612. Is Macy’s Thanksgiving Parade Its Most Valuable Asset? AI transcript and summary - episode of podcast Freakonomics Radio
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Episode: 612. Is Macy’s Thanksgiving Parade Its Most Valuable Asset?
Author: Freakonomics Radio + Stitcher
Duration: 00:53:18
Episode Shownotes
The 166-year-old chain, which is fighting extinction, calls the parade its “gift to the nation.” With 30 million TV viewers, it’s also a big moneymaker. At least we think it is — Macy’s is famously tight-lipped about parade economics. We try to loosen them up. (Part one of a two-part
series.)Please take our audience survey at freakonomics.com/survey. SOURCES:John Cheney, carpenter at Macy’s Studios.Will Coss, vice president and executive producer of Macy’s Studios.Jeff Kinney, author, cartoonist, and owner of An Unlikely Story Bookstore and Café.Kevin Lynch, vice president of global helium at Messer.Jen Neal, executive vice president of live events and specials for NBCUniversal EntertainmentTony Spring, chairman and C.E.O. of Macy's Inc.Jessica Tisch, commissioner of the New York City Department of Sanitation; incoming commissioner of the New York City Police Department.Dawn Tolson, executive director of Citywide Event Coordination and Management and the Street Activity Permit Office for the City of New York. RESOURCES:Macy's: The Store. The Star. The Story., by Robert M. Grippo (2009).History of Macy's of New York, 1853-1919: Chapters in the Evolution of the Department Store, by Ralph M. Hower (1943).Macy's Thanksgiving Day Parade. EXTRA:The Economics of Everyday Things.
Summary
In this episode of Freakonomics Radio, co-hosted by Stephen J. Dubner, the focus is on the Macy's Thanksgiving Day Parade, a cherished American tradition attracting nearly 30 million viewers. The complexities of its production, which spans 18 months and involves significant costs kept under wraps by Macy's, are explored. The parade is not only a cultural event but also a vital marketing platform, generating substantial ad revenue. Discussion includes the significance of iconic balloons, brand collaborations, and the partnership with New York City, showcasing the deeper relationship between the parade's cultural impact and Macy's branding efforts amidst retail challenges.
Go to PodExtra AI's episode page (612. Is Macy’s Thanksgiving Parade Its Most Valuable Asset?) to play and view complete AI-processed content: summary, mindmap, topics, takeaways, transcript, keywords and highlights.
Full Transcript
00:00:04 Speaker_12
Hey there, it's Stephen Dubner with a quick word before today's episode. We have a new listener survey that I would love you to take if you have the time and the interest. We are always trying to get better around here and feedback helps.
00:00:16 Speaker_12
So please go to Freakonomics.com slash survey. It'll only take a few minutes. Thanks for that. And as always, thanks for listening.
00:00:32 Speaker_12
I really only started paying attention to the Macy's Thanksgiving Day Parade about 10 years ago when my family and I moved into the neighborhood where the parade starts and where the night before they stage everything.
00:00:44 Speaker_12
This is on the Upper West Side of Manhattan. They take over two extra wide streets to lay out the giant balloons. Each balloon arrives folded up flat in its own small rolling cart.
00:00:57 Speaker_12
It gets unpacked, unfolded, laid out on the pavement, and then comes the helium. There's a truck nearby with big helium canisters stacked horizontally on a rack. Up close, the balloons are really big.
00:01:11 Speaker_12
You see this as soon as they start drinking up some helium and puff up to full size. But tonight is Wednesday, the night before the parade, inflation night. They call it. So the balloons aren't allowed to rise to parade height.
00:01:26 Speaker_12
Each one has a net thrown across the top and the net is held down by sandbags. If you happen to be passing by on foot, this can provide an unusual view of your favorite balloon character. A bulging eyeball, a massive derriere, some very chubby fingers.
00:01:44 Speaker_12
Many thousands of people come see the balloons on inflation night. It is an unusual and joyful scene for the visitors and the locals. For many people, myself included, it is the best New York night of the year.
00:01:59 Speaker_12
A lot of people who live on these blocks throw inflation parties up in their apartments. And when you look straight down out of your window, you get another unusual and wonderful view of the balloons.
00:02:12 Speaker_12
I've watched this whole operation for several years now, and every year I'm a little bit more impressed. The parade people execute the mission with a blend of military efficiency and childlike glee.
00:02:25 Speaker_12
You can't help but marvel at how much planning must go into it. Also, how good the execution has to be. Not just from the parade side of things, but from the city side and the broadcasting side. And it's not like they have weeks or even days to set up.
00:02:42 Speaker_12
On Wednesday morning, the streets are normal, full of cars, trucks, jaywalkers, dogs, bikes. And then the balloon people come and you get to see the real up-close version of the thing that everybody else has to watch on TV in miniature.
00:02:59 Speaker_12
The cleanup begins as soon as the last balloon enters the parade on Central Park West.
00:03:04 Speaker_12
And by the time they reach the Macy's flagship store down in Herald Square, our streets are back to cars and trucks again, although not so many since it's still Thanksgiving morning.
00:03:15 Speaker_12
Like I said, it's only recently that I began paying attention to the parade. I do remember it being on TV when I was a kid, but I don't know, I guess I just wasn't a parade person.
00:03:26 Speaker_12
Seeing it up close made me curious, and after last year's parade, I took a look at the TV ratings. Holy... nearly 30 million viewers. Another 3 million plus watch in person from the sidewalks and grandstands. But the TV numbers blew me away.
00:03:48 Speaker_12
As you may know, the television juggernaut these days is the National Football League. Of the 100 most watched broadcasts last year, 93 were NFL games. The Macy's Parade was one of the remaining seven, beaten out only by the State of the Union address.
00:04:05 Speaker_12
A TV audience of 30 million must generate a lot of ad revenue. And then I got to wondering how much. And then I got to wondering how much it costs to produce the parade. Simple questions, right? As it turns out, not so simple.
00:04:21 Speaker_12
Macy's is one of the oldest department stores in the U.S. and it has a lot of traditions. One of those traditions is not talking about the economics of its Thanksgiving parade. They like to call it their annual gift to the nation.
00:04:36 Speaker_12
And we all know it's not polite to ask how much a gift costs. But today on Freakonomics Radio, we ask anyway.
00:04:45 Speaker_07
Why do I need to know how much Lion King costs to produce? I can't tell you that.
00:04:51 Speaker_10
We can't talk about sensitive commercial topics out here.
00:04:54 Speaker_03
Oh, I can't say how much they pay. Could try.
00:04:59 Speaker_12
This is the first of a two-part series. We will look into the cost of the raw materials. We do have our finger on the pulse of helium. We'll look at how New York City pitches in.
00:05:10 Speaker_03
I don't know how you guys found me, by the way, because most people don't know I exist.
00:05:16 Speaker_12
We will hear from the CEO of Macy's, who's trying to keep an old store alive when so much retail is dying.
00:05:24 Speaker_07
I want to be perceived as giving this gift to the city and to the nation. I also want to do a lot of business.
00:05:29 Speaker_12
And we ask an industry expert what Macy's stands for today.
00:05:34 Speaker_06
Macy's doesn't stand for anything today.
00:05:36 Speaker_12
So come along as we drink the helium and wonder if the Macy's parade may be the most valuable asset Macy's has.
00:05:55 Speaker_02
This is Freakonomics Radio, the podcast that explores the hidden side of everything, with your host, Stephen Dubner.
00:06:12 Speaker_12
We are hardly the first people to wonder how much it costs to stage the Macy's Thanksgiving Day Parade.
00:06:18 Speaker_12
There are published estimates ranging from around $10 to $15 million, but they're just estimates and it's unclear where those numbers come from, which makes sense.
00:06:29 Speaker_12
Macy's doesn't like to talk about it, and therefore it's hard to even identify all the costs. It's also hard to quantify the benefits.
00:06:37 Speaker_12
Keep in mind that most of the balloons and floats in the parade are sponsored by big brands that are presumably paying big money for the millions of eyeballs that will see them. And the parade itself is one big ad for Macy's.
00:06:52 Speaker_12
But let's start by focusing on the costs. There is, of course, the expense of building and maintaining the balloons and floats. There is the casting and wrangling of the marching bands and other performers.
00:07:05 Speaker_12
And there are all sorts of city services, police and sanitation and counterterrorism that somebody is paying for. And then there are all the personnel costs for the Macy's parade unit, which is a year round operation.
00:07:19 Speaker_12
So we figured we might as well start at the source.
00:07:23 Speaker_11
Will Koss, and I'm the executive producer of Macy's Thanksgiving Day Parade. And what does Will Koss actually do?
00:07:29 Speaker_11
The executive producer oversees the entire production of the parade, from our balloon and float design, construction, fabrication, and delivery to New York City on parade day, to all of the logistics as it relates to shutting down three and a half miles of New York City.
00:07:47 Speaker_11
on the busiest travel day in New York.
00:07:49 Speaker_12
Koss grew up in New York, in the Bronx, and he went to college nearby on Long Island. I traveled really far. Have you ever lived outside of the New York City area then? I've not. Koss now lives on the Upper West Side with his wife and daughter.
00:08:04 Speaker_12
He's 44 years old. He started out as a producer for MTV, Nickelodeon, YouTube, and he got the Macy's job in 2021. But he sounds like a lifer.
00:08:15 Speaker_11
We are part of the tradition of Thanksgiving morning for millions of people. If you love marching bands, we've got that. If you love giant balloons, we've got that. We've got floats. We've got celebrity. We've been a staple.
00:08:27 Speaker_11
Whether you're sat in front of the television or have it on in the background, just using us as the soundtrack to your Thanksgiving morning, we're there.
00:08:36 Speaker_12
Macy's itself was founded in 1858 by Roland Hussey Macy, a former whaler from Nantucket. He ran dry goods stores in Massachusetts and California before settling in New York City. They sold everything from clothing and furniture to groceries and books.
00:08:54 Speaker_12
By 1902, according to one history of the store, the human wants were few indeed that the Macy's store could not meet. By 1924, the Macy's flagship store in Herald Square was the world's largest store with over one and a half million square feet.
00:09:12 Speaker_12
That year, Macy's sponsored its first parade, a six-mile march through Manhattan. It featured three horse-drawn floats, four professional bands, and camels, elephants, and bears borrowed from the Central Park Zoo.
00:09:28 Speaker_12
In these early days, Macy's released big helium balloons into the sky after the parade and offered a $100 reward for their return. That tradition ended in 1932 when a novice pilot going for the reward crashed into a balloon in the sky.
00:09:46 Speaker_12
It has now been 100 years since the first parade, although this year's edition is only the 98th since it took three years off during World War Two. The parade today looks a lot different than it used to.
00:09:58 Speaker_12
When there are 30 million people watching on TV, appearances matter.
00:10:02 Speaker_11
We are the largest televised variety show of the year. There's something about the work that we do that connects multigenerational. It's a responsibility that we don't take lightly, knowing that we have that impact on so many folks.
00:10:18 Speaker_00
The demographics are far and wide and are representative of everyone that's in New York City and America.
00:10:24 Speaker_12
That is Jen Neal.
00:10:26 Speaker_00
And I oversee the strategy, the creative development and the operations for all of our live events and specials across NBCU.
00:10:35 Speaker_12
NBCUniversal is the network that has carried the Macy's Parade for 71 years. Neal's team produces roughly three dozen big live events a year.
00:10:45 Speaker_00
Christmas at Rockefeller Center, New Year's Eve, the People's Choice Awards, red carpets around Hollywood's biggest nights like the Grammys, the Oscars.
00:10:55 Speaker_00
My role focuses on the entertainment side, but we have incredible teams on the sports side that do the Super Bowl and the Olympics.
00:11:02 Speaker_12
Can you compare the production and coverage of the parade to the Super Bowl?
00:11:08 Speaker_12
I mean, obviously, with the Super Bowl, there are many, many, many elements and features and so on, but it is in the end a self-contained athletic competition on one big patch of turf, whereas the parade is this roving multi-mile extravaganza through New York City.
00:11:27 Speaker_00
There's incredible complexity in terms of the production. Each year there are a number of elements that stay the same, and each year we are evaluating what we want to evolve and change. Do the Broadway shows kick off the show?
00:11:45 Speaker_00
Is it better to have them in the second or third hour? A Super Bowl is incredible and there's many dynamics that go into that, but you're still covering a football game which has the same rules and the same field of play each year.
00:11:58 Speaker_12
What is the timeline from your end? When do you start working on a given year's parade?
00:12:03 Speaker_00
We start looking at it right after the parade ends, truly, the week or two after. In fact, this year is the 98th year of the parade and we are already talking about the 99th and the 100th anniversary.
00:12:17 Speaker_11
The parade is an 18-month pre-production to execution process. That's Wilcox again.
00:12:24 Speaker_11
My full Macy Studios team is over 65 full-time folks that range from our partnership team to our creative team, to our studio production team, logistics, project management, production management. The 65 number is our full-time.
00:12:39 Speaker_11
As we get closer, we expand considerably.
00:12:43 Speaker_00
The week before, they paint the star on 34th Street. The Monday and Tuesday nights, we shut down 34th Street in front of Macy's. We're rehearsing with all the performers.
00:12:52 Speaker_00
Wednesday night, we've introduced in the last two years a countdown show to bring to life the inflation of the balloons that happen magically on the Upper West Side. And then Thursday, we have a call time, the day of Thanksgiving, 2 a.m.
00:13:09 Speaker_00
And Jen, where do you spend parade day? I'm in the truck. I'm in the truck on parade day.
00:13:15 Speaker_12
Which is where?
00:13:15 Speaker_00
On 34th Street or adjacent to 34th Street.
00:13:18 Speaker_12
And what's that day like for you?
00:13:20 Speaker_00
There's a lot of energy, a lot of adrenaline. We go live at 830 through noon. So it's three and a half hours of that coverage. We have preparation and contingencies and plans for every single thing that can happen along the way.
00:13:33 Speaker_00
And then I do, once every parade, take 30 seconds during a commercial break and jump out into the streets and see the scale of, you know, Snoopy or the Minion or the Doughboy adjacent to the buildings in New York. And it's magic.
00:13:50 Speaker_12
It also sounds incredibly expensive to produce from your side, not just the coverage part, but the coordination and the run of show and talent and so on. Can you just talk about how extensive that is?
00:14:02 Speaker_00
We don't really get into the cost of everything, but what I can say is we know that this is incredibly valuable to our advertising partners. And we know that advertising messages that are in the parade deliver stronger memorability and likability.
00:14:20 Speaker_12
I did see on the NBCUniversal site a report about the power of the parade from a consumer perspective, said that the year-over-year growth demonstrates that NBCUniversal is moving consumers down the purchase funnel.
00:14:35 Speaker_12
What does that mean, moving consumers down the purchase funnel?
00:14:39 Speaker_00
First, our job is we got to make sure that this is incredibly entertaining and relevant and great TV. And second, brands want to be associated with this because their messaging is woven in and each brand takes a different strategy to do that.
00:14:53 Speaker_12
Can you give me an example?
00:14:55 Speaker_00
When you are a Jennie-O turkey and you want to have a turkey float, they're going to want to talk about the number of years of the Big Turkey Spectacular and what Jennie-O brings to you.
00:15:07 Speaker_05
Well, the star of the Thanksgiving meal has arrived on a green and gold platter, the signature colors of its gracious host, Jenny O. If you're the jolly green giant, you're going to talk about Holly traditions and some of those products.
00:15:22 Speaker_05
Well, there in the valley on the farm, the green giant oversees the fall harvest, ensuring that each vegetable for your Thanksgiving table is picked at the peak of perfection.
00:15:33 Speaker_12
In other words, yes, the Macy's Thanksgiving Day Parade is a parade, but unlike a memorial parade or a victory parade or a pride parade, this one is plainly a commercial venture, a marketing venture.
00:15:48 Speaker_00
If you have a Minions float, you're definitely going to talk about Stuart the Minions and the Frantic Bananas.
00:15:53 Speaker_00
Ronald McDonald, Smokey the Bear, all of these are traditions and floats that have their own unique messaging, from forest fires to fundraising for children's hospitals to the Wondership float.
00:16:06 Speaker_12
If I were to spec this out from a Super Bowl, I know the Super Bowl generates around $600 million in ad revenue. That's had an ad rate of about $7 million per 30 seconds, and that's viewership of 110 million, so significantly more than the parade.
00:16:19 Speaker_12
But I could imagine that the total ad revenue for the Macy's parade might be in the neighborhood of like $100 or $150 million. Does that seem ballpark or do you not know?
00:16:27 Speaker_00
You know, I'm focused on the creative side and how are we covering this event in the best way to bring audiences at home this extraordinary tradition?
00:16:38 Speaker_12
We did later find an estimate from Vivix, a company that tracks commercial ad spending. They report that brands spent $76 million to advertise on NBC during last year's parade broadcast. Macy's would, as the saying goes, neither confirm nor deny.
00:16:57 Speaker_12
And that TV revenue presumably wouldn't include money the brands pay Macy's directly for the rights to sponsor a balloon or a float.
00:17:06 Speaker_12
Although we should say not every balloon or float is bringing in sponsor money because some of them are promoting Macy's itself. Here's Will Koss again.
00:17:15 Speaker_11
Tom Turkey and Santa are Macy's owned and are the iconic elements that open and close the parade.
00:17:22 Speaker_12
OK, so there's no royalties being paid to the Santa Claus Foundation or anything like that, I assume. So I want to ask you about the relationships with the brands and whatever you're willing or able to tell me about the financial relationship.
00:17:35 Speaker_12
My wife's favorite balloon when she was a kid, she grew up in New York. was the Pillsbury Doughboy. And the first year we lived on this block, when we woke up the next morning at like 6 a.m.
00:17:47 Speaker_12
and we looked down, it was just this magical sight with the sunrise off the balloons, and there was the Doughboy. And we could see the patches, his butt was taped a little bit, and it was just so beautiful and endearing.
00:18:02 Speaker_12
And I thought, wait a minute, is that still the Pillsbury Doughboy? Does Pillsbury still even exist?
00:18:08 Speaker_12
Then I started to think about Snoopy and I thought about Snoopy I knew was the emblem of MetLife for a while and I thought, oh, does that mean it's a MetLife balloon?
00:18:16 Speaker_12
So let me just make it an open thread for you to tell me what you can about why the balloons that are in the parade are in the parade and how that relationship works.
00:18:27 Speaker_11
Pillsbury Doughboy, Snoopy, our Peanuts characters, SpongeBob SquarePants. The goal with all of our balloons is to create a moment that's instantly recognizable in the sky.
00:18:40 Speaker_11
As it relates to selection of balloon, the most important goal is to ensure that each of the characters resonates with our audiences. And our audience is 1 to 100, so we have Some of those will call them legacy characters.
00:18:55 Speaker_11
And then we have new characters that are appealing to a much younger audience.
00:18:59 Speaker_12
And Will, what if someone like me came to you and I said, hey, well, I've got this brand Freakonomics, Freakonomics Radio. In some ways, it's a pretty big brand, but you know, it's kind of like a big niche brand. It's not Teenage Mutant Ninja Turtles.
00:19:12 Speaker_12
It's not, you know, Spider-Man. I recognize that. But I've also got a pretty pretty beautiful visual image, what we call an orple, right? It's an apple that you cut open and it's an orange in the middle and it's, you know, it's fruit.
00:19:24 Speaker_12
Who doesn't like fruit? And I think it would be worth my while to try to figure out how to get my brand in front of the world. These 30 million people are watching on TV, these 3 million that are there. Would you even take a meeting with me?
00:19:39 Speaker_11
We're taking the meeting right now. You're underselling the brand, my friend. We're open to taking every meeting and every conversation. This is not an exclusive members only type of event.
00:19:53 Speaker_12
Well, maybe not quite members only, but it is a small club. This year, there are 17 giant balloons in the parade. Sadly, the Freakonomics Orple is not one of them, but this guy has one.
00:20:07 Speaker_08
I pinch myself when I see the balloon fly down the main avenue there. That is Jeff Kinney. I'm an owner of an unlikely story bookstore in Plainville, Massachusetts, and I am the author of The Diary of a Wimpy Kid series.
00:20:20 Speaker_12
Now, for those who are children or have children who have read those books, you are somewhere between, I don't know, Jesus Christ and pick your favorite cult hero ever. What's it been like to be you these last 15, 18 years?
00:20:37 Speaker_08
The ride for me has been a lot like the Truman Show. I feel like I created this character who's a stick figure and somehow that has propelled me into the most unusual situations you could ever imagine.
00:20:50 Speaker_12
How many books have there been now and how many copies sold globally?
00:20:55 Speaker_08
There are 19 books in the main series. I have four or five spinoff books and there have been about 295 million sold.
00:21:05 Speaker_12
For people who don't know the series or don't know the character, just talk to me for a minute about Greg Hefley. Who is he? What is his interior and exterior life like?
00:21:14 Speaker_08
Greg Hefley is a complicated character. He's a bit of a mess. He doesn't always do the right thing. At the time that I was writing Wimpy Kid, I was reading Harry Potter, which is about a boy who's an aspirational character. He's heroic.
00:21:30 Speaker_08
Greg isn't heroic. He doesn't really want to hear about his best friend Raleigh's vacation and their awesome adventures. He's like a Larry David type in a way. He's very flawed, but hopefully still lovable.
00:21:43 Speaker_12
Give me a little bit of the origin story of Wimpy Kid itself and Greg Hefley himself and how you brought them to life, how long it took, etc.
00:21:52 Speaker_08
My big dream was to become a newspaper cartoonist. When I was growing up, we got The Washington Post every morning. My father opened the paper to the comics page.
00:22:01 Speaker_08
So when I got up, it was already open to The Far Side and Bloom County and Calvin and Hobbes. You had good taste in comics. Yes. And I was like, well, I know where I want to be. I want to be at the top of that page.
00:22:15 Speaker_08
And so in college, I created a comic strip that got the attention of the Washington Post. They did a big full page article on the style section and said, hey, this is the next big thing, this comic by this guy. And I believed it.
00:22:31 Speaker_08
Then I hit the reality of shrinking newspapers and the limits of my own talent, and I couldn't break into the comics. So after about three years of bonking my head into the wall, I realized that it wasn't going to happen for me.
00:22:45 Speaker_08
At the time, I was keeping a journal. The journal was an organic mix of text and cartoon illustrations that kind of showed what was happening in my life at the time. I looked at it and I said, hey, maybe I've got something here.
00:23:01 Speaker_08
I can't be in newspapers, but maybe I can be in books. I thought, I'll fictionalize this. First, I'll write down every funny thing that happened to me in my life as a kid. I thought I could do that in about two months. Instead, it took four years.
00:23:16 Speaker_08
It was a 77-page sketch journal, but I filled it with enough ideas for five books.
00:23:23 Speaker_12
And then, as I understand, but correct me if I'm wrong, you're working as a game developer for Pearson Education and you begin to publish some of this work online on a Pearson site called funbrain.com.
00:23:35 Speaker_08
Is that right? That's right. And my boss was looking for something to keep traffic up over the summer months. I said, hey, I'm working on this thing. It's not really for kids.
00:23:44 Speaker_08
It's more like the wonder years where an adult is looking back on their childhood, but it could work. So I started publishing online. After about a year, we had 12 million readers. Holy cow.
00:23:57 Speaker_08
And I got a lot of encouragement from adult readers who were following my almost blog-like entries.
00:24:04 Speaker_12
OK, and then that leads to a book contract. Just walk me quickly through the mechanics. What came first? Was there an agent? Was there a reach out from a publisher or editor?
00:24:12 Speaker_08
I went to New York Comic Con. I walked around with a sample packet. I heard about a guy who published a web comic called Mom's Cancer. I talked to the editor at a booth. He said, this is exactly what we're looking for. And I was off to the races.
00:24:29 Speaker_12
So you wind up publishing with Harry and Abrams, correct?
00:24:32 Speaker_08
Yes. At the time, Harry and Abrams would be known as an art book publisher. So those gorgeous picture books that you have on your coffee table, primarily, they weren't doing a lot of this kind of thing.
00:24:45 Speaker_08
What I really liked was that they treated books as an object to be valued. They put a lot of craftsmanship into their publishing. And I thought, if I sign with Harry and Abrams, that might elevate the work itself.
00:25:00 Speaker_08
And that's the way it's been with Wimpy Kid. About two weeks after the book was published, it got on the New York Times bestseller list, which was just an absolute shock.
00:25:11 Speaker_08
I remember my wife and I were jumping up and down on our kid's bed like we just couldn't believe it. Now it's been on the list, a combined total of something like 900 weeks.
00:25:22 Speaker_12
And let's now talk about how you came to intersect with the Macy's parade.
00:25:28 Speaker_08
In about 2010, Diary of a Wimpy Kid was doing pretty well. And we had an ambitious publicist named Jason Wells who said, hey, I think we could get a balloon in the Macy's parade. So he approached Macy's and said, hey, how about a balloon?
00:25:46 Speaker_08
They said, hmm, it might not be ready for a balloon, but how about a float? The idea, I remember, was that there was going to be a standing Greg Hefley, and at the base of the float would be a bunch of kids reading.
00:26:00 Speaker_08
So it would be a float to promote reading and literacy.
00:26:05 Speaker_12
That sounds a little, what's the word I'm looking for, more reverent, perhaps, than the Wimpy Kid brand is.
00:26:11 Speaker_08
That's right. And we said, we're going to hold out a little bit and see if we get into balloon territory.
00:26:17 Speaker_12
And then what happens next?
00:26:19 Speaker_08
So the next year, I think I got named to Time Magazine's Most Influential People list.
00:26:25 Speaker_12
Congratulations. Thank you very much. And that theoretically makes you balloon worthy. Yeah, right.
00:26:30 Speaker_08
So Macy's said, yes, please, we'd like to do a giant helium balloon. And my publisher was kind enough to sign on for the terms. Tell me what you know about that negotiation and the terms of the deal.
00:26:45 Speaker_08
As you can probably imagine, the terms are proprietary, so I can't talk about that. But it was a multi-year situation. You pay a certain amount to get the balloon made, and then a certain amount to have it flown every year.
00:26:58 Speaker_08
That first balloon flew for three years, and then we re-upped and flew it for another three. And that's really the pattern we've been in for now a good long time.
00:27:09 Speaker_08
I have no idea what Macy's deals look like with other creators, if we're standard, if we have our own separate thing.
00:27:17 Speaker_12
Has Harry and Abrams continued to basically pay for or subsidize the participation?
00:27:24 Speaker_08
To their great credit, Abrams has continued to support the balloon. This past balloon I chipped in because, of course, I have a big stake in this as well. Any idea what it costs to make it?
00:27:36 Speaker_08
I don't know what the actual costs are to make a balloon, but I would guess it's somewhere around the low $100,000 range.
00:27:43 Speaker_12
I guess the big question is, how do you and your publisher think about ROI and all that that implies? Not just, you know, whether It extends and grows the brand and sells more books and so on.
00:27:57 Speaker_12
But if it creates a different sort of awareness around the brand.
00:28:00 Speaker_08
That's a really good question. We think about it a lot. It's possible that the balloon is one of the legs of a chair. And if you kicked out that leg, maybe the whole thing collapses.
00:28:13 Speaker_08
The fact that Wimpy Kid is still going strong suggests that the balloon is a part of that equation. But there's also some real pride that's associated with the balloon. Everybody gets to hold the string and walk down the streets of New York City.
00:28:29 Speaker_08
So what's that like? It's nerve wracking in a way because you're sort of presenting yourself to the world. You're saying, hey, my property is worthy of being here.
00:28:38 Speaker_08
I remember the first few years, like we would walk the balloon down the main avenue and I think people were sort of scratching their heads. You know, what's this? Is this Charlie Brown? Who is this?
00:28:50 Speaker_08
And over time, one of the rewards of this has been that Wimpy Kid is sort of seeped into the cultural consciousness. So now most people know what the cheese touch is. Explain the cheese touch for those who aren't familiar.
00:29:04 Speaker_08
There's a piece of cheese in the first book that sits under a basketball hoop and it becomes an existential threat to Greg and to all of the middle schoolers.
00:29:14 Speaker_08
Everybody's worried about getting the cheese touch because it means, you know, certain death in the middle school popularity ranking.
00:29:24 Speaker_12
This year will be WimpyKid's 14th consecutive Macy's Parade. That puts him on the all-time leaderboard, but he's still way behind Snoopy with 43 appearances and Pikachu with 24. Kinney told me that a balloon typically lasts three to five years.
00:29:41 Speaker_12
He is now on the third version.
00:29:44 Speaker_08
I think we've gotten better and better at it. And now Greg really looks exactly like I'd like him to look. Describe the current balloon. The current balloon has Greg sort of hunched over, getting ready to touch the piece of cheese.
00:29:59 Speaker_08
So I said to Macy's, we really need to do something special. What can we do?
00:30:04 Speaker_08
And they came up with an idea that the cheese itself could be in a cart or a car that's like a motorized vehicle that could spin and sort of spew green smoke into the air to make the cheese look like it's emitting smells. Let's go back for a sec.
00:30:20 Speaker_08
Describe the design process and how involved you are. It's really exciting. It starts with a sketch, and then it moves to kind of a pen and ink drawing. And then Macy's has to turn that into a 3D model, which is not so easy with my character.
00:30:36 Speaker_08
My characters are two-dimensional purposefully. I don't have any sense of 3D space at all. And so the first time we saw a Wimpy Kid balloon was the first time we saw Greg Hefley articulated in three dimensions.
00:30:49 Speaker_12
He has a butt.
00:30:50 Speaker_08
Right. In the early days with Macy's, I'd go down to Hoboken, New Jersey, and there would be a clay model waiting for me. The clay was still pliable. And then we would make changes on the fly with a really skilled artist.
00:31:06 Speaker_08
It would spin around on a pole so we could see it from every angle and really imagine what it would look like from the street level.
00:31:14 Speaker_12
Since Jeff Kinney's first Wimpy Kid balloon, the Macy's Parade studio has moved from Hoboken to nearby Menachie, New Jersey. And rather than clay, balloon modeling now is done with 3D printers. Coming up after the break, let's go to Menachie.
00:31:31 Speaker_12
Welcome to Macy's Studios. I'm Stephen Dubner. This is Freakonomics Radio. We'll be right back.
00:31:48 Speaker_12
Will Koss, the parade's executive producer, met us at the Macy's Parade Studios in Menaki, New Jersey, just a few miles across the Hudson River from Manhattan.
00:31:58 Speaker_11
This is our 3D printing room. So this is Diary of a Wimpy Kid.
00:32:03 Speaker_12
We're looking at a three-foot plastic model of Greg Hefley.
00:32:07 Speaker_11
We've got our character here actually laying on a table at the moment, but if he was sitting in flight position, he'd be pointing at the stinky cheese, which will be preceding him down the line of March.
00:32:20 Speaker_12
We're inside a sprawling brick and glass building that from the outside looks like an office building, but inside it's a 72,000 square foot warehouse with 44 foot ceilings and a variety of workshop stations. It's also a little bit noisy.
00:32:37 Speaker_11
The floor that we're standing on right now is our fabrication floor.
00:32:42 Speaker_12
As we walk through, Koss points out some floats under construction, including a new float representing the Bronx Zoo.
00:32:49 Speaker_11
So we'll have giraffes, we'll have tigers, we'll have gorillas, birds.
00:32:55 Speaker_12
These giraffes and tigers are not real the way they would have been back in the beginning.
00:32:59 Speaker_11
Every element that you see here being sculpted by our very, very talented artists start as a block of foam. We're going to walk over to meet the legend himself, Mr. John Chaney. Howdy. Good to see you.
00:33:15 Speaker_12
I brought some friends to talk to you. John Chaney is a carpenter who has worked on nearly 50 Macy's parades.
00:33:22 Speaker_09
I came to New York and I wanted to be an artist, so I went to the Art Students League, and in a few months I started running out of money, but my dad used to always have the parade on, and I met some girl who wanted to work in the costume shop.
00:33:37 Speaker_09
So I said, I'll just walk over to Macy's and see what's happening. 50 years ago, it was a lot different than all the paperwork now. They had this hiring rail, you got up to the rail,
00:33:51 Speaker_09
And there were all these kids around with very nice suits and everything. And I got ripped up jeans and a t-shirt on. I said, I want to work the parade. And they said, hey, he wants to work the parade. And that's how I got hired.
00:34:06 Speaker_12
And how does it feel for Chaney to work year round on something that will be seen for just one day?
00:34:11 Speaker_09
Well, millions of people see it, so the exposure is really great. But there is something mind-boggling about doing all this work for one night and setting it all up in one day and now taking it down. I guess that's part of the pressure.
00:34:27 Speaker_09
You have this incredible deadline. And we work all night in the beautiful weather, because we don't even dare say the other words. The week before is maybe the hardest time. It's like getting into the water.
00:34:42 Speaker_09
You know, once you're in there, damn it, we're doing it. I don't care what's going wrong. Let's go.
00:34:48 Speaker_12
Chaney is one of a couple dozen members of a team of carpenters, sculptors, welders, electricians, costume designers, and what are called balloon technicians. Here's Will Koss again.
00:35:00 Speaker_11
Right now we're on the balloon studio floor. Once our balloons are flattened, they make their way over to our heat sealing tables. And this is
00:35:12 Speaker_11
essentially a sewing machine, but instead of a needle and string, it's actually melting the two pieces together. And we actually have a balloon in process right now. This is Marshall, our Paw Patrol pup.
00:35:29 Speaker_11
Marshall is a firehouse Dalmatian from the animated kids show Paw Patrol. So Marshall is presently rigged to one of our rigging points in the ceiling.
00:35:39 Speaker_12
At this point, he just looks like a big, white, round blob with no distinguishable limbs. That's because of how these giant balloons are built.
00:35:49 Speaker_11
The head right now is the chamber that's inflated. The rest of the balloon is deflated because we're working specifically on the head unit. And that's how all of our balloons are fabricated.
00:36:00 Speaker_11
They're fabricated into chambers, which gives us some flexibility if we do run into a situation on parade day to quickly try to remedy that one specific area without compromising the integrity of the entire balloon.
00:36:14 Speaker_12
Jeff Kinney had told us earlier about a mishap with the Wimpy Kid balloon.
00:36:19 Speaker_08
Yeah, I think Greg's hand popped this last year and it looked a little bit sad, but these things happen.
00:36:26 Speaker_12
Marshall, the Dalmatian, is a new balloon in this year's parade, one of six. All the new balloons will need to have a dry run outdoors before the parade.
00:36:36 Speaker_11
Our volunteers, our balloon handlers and our flight management team have an opportunity to see the balloons working in real time and reacting in wind conditions and take notes and prepare for Thanksgiving Day.
00:36:48 Speaker_12
This dry run is called Balloon Fest. It happens in the parking lot of MetLife Stadium in East Rutherford, New Jersey, about four miles from the Macy's studio in Menaki. Balloon Fest is always held on the first Saturday of November.
00:37:03 Speaker_05
Good morning, everyone. Welcome to Balloon Fest!
00:37:09 Speaker_12
There are several hundred volunteers to handle the balloons. On parade day, there will be 5,000 parade volunteers.
00:37:18 Speaker_09
Okay, I need 20 handlers. I need 20.
00:37:22 Speaker_12
The six new balloons, including Marshall and Minnie Mouse and a new Spider-Man, they are already inflated and held down under a net with sandbags.
00:37:33 Speaker_12
When the time comes, the sandbags are taken away, the nets are pulled off, and the volunteers slowly unroll the thin ropes that are attached to what they call the handling bones, which are plastic X-shaped grips.
00:37:58 Speaker_12
Once the balloons are up in the air, the volunteers walk them around the parking lot. Will Koss is paying close attention. Everything looks good. Nearby is the helium truck. Here's the helium guy.
00:38:18 Speaker_10
The trailer's about 40 feet long. There are 12 high-pressure steel tubes in there. If you could get all the helium out of each one of those tubes, you could fill about six to eight of these balloons with a single trailer. His name is Kevin Lynch.
00:38:33 Speaker_10
I'm the vice president of global helium for Messer.
00:38:36 Speaker_12
Messer is one of the big players in the helium market. It and the companies it has acquired have been providing helium to the Macy's parade for decades.
00:38:45 Speaker_10
Helium that's here today started in an underground helium reservoir in Amarillo, Texas. And here we are filling balloons. But if you put too much helium in it, that whole crew of people would be, you know, rising up into the sky.
00:39:00 Speaker_12
Lynch tells us that each giant balloon takes around 15,000 cubic feet of helium. So how much does that cost Macy's?
00:39:08 Speaker_10
I can't tell you that. We can't talk about sensitive commercial topics out here.
00:39:16 Speaker_12
The price of helium itself is not a particularly sensitive topic. Helium is used widely in medical settings and elsewhere, and there's a strong global market for it. Believe it or not, giant balloons consume only a tiny share of the helium market.
00:39:31 Speaker_12
We did a rough calculation of what it would cost to fill the 17 balloons in this year's parade if you paid market price. It was around $425,000. I asked Will Koss if this sounded about right, but he wouldn't take the bait.
00:39:47 Speaker_12
I also asked him what Macy's does about the occasional helium shortage.
00:39:51 Speaker_11
We do have our finger on the pulse. of helium. It's a market that adjusts over time, but we plan for it and we have good relationships with our vendors across our helium supply teams.
00:40:04 Speaker_12
What's your biggest concern or anxiety or, you know, the thing on your to-do list that keeps you up the night before. I guess I would assume the weather, but maybe I'm wrong.
00:40:15 Speaker_11
The weather is definitely a concern for us. We are a rain or shine event. So unless there's significant weather that would impact the flight of the balloons. Wind particularly, yeah? Yeah. Wind is one of the most potential risks on our overall parade.
00:40:34 Speaker_11
We've had some snow in our history. I don't wish that on us. I've been fortunate enough to have relatively good weather. I know my time is coming at some point. It's probably good for the broadcast though, isn't it? Snow?
00:40:45 Speaker_11
It would look beautiful, but we do still have to get 5,000 people and 27 floats and 17 large balloons down the parade route. So I'd love it to snow at 12.01. Or 11.59.
00:41:00 Speaker_12
So far, we've heard from the key people who create and broadcast the Macy's parade, but there is one more partner, sort of a silent partner, without whom it could not happen.
00:41:12 Speaker_03
If there were no permits, it would be a free-for-all.
00:41:15 Speaker_12
I'm Stephen Dubner. This is Freakonomics Radio. We'll be right back. Yes, there are giant character balloons drifting through the sky. And yes, there are floats and marching bands, Broadway performers.
00:41:35 Speaker_12
But the real star of the Macy's Thanksgiving Day Parade, if we're being honest, come on, you know who it is. It's New York City.
00:41:45 Speaker_03
My name is Dawn Tolson, and I'm the executive director of Citywide Event Coordination and Management and the Street Activity Permit Office.
00:41:52 Speaker_12
And those are a lot of words. Tolson has worked in New York City government for a decade. Her office issues permits for many types of events, street fairs and farmers markets, festivals, and of course, the Macy's Parade.
00:42:06 Speaker_12
We told her we were trying to put together the costs of the parade, and she did give us a little bit of pricing information.
00:42:13 Speaker_03
An application fee is non-refundable and that's $25. And then it ranges from zero, no cost whatsoever, up to something that could be 66K per block, depending on the use of space and the impact.
00:42:27 Speaker_12
The Macy's parade uses 40 plus blocks and it is undeniably high impact. Does that mean that Macy's pays the city something like $3 million, 40 some blocks times 66K per block?
00:42:41 Speaker_03
Oh, I can't say how much they pay. Could try. Macy's is a partner with the city. They put on two very iconic events in New York City that are birthdays and holiday events for America.
00:42:57 Speaker_12
The other one she's talking about is the Macy's Fourth of July fireworks, which, no offense to fireworks, is nowhere near as big a deal as the parade.
00:43:05 Speaker_03
And so we know the importance of that and we work with them.
00:43:09 Speaker_03
But I can say that they do work really hard with us to make sure that we are very cognizant of the amount of resources that we're using, that we're not overextending, that we're also being fair to the employees and the workers.
00:43:21 Speaker_12
When Tolson talks about the resources the city is using. These are serious resources, including law enforcement and emergency crews. Here is Will Koss again from Macy's.
00:43:33 Speaker_11
The security plan is a quite detailed plan.
00:43:38 Speaker_12
You could imagine if you were throwing a parade for three and a half million people on the sidewalks and 30 million people watching a live broadcast, that you would invest a lot in security planning and execution.
00:43:50 Speaker_11
There's a variety of personnel that are visible on the parade route and other layers of security that are less visible.
00:43:58 Speaker_03
hats off to the NYPD. There are people out there that were there since 1 a.m. in the morning putting barricades in place and moving vehicles around so you don't even hear a car honking.
00:44:08 Speaker_03
Then you've got, you know, counterterrorism working with the FBI on any kind of threats. You've got TARU, their technical assistance unit, who are doing the counter drone stuff with the FBI.
00:44:19 Speaker_03
And then you've got the DCPI, their press group, doing press conferences with their chief of departments and chief of patrols. So basically you're enacting the entire NYPD.
00:44:29 Speaker_12
And what does it cost to enact the entire NYPD? And how much of that comes from Macy's? The parade, for all its goodwill and vibes, is a commercial event. So you could imagine Macy's contributing heavily to the city services.
00:44:45 Speaker_12
On the other hand, even if you don't buy my argument that New York City is the real star of the show, the city does get a lot out of the parade.
00:44:55 Speaker_12
When I was a kid and saw the parade on TV, I barely noticed the floats and balloons I was staring at Central Park West. To a farm boy, which is what I was, the balloons and floats were cute, but the fantasy was New York.
00:45:12 Speaker_12
So does New York City kick in all those resources for free for the Macy's Parade? Does the cost of the permit itself cover all these services? Those are questions that no one would directly answer on either the city side or the Macy's side.
00:45:29 Speaker_12
And there are other city resources to talk about, other city agencies that get involved.
00:45:34 Speaker_03
We have four walkthroughs with all of those agencies, as in we're walking the route four times. In New York City, the city of scaffolding, there's a lot of obstructions along the path.
00:45:46 Speaker_03
And so we have to walk that path to see what construction's going on, what potholes are in the street, what is up above.
00:45:53 Speaker_12
Street lamps, for instance. In 1997, the parade was held on a very windy day. At Central Park West and 72nd Street, the six-story tall Cat in the Hat balloon hit a lamppost and knocked off part of it.
00:46:07 Speaker_12
Several people were injured, including one woman who was in a coma for 24 days. Macy's and the city now work together to prevent that kind of thing. Will Koss, again,
00:46:17 Speaker_11
All of our balloons and floats starting up at 77th Street and all the way through 34th Street, that entire parade route has to be cleared of any aerial obstruction.
00:46:30 Speaker_12
This clearing process includes what KAS calls light swings.
00:46:34 Speaker_11
We have a team to physically move all of the light poles out of the way. So they're loosening them and then we're actually swinging all of the poles. It's done under the dark of night. And Don Tolson again.
00:46:49 Speaker_03
Sanitation. We haven't even talked about sanitation. I didn't know this until a couple of years ago that there's a special unit that deals with the horse refuse.
00:46:57 Speaker_12
This horse refuse comes from the NYPD and Parks Department mounted units that march in the parade.
00:47:04 Speaker_03
So we forgot to call them one year. It was not pretty.
00:47:09 Speaker_01
One of our responsibilities is to clean up the horse poop.
00:47:14 Speaker_12
That is Jessica Tish. When we spoke with her, she was New York's sanitation commissioner.
00:47:19 Speaker_01
We have one to two sanitation workers for every four to five horses.
00:47:25 Speaker_12
Tish has just been named commissioner of the NYPD. As sanitation commissioner, her job was to make the parade route as photogenic as possible on Thanksgiving Day from 830 a.m. Eastern Time until noon.
00:47:40 Speaker_01
Those streets, about 42 blocks, they need to sparkle because New Yorkers and people from around the world all converge on that part of the city, and we want those streets to look really good. After the parade is obviously a huge effort.
00:47:57 Speaker_01
We have about 150 sanitation workers who are involved in the post-parade cleanup. They are doing manual cleaning with brooms and baskets, but also our mechanical brooms, which can sweep 1,500 pounds of litter, are out in full force.
00:48:18 Speaker_01
About 71,000 pounds of trash is collected by the Department of Sanitation as part of the cleanup of the Thanksgiving Day parade.
00:48:30 Speaker_12
Once again, we couldn't learn anything significant about how these costs are allocated or perhaps shared. New York City plainly derives value from the parade.
00:48:40 Speaker_12
There's the marketing value of the broadcast, but also three and a half million in-person spectators generate a lot of economic activity. How much? Those numbers, too, are shock of shocks, hard to come by.
00:48:56 Speaker_12
If we began this episode hoping to run even a rough cost-benefit analysis of the Macy's Thanksgiving Day Parade, we have failed. Too many of the costs are privately held.
00:49:08 Speaker_12
We can guesstimate the overall TV ad revenues, but we don't know how that money is split between Macy's and NBC and whatever agencies or other middlemen are involved. So we took one more shot.
00:49:23 Speaker_12
We asked to speak to the man at the top, Tony Spring, chairman and CEO of Macy's Inc. So Macy's refers to the parade as, quote, a privately sponsored and privately funded event and is regarded by Macy's as its annual gift to the nation.
00:49:38 Speaker_12
I understand that, as with most gifts, you don't tell people how much the gift costs when you're giving it to them. But why is it so important that no one knows how much the parade costs? Because we've been trying to figure it out and really failing.
00:49:52 Speaker_07
Why? Do I need to know how much Lion King costs to produce? But I can figure that out. OK, go to the Hayden Planetarium and what did it cost? I can figure that one out, too, Tony. I can't figure out the parade.
00:50:04 Speaker_07
I guarantee you you're bright enough, much brighter than me. You can figure this out.
00:50:07 Speaker_07
But I would like to focus more on the fact that, you know, 100 years later, 98 parades later, this thing is still relevant and is a great example of if we were still marching animals up and down the street, it wouldn't be as relevant today.
00:50:21 Speaker_07
but the fact that it evolved over time and includes a level of modernity, includes a level of history, floats that have been there over the years, floats that are new this year, balloons that are new this year, that is, just like the fireworks, I think what makes it such an amazing spectacular.
00:50:39 Speaker_12
Okay, so the Macy's parade is still relevant. Here's a bigger question, especially for Tony Spring. Is Macy's still relevant?
00:50:50 Speaker_12
Coming up next time in part two of our series, brick and mortar retail has been declining for years and Macy's is planning to close 150 of their stores. Tony Spring took over less than a year ago and he is pushing for a renaissance.
00:51:06 Speaker_12
At least he's optimistic. Now is the time to buy Macy's. Next time, we go deep with Tony Spring and we get another view, too.
00:51:17 Speaker_06
Macy's has a hell of a challenge over the next few years to remain upright, let alone become successful as they once were.
00:51:24 Speaker_12
We also visit Wimpy Kid author Jeff Kinney up in Massachusetts, where he is trying to launch his own retail renaissance.
00:51:32 Speaker_08
If you invest in your downtown, can you change the fate of a town? And I don't know the answer to that.
00:51:39 Speaker_12
That's next time on the show. Until then, take care of yourself. And if you can, someone else too. Also, if you'd like to learn more about helium, be sure to follow another podcast we make, The Economics of Everyday Things.
00:51:55 Speaker_12
Host Zachary Crockett went deep on helium supply and demand in an episode that will be out very soon. Freakonomics Radio is produced by Stitcher and Renbud Radio. You can find our entire archive on any podcast app.
00:52:08 Speaker_12
Also at Freakonomics.com, where we publish transcripts and show notes. This episode was produced by Alina Kullman. We also had recording help from Alexander Overington.
00:52:19 Speaker_12
And special thanks this week to Thomas Recupero for the research paper and to Harlan Coben.
00:52:25 Speaker_12
Our staff also includes Augusta Chapman, Dalvin Abouagy, Eleanor Osborne, Ellen Frankman, Elsa Hernandez, Gabriel Roth, Greg Rippin, Jasmine Klinger, Jason Gambrell, Jeremy Johnston, John Schnarrs, Lyric Bowditch, Morgan Levy, Neil Caruth, Rebecca Lee Douglas, Sarah Lilly, Tao Jacobs, and Zach Lipinski.
00:52:43 Speaker_12
Our theme song is Mr. Fortune by The Hitchhikers. Our composer is Luis Guerra. As always, thank you for listening.
00:52:55 Speaker_03
When I see a crowd, I'm thinking to myself, wait a minute, did I issue a permit for that?