The Rising Cost of Consumer Attention: Why You Should Care, and What You Can Do about It

Thales S. Teixeira

Working Paper | HBS Working Paper Series | 2014

The Rising Cost of Consumer Attention: Why You Should Care, and What You Can Do about It

Abstract

Attention is a necessary ingredient for effective advertising. The market for consumer attention (or "eyeballs") has become so competitive that attention can be regarded as a currency. The rising cost of this ingredient in the marketplace is causing marketers to waste money on costly attention sources or reduce their investment in promoting their brands. Instead, they should be thinking about how to "buy" cheaper attention and how to use it more effectively. Research in the emerging field of the Economics of Attention shows how this can be achieved. Here, I argue that, irrespective of the means to attain it, attention always comes at a price. I also show that the cost of attention has increased dramatically (seven- to nine-fold) in the last two decades. To counteract this trend I propose novel approaches to lower its cost or use attention more efficiently by adopting multitasker-tailored ads, Lean Advertising, and Viral Ad Symbiosis. To guide the choice of which approach to take, I propose the Attention-contingent Advertising Strategy, a framework to match the most effective approach to the quality of attention contingently available. As the value of attention rises, marketers need to become better managers of attention. This paper is intended to help them in this regard.

Keywords: Strategy; Advertising;

Language: English

Format: Print

23 pages

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Citation:

Teixeira, Thales S. "The Rising Cost of Consumer Attention: Why You Should Care, and What You Can Do about It." Harvard Business School Working Paper, No. 14-055, January 2014.

Consumers have an increasingly wide variety of options available to entertain themselves. This poses a challenge for content aggregators who want to effectively promote their video content online through original trailers of movies, sitcoms, and video games. Marketers are now trying to produce much shorter video clips to promote their content on a variety of digital channels. This research is the first to propose an approach to produce such clips and to study their effectiveness, focusing on comedy movies as an application. Web-based facial-expression tracking is used to study viewers’ real-time emotional responses when watching comedy movie trailers online. These data are used to predict both viewers’ intentions to watch the movie and the movie’s box office success. The authors then propose an optimization procedure for cutting scenes from trailers to produce clips and test it in an online experiment and in a field experiment. The results provide evidence that the production of short clips using the proposed methodology can be an effective tool to market movies and other online content.

Working Paper | HBS Working Paper Series | 2018

The Impact of Increasing Search Frictions on Online Shopping Behavior: Evidence from a Field Experiment

Donald Ngwe and Thales S. Teixeira

Online retail accounts for a rapidly growing proportion of revenues in many industries. While selling online broadens firms’ access to consumers, operating margins are often lower in online stores than in physical stores. There are well-recognized reasons for this discrepancy: prices are easy to compare online, discount coupons and codes have high uptake, and sellers often bear the cost of shipping products to buyers. In addition to these factors, online selling precludes many methods of price discrimination exercised in offline environments. Many online stores present few barriers to accessing discounted products. We propose that deliberately increasing search frictions by placing obstacles to locating discounted items can improve online retailers’ margins and increase conversion. We demonstrate using a simple theoretical framework that inducing consumers to inspect higher-priced items first can simultaneously increase the average selling price and the overall purchase rate. We test these predictions in a series of field experiments conducted with an online fashion and apparel retailer. Using information from historical transaction data about each existing consumer, we demonstrate that price-sensitive shoppers are more likely to incur search costs in order to locate discounted items. Our results show that adding search frictions can be used as a self-selecting price discrimination tool to match high discounts with price-sensitive consumers and full-priced offerings with price-insensitive consumers.

Keywords: e-commerce; online retailing; effor; search costs; price discrimination; friction; Marketing; Consumer Behavior; Price; Fashion Industry; Retail Industry; Southeast Asia; Philippines;

Citation:

Ngwe, Donald, and Thales S. Teixeira. "The Impact of Increasing Search Frictions on Online Shopping Behavior: Evidence from a Field Experiment." Harvard Business School Working Paper, No. 18-114, June 2018. View Details

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By 2016, two-sided online platforms (or marketplaces) were pervasive among the highest growing internet startups around. These marketplaces sought to match suppliers of assets for rent, physical products or services with customers demanding them. Among the most notable two-sided platforms in terms of their tremendous early growth were Airbnb, Etsy and Uber. They offered short-term property rentals, handcrafted goods, and car rides, respectively. As two-sided markets grew to scale, network effects kicked in as more consumers bred more suppliers and vice versa. But how did these platforms acquire their first customers, at the time when they had so few providers? How exactly did they go about acquiring their first thousand customers?

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The Rising Cost of Consumer Attention: Why You Should Care, and What You Can Do about It

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