Is TV airtime a Giffen Good?

879296 — Tue, 07 Oct 2008 17:17:00 GMT

This was the bizarre question raised in a conversation between me and the wonderful Simeon Duckworth of Mindshare.

If you don't know what a Giffen Good is, have a look here.

In consumer terms Giffen Goods are believed to be rare and elusive. However in B2B - where the purchaser generally has less discretion to move expenditure - they may well be more common.

Indeed TV airtime may be the best example yet.

Think about it this way. Just as a human needs a certain number of calories to survive, a brand marketer needs a certain number of advertising impressions within a predefined demographic group in order to justify their existence. Mass TV provides these eyeballs at the lowest possible cost per unit. Hence given a finite budget (a fair assumption) and no freedom of substitution (also true) this means that demand for TV airtime will actually increase as the price goes up, since in order to satisfy the intended reach with the same budget, any increase in its price forces the advertiser to to spend more on TV - using more of the lowest cost-per-eyeball medium at the expense of pricier forms such as magazines or newspapers.

Better buy stock in ITV, then?

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Is TV airtime a Giffen Good?