But the realistic picture is that firms are composed of people, and all of the foibles and shortcomings that people exhibit in their everyday life, they bring those to work with them.

The ad industry swears by its efficacy but a massive new study tells a different story.

Below is a transcript of the episode, edited for readability.

For more information on the people and ideas in the episode, see the links at the bottom of this post.

Every day, we are each exposed to hundreds, even thousands of advertisements a number thats 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 theres a basic question worth asking: does all that advertising actually work.

Occasionally he will get a call from a company that wants his help solving a problem.

I said, Okay, so whats the problem And they said, The problem is that we spend almost a billion dollars a year on advertising, and we dont know whether it works or not.

I said, Okay, what do you know And they put up these PowerPoint slides.

And they were some of the most beautiful PowerPoint slides youve ever seen.

Because typically theres nothing like a randomized experiment going on.

So, teasing out the causal part, the sales that wouldnt have happened absent the advertising, its just a really hard problem.

They also said that theyd been advertising in every big Sunday newspaper in the U.S., every week, for the past 15 years.

And then we advertise a bunch on Black Friday, right after Thanksgiving.

And then in the lead-up to Christmas, of course, we do an enormous blitz.

Its because the company knows when the big selling days are, and they target the ads around it.

But because the company only ran TV ads exactly when customers were already planning to buy a lot of stuff, it was impossible to disentangle.

Since those ads ran everywhere every week, they could stop running them in certain markets and measure the effect on sales.

One time we hired this summer intern and his job was to do the newspaper inserts for Pittsburgh, and the guy was so incompetent that he just didnt do it.

And when the C.E.O.

If you ever do that again, youre all fired.

But when you looked at the results, what happened to the sales in Pittsburgh when you were dark for a month And they called me back about a week later and they said, Youre not going to believe it.

I said, Oh, my God, thats amazing Okay, so when can we get started.

Because then they had to explain why for the last 15 years they had been wasting 200 million a year.

So, they were happy to just live in a world in which as long as there were ads in every market, every Sunday, life was good.

Half An Orange Mostly We Grow Pt. 1 Ep