BBC4 Analysis: Chasing Unicorns Analysis

 We live in a world of unicorns. From hailing taxis to ordering pizza to renting a holiday home, the world has come to rely on huge tech startups known in Silicon Valley as unicorns. But in a post-pandemic world, can these mythical beasts survive?

In tech lingo, a unicorn is a rare start-up company valued at $1 billion dollars or more in private markets. Five years ago there were fewer than 50. Today there are over 400, including Airbnb, Uber and Deliveroo. Often created by eccentric founders and funded by evangelical venture capital backers with deep pockets, these companies have come to define our digital age while creating unimaginable riches for their investors.

But with many enduring eye-watering losses even before the pandemic, and with big question marks hanging over their long term viability, is the magic dust finally coming off?

Elaine Moore is a tech columnist at the Financial Times based in San Francisco - home of the tech unicorn. She's on a mission to find out what the future holds for the industry and what it could mean for us next time we take a taxi or order in a Friday night curry.

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Freakonomics: Does Advertising Actually Work? (Part 2: Digital)

 Google and Facebook are worth a combined $2 trillion, with the vast majority of their revenue coming from advertising. In our previous episode, we learned that TV advertising is much less effective than the industry says. Is digital any better? Some say yes, some say no — and some say we’re in a full-blown digital-ad bubble. [...]

There are, not surprisingly, objections to this research. Especially from the marketing industry. For instance, they’ll point to the brand-building aspect of advertising: “It’s not just about short-term sales,” they’ll say. Or the game-theory aspect — that is, if you don’t advertise your product and your rivals do, where does that leave you? Still, any company that spends even thousands of dollars on TV ads, much less millions or billions, would have to be sobered by Anna Tuchman’s findings. [...]

But what about the precise targeting that digital ads are supposed to offer? A 2019 study, this one done by three academic researchers, addressed this question by measuring the impact of a user’s cookies. Those, remember, are the tracking codes that most of us allow to roam our computers and phones in exchange for all the free information we get from companies like Google and Facebook. This study found that when a user’s cookies were unavailable, ad revenues only dropped by around 4 percent. Why would cookies be so ineffective? Tim Hwang argues that people pay a lot less attention to online ads than they used to.

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Freakonomics: Does Advertising Actually Work? (Part 1: TV)

 It’s a puzzle about something that you encounter all the time. Every day, we are each exposed to hundreds, even thousands of advertisements — a number that’s grown exponentially thanks to the internet. In the U.S., more than $250 billion a year is spent on advertising; globally, the figure is more than half a trillion dollars. So, it would seem there’s a basic question worth asking: does all that advertising actually work? [...]

Let’s assume the percent change in advertising is 100 percent; in other words, you double your ad spending. An ad elasticity of .15 or .2 indicates that sales would increase by 15 or 20 percent. Which is a pretty substantial increase. Which would suggest that advertising spending is quite effective. At least that’s what the existing benchmark said. But when Tuchman, Shapiro, and Hitsch calculated the ad elasticity in their own research, they found a much smaller number: .01.

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