The radio provided an instant source of advertising. In order to be profitable, radio stations had to sell advertising spots since their product was free. Many of the early radio shows had corporate sponsors. Fans of the show were often fans of the product advertised before the show. In many circumstances the advertisements were targeted for a particular audience; for example, a radio soap opera could carry Ivory soap or Martha White flour as a sponsor because housewives would be the presumed audience of the show.

Radio advertisements also made the advertising world more scientific. Many radio shows were popularized nationwide—not only did this create the largest possible market for products, but it also created large sample sizes for surveys concerning the effectiveness of advertising. Advertising agencies could now adjust their pitch in order to reach the largest possible audience.

Radio was also a constant presence in people's lives. For many people, the radio was a source of entertainment and news, as well as a lovely piece of furniture that no home should be without. Even people without radio could walk down the street and hear other people's radios. By the end of the decade radios were also in cars. The constant presence of advertising led to more impulse buys as well as advertisements targeting young people, who would then pressure their parents into buying things.

Radio, combined with more surplus wealth, boosted the American consumer economy. Pitchmen became famous nationwide by becoming associated with certain shows and products. Radio helped to fuel consumer demand for various goods and thus helped create the notion that the decade was good for everyone economically. Radio was important in making consumerism a major part of American culture.

Commercial radio came on the scene in 1920 in the United States and had significant effects on the economy. First, it started a whole new industry. Although radios were expensive for that time period, people wanted them, and according to one estimate sales of radios rose from $60 million in 1923 to more than $840 million in 1929. This led to job growth, as people had to be hired to build, package, and ship the radios, and to create the advertising involved in selling all these radios. Further, some people started careers as radio announcers, radio station owners and writers of radio programs, in addition to all the other jobs that supported radio programming.

A second effect on the economy was radio advertising, which helped raise people's desire for consumer goods, and helped the U.S. grow as a consumer economy as the 1920s economic boom roared away. In 1926, the first national radio network, NBC, was born, bringing standardized programming and advertising to the entire country. This helped developed national, rather than regional, economic markets.

The major impact of radio on the economy was that it brought advertising into American homes. In a time before television, the radio was the greatest invention prior to the advent of the internet. It provided a source of entertainment which reached millions of American homes within three years. Although radio programs were entertaining, they had to be paid for; and this brought about the commercial. Everything from aspirin, toothpaste, soft drinks, etc. were advertised on radio. The commercials were a huge success and businesses saw sales of their brand names boom. Thus the effect on the economy of the radio was immense.