If They Hawk It, You Will Come

By Russ Roberts

From the St. Louis Post Dispatch

Oprah and Martha appear as different as night and day.

One is African-American. The other is whiter than white. One is chatty and informal. She seems like one of us. She has weight problems. The other one seems almost too perfect. Everything is handmade, homemade, crafted with love and matches everything else.

Yet these two women have much in common, starting with their wealth. Each possesses a talent that is hard to measure. Neither is a great golfer or actress or mathematician, talents that jump out at you. Yet each has something that is deeply appealing to large slices of America.

And each has been able to create a brand-name, a franchise. They both have a television show and a magazine. Neither of them needs a last name. Both attach their names to products for fame and money.

Oprah endorses books and elevates her reputation above your average talk-show host. Martha has her own line of Kmart housewares. But she also has her own palette of 256 paint colors at Sherwin-Williams including Lamb's Ear, Fresh Hay and Araucana Colors, based on the egg shells of her Araucana hens, whatever they are.

And that brings us to our puzzle for today—why is this brand extension possible? Why would anyone buy a pot at Kmart that has Martha Stewart's name on it? Or buy a book because it's a selection of the Oprah Book Club?

Perhaps it's an immature form of hero-worship. Some want to be like Mike, so they wear his shoes. Others want to be like Martha, so they sleep on her sheets. In this view of the world, it's all about image. If you're buying Martha's pans or reading Oprah's books, you're deluding yourself into thinking you're part of Oprah or Martha's world.

But the economist in me sees it differently. Oprah and Martha are filters.

Your email program probably has a filter that lets you keep spam to a minimum. A good filter keeps the good stuff and throws out the bad. Life is too short to pay attention to everything. A good filter is valuable. And filters pop up in the economic landscape to save us precious time and make life easier.

A department store is a filter. When Dillard's or Famous-Barr puts an item in their store, they're telling me that it has passed their minimum level of quality. It's a stamp of approval. That keeps me from spending a lot of time running around trying to figure out which are the best specialty shops.

A bookstore is a filter compared to all the unpublished stuff I can read on the web for free. I may not like every book in the bookstore, but a bookstore is a place that's been pre-surfed for at least a minimum measure of quality. But even in a bookstore, we don't choose our books randomly. We use the Pulitzer Prize or the quotes on the back cover or we ask friends for advice. And some of us use Oprah's Book Club.

Martha and Oprah are filters. After watching their shows and reading their magazines, we know what they like. And we trust them to deliver the goods for the same reason we expect quality from Dillard's or Plaza Frontenac or Houghton-Mifflin.

It's always in the short-term interest of these brands to take advantage of us by charging high prices for low quality merchandise. But if these brands give in to this temptation, it would hurt their reputations and the long-term damage would outweigh the short-term gains.

So it is with Oprah and Martha. If Oprah recommends a lousy book, it hurts the franchise. If the ground beef sticks to Martha's no-stick pan, it hurts the franchise.

Those franchises are rather valuable. According to Forbes Magazine, Oprah is worth about $900 million and Martha, a mere $650 million. (Down from $1 billion the year before. Sob!) You can imagine that Oprah and Martha are very, very careful in deciding to put their name on something. There's a lot at stake. And that care is what you're counting on when you follow their advice.

They have one more thing in common. People like to make fun of them and their recommendations. But you could do worse than read the books that Oprah recommends. And while I have no idea what an Araucana chicken looks like, I wouldn't be surprised if its eggs are a lovely hue.

Subliminal Advertising for Politicians

By Russ Roberts

Text from National Public Radio, Morning Edition

When I teach economics and talk about how difficult it is for advertisers to sway consumers, someone always brings up subliminal advertising.

The student then tells me about the classic experiment when a movie theater repeatedly flashed the words "Eat Popcorn, Drink Coke" on the screen so quickly that the audience couldn't see them. The subliminal suggestion caused people to surge into the lobby buying popcorn and coke in a frenzy.

The technique was so dangerous, they tell me, that subliminal advertising had to be banned.

I've always been mystified by this story. If you found yourself in the lobby, lined up with your fellow zombies, wouldn't you pause for a moment and ask yourself if you were hungry or thirsty? How could the message continue to brainwash you once you were out in the lobby?

Besides, wouldn't the ad have been more effective if you could actually SEE the words rather than perceiving them subconsciously?

The story plays to our belief in the subconscious and a paranoia about the power of marketing and advertising to manipulate us.

Too bad the story isn't true. It's an urban legend. Or a marketing legend. Or something.

There WAS an experiment. And the words "Eat popcorn, drink Coke" WERE flashed on the screen. But there was no increase in sales. The guy who claimed there was an increase was trying to drum up demand for his services. He made up the numbers to convince people he was an advertising Svengali.

I feel pretty much the same way about the flap over the subliminal RATS in the Republican ad. Wouldn't it be better just to call the Democrats RATS, straight out? Maybe show a picture. Well maybe not. That's negative campaigning. Very naughty.

But could Republicans be so sinister as to plant the word RATS hoping that in that 1/30th of a second, they could get the American electorate to view the Democrats as vermin?

Can you see it? A nice, normal midwestern family is having breakfast. The wife notices the husband doodling absent-mindedly on the morning paper. "Honey, why are you drawing the tail of a rodent on that picture of Al Gore?" "I don't know, dear. I don't know what I was thinking."

If that was the plan, the Republicans are in for a big disappointment and the Democrats can rest easy.

But be careful anyway. While I'm reading this, I have a student next to me playing the dramatic theme for the Olympics on a dog whistle. Very subliminal. You may find yourself with an urge to watch the Olympics. But if you find yourself wanting to watch even more than your dog wants to watch, be afraid, be very afraid.