“Attention Economy” is the Wrong Metaphor. It’s All About Persuasion.

The concept of the “attention economy” has been around for a few decades now. And many people think that Web 2.0 is the first real-world manifestation of this economic theory.

Briefly explained, the concept assumes that in our modern world — with its constant information overflow — human attention has become a scarce good. Since scarcity creates economic value, attention becomes valuable. Some even think that attention can be traded like commodities.

The conventional way to monetize attention is to sell advertising against it. Media companies publish content that grabs people’s attention, and they resell a part of that attention to advertisers. (Here’s a great article by Dharmesh Shah that explains the difference to what he calls the “wallet economy” where people pay you directly for a product).

Sounds simple enough. But the problem is that the theory doesn’t really explain the commercial nature of attention.

From the point of view of somebody who receives attention, there are two possible value components to it:

1) The intrinsic reputation value of attention, i.e. social status. Example: A programmer who contributes to an open source package doesn’t do this because he expects to make money, but in order to get a higher reputation with his peers.

2) The value of possible persuasion that needs attention as a starting point. An advertiser is not interested in your pure attention as such, he’s interested in selling you something. That’s only possible if he gets your attention first. But the real value is only created if the subsequent persuasion process is successful.

While the first component (reputation) might become more important in advanced societies where people already own most material goods that they could possibly want, the second component (persuasion) is the only one that can really be monetized.

The problem with the oversimplified view of attention is that attention is not uniform, particularly not if it’s supposed to be used for persuasion. You know this from real life: When you go to the mall on a Saturday, you are easily persuaded to buy more stuff. You are already in a buying mood, your attention is tuned to consumption. Not so if a telemarketing firm calls you in the evening during your favorite TV show. They will get your attention, but they won’t persuade you. You’ll probably hang up on them.

The same difference exists in the online world, and it is the reason why Google makes a ton of money, but social networks don’t.

Google probably makes most of its money from searches where people are actively looking for certain products or solutions to problems. The users are in a buying mood — think of the mall on a Saturday afternoon. A relevant ad delivered at this moment is highly effective, and a click is worth a lot of money, because it’s a great starting point for successful persuasion.

Just check a few AdWord prices, and you’ll see this immediately. A click on “Britney Spears” (high attention, consistently in the top 10 search terms every year) costs $0.30. A click on “life insurance” costs $15.80. The Britney-related ads actually receive twice as many clicks per day as the insurance ads, but they’re worth a fraction.

Why do smart advertisers who want to sell to a teen/tween audience not simply buy Britney Spears-related clicks (=attention) and then use the traffic to sell something else that appeals to this target demographic? Because it doesn’t work. If somebody clicks on a specific keyword, they are not in the mood to be persuaded to buy something completely different. Attention doesn’t equal persuasion potential.

Unfortunately, this is the fundamental challenge for advertising on social networks and many other Web 2.0 sites. You go to Facebook to catch up with friends or share stuff, not to be persuaded to buy something. Metaphorically speaking, you’re not in a mall, you’re at a dinner party. And somebody who’s trying to sell you something at a dinner party will likely not be invited next time.

Obviously, there’s an opportunity here. The trick is to catch users when they are in a buying mood or at least in an online environment that is tuned towards consumption. The ad industry is however very far away from really understanding this, because in traditional media, an eyeball is an eyeball.

But at some point, advertisers will start to understand that smart micro-targeting delivers far more relevant forms of attention than having a generic product page on Facebook or slapping an ad on MySpace’s homepage. The rule is clear: Follow the money. And the money is where people can be persuaded.

(Picture: hansol, CC license)

12 thoughts on ““Attention Economy” is the Wrong Metaphor. It’s All About Persuasion.”

  1. I think you’re overestimating the value of users “in a buying mood”. Well, actually you can say that Google is just the biggest Affiliate Network in the world and/or Google is just a gigantic web directory and making money by “recommending” certain websites (you can say the same about Adsense partners). There is money in it. And Googles revenue is showing us how much.

    But there is still another market which has to be revolutionized. Plain Display Advertising:

    Ads in TV are working (at least most people think so) and people are not in a buying mood but could still become interested in certain products: “Mmmmmm. This Whopper looks delicious. Tomorrow I’m going to buy one.” This can work in the internet as well but I am convinced the problem in the internet today is, that most people are just ignoring ads.

    So, people have to be forced to watch video ads.

  2. I dont agree with you Felix:
    People are just overloaded from information and ads, as Andreas says. In future they will have an infrastructure to simply fade out ads. As many already do have: in my case for example a digital-recorder to watch movies without an ad-break. And why I am doing this: Because the ad is not invited to my dinnerparty anymore, as Andreas says.
    Or think about ad-blindeness: on my favorite webpages I know where the ads are and I am able to simply fade them out.

    Ads in TV are not working. They are very expensive an the effect on costumers very hard to measure. TV-advertisement ist always only one component of a huge marketing-program, in fact it works only, because you spend lots of money on all actions together. They right way would be to spend a little money only there, where the costumer is in buying mood at the very moment. Think of sweet in front of a cashpoint.

  3. I am certainly not in that line of business, but like the two preceeding commenters, I don’t really feel comfortable with what you write there. From a layman’s point of view, all you write makes sense, but may be too remote from the real issues to be understood. Something, I think, can be read between the lines in Fabienne’s comment, or at least I do read it:

    What you write seems to negate the basic difference between what ‘marketing’ is and what ‘advertising’ is – at least as far as I tend to keep these two concepts apart. If we stay within the context of what Felix and Fabienne write – and I agree with them – even good advertising can be swatted, blanked out, skipped, whatever. Good marketing will always prevail. I like Fabienne’s mention of the candy lanes at the supermarket. That sells. What it will sell (product and brand), is a matter of advertising (and placement on the shelves). Certainly not a matter of advertising in the candy lane. Too late vor clever slogans there.

  4. @ray: You are right, I should differ more between marketing and advertising. Andreas focused on the second and I agree with him completely.

    In most of cases Advertising does not work. The costs to the point of action (buying) are to high. And I agree with Andreas: When you put the money in the right channel of advertisement, then it could work. Where the money goes there is the shortest way to the point of buying. The way from my couch to the internetshop ist very long.

  5. @Fabienne: Dunno. I think you’re too self-critical there. For my gusto, you were on the right track. Marketing, advertising, whatever. I still claim that Internet, WWW, 2.0 et al. have not really brought much of a change to human behaviour as such. A myth! Old marketing and advertising principles still hold. Totally. The fuzz is more about a lot of new people on the scence, coming from the IT side, who come with “everything is possible” attitudes and try to rattle every fence. Good thing that they do, but they too, will grow older and realize that having fun needs to be funded. 😉

  6. @Fabienne
    AdblockPlus is definitely a problem. Agreed. But I think there are ways to solve this one.

    I agree with you, that you can’t really measure the success of TV ads. It’s good on the one and bad on the other side. IMHO prices for TV ads (in Germany) are too high anyway but still help products being sold. In the internet you have a real-time market with a high ability to measure success but I believe there is still potential to improve this whole concept.

    I really wonder what would happen if i.e. Burger King would do a 5 seconds pre-roll ad appearing once after each Facebook Login offering a special 20% voucher on a menu. Assuming people would actually have to (!) watch the ad, what would happen?

  7. Pretty good post. I just stumbled upon your blog and wanted to say that I have really enjoyed reading your blog posts. Any way I’ll be subscribing to your feed and I hope you post again soon

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