that podcast, I started thinking about display advertising. It’s a natural leap.