Attention is the new gold, but how to mine it

Despite their limited product assortment, a new study reveals that small businesses can challenge industry leaders by effectively capturing consumers’ attention

By Pan Jingyi, Principal Writer, China Business Knowledge @ CUHK

“A wealth of information creates a poverty of attention,” writes Herbert Simon, an American Nobel Laureate who proposed the concept of attention economy. In a world of information inundation, it is vital for businesses to master the art of attracting and monetising consumers’ attention.

Platforms like YouTube, Instagram, and TikTok have given birth to many content creators or “influencers”, many of whom have become global celebrities. The influencer marketing industry has seen exponential growth, expanding from US$1.7 billion in 2016 to US$24 billion by the end of this year, according to The state of influencer marketing 2024: Benchmark report by a social media research firm, Influencer Marketing Hub.

“The attention monetisation via e-commerce (AMveC) model allows businesses to focus on garnering consumer attention, which becomes the core strategic resource for businesses.”

Professor Tony Ke

In China, live stream selling has become a common norm among top influencers, with Crazy Little Yang Brother or Crazy Xiaoyangge, who also hosts e-commerce live streams, outperforming his peers with an annual net income of 3.21 billion Chinese yuan (US$451 million). This is no surprise as a new report by KPMG, Navigating the future of seamless commerce in Asia Pacific, found that Gen Z ranked social commerce and live streaming commerce as important parts of their shopping experience.

“The business strategy to monetise attention through e-commerce is economically feasible both in the short term and for the long haul,” says Tony Ke, Associate Professor of the Department of Marketing at the Chinese University of Hong Kong (CUHK) Business School.

E-commerce platforms are not the only ones that leverage content to captivate consumers and monetise their attention through direct product sales. The New York Times has introduced a digital store that not only offers books but also a diverse range of apparel and accessories, while Vogue went further by opening an online shop showcasing products curated by its editorial team.

However, there is much to understand about how attention monetisation works in a competitive market and how it helps smaller companies or individual content creators compete against the giants. Professor Ke and Mandy Hu, Associate Professor of the same department, along with their PhD student Wee Chaimanowong, as well as Cao Jingcun of the University of Hong Kong, delve into the model of attention monetisation via e-commerce (AMveC) in their latest research titled Attention Monetisation via e-commerce: Why do people buy groceries on an education app?

Differences from traditional business models

Unlike conventional business models like product merchandising and attention monetisation via advertisement, the AMveC model boasts its distinctive characteristics. Businesses adopting AMveC invest in content creation to allure consumer attention before monetising it by selling products from third parties and relying on e-commerce platforms to sell and deliver their products, instead of engaging in manufacturing.

“This model allows businesses to focus on garnering consumer attention, which becomes the core strategic resource for businesses,” Professor Ke explains, adding that the AMveC model also allows businesses to control over product assortment and price directly.

To formulate this model, the researchers conducted a large-scale randomised field experiment with a private online education service provider in China to scrutinise the viability of the AMveC model.

Various and updated product choices win

The researchers created a new in-app store and randomly assigned 100,000 users to one of their four stores that differ in product assortment (educational vs. non-educational) and prices (regular vs. high). The study revealed insights into consumer behaviour and purchasing trends over a 32-day period.

The findings indicated that the non-educational store with regular pricing tends to attract the most buyers and generate the highest sales, revenue, profit, and repeat purchases. Although fewer people shop in education stores due to the less popular product assortment, those who shop are more willing to spend more money. However, Professor Ke notes that the sales declined quickly over the experiment period for all the stores.

“This suggests that even though some customers indeed make repeated purchases, the stores still need to change the assortment of products frequently to boost sales,” he says.

Building competitive advantages for small firms

Given consumers’ limited attention, Professor Ke and his collaborators also explore how smaller companies can compete with industry leaders.

Compared to the leading firms with a wide range of products, small companies or fringe firms usually provide limited product selections. “The fringe firms may have limited resources to develop the necessary technologies, and therefore, even if they have access to a large selection of product assortment, it may not be optimal for them to offer all of them,” Professor Ke says.

Therefore, smaller firms can harness the AMevC model to compete against the dominant seller. Professor Ke highlights that in this model, the core strategy for small firms is to create appealing content that can capture consumers’ attention, and third-party products are just a means to monetise the attention. “Consumers visit the fringe firms for the content, instead of product consumption.”

On the other hand, the researchers also found that a discounted rate works best for businesses adopting the AMevC model. “A lower price compensates the business’ disadvantage in product assortment and also discourages consumers from continuing to search,” Professor Ke adds. “Fringe firms can secure consumers’ first visit via attention-grabbing content and retain consumers by charging a lower price.”

Managerial insights for companies

With the unstoppable rise of e-commerce platforms, more businesses are now leveraging the AMveC model, selling unrelated products to monetise the attention of a larger consumer base.

RELATED ARTICLE

How Privacy Rights Affect Personal Data Markets and Firm Profit

The management team of the education platform Professor Ke collaborated with did not expect non-educational products to sell better than educational ones. After implementing an in-app store showcasing a mix of educational and non-educational products, as learned from the experiment, the platform saw a substantial 45 per cent revenue increase.

“Our research not only demonstrates AMveC as an economically viable business strategy, but also offers managerial insights on product assortment and pricing decisions,” says Professor Ke.

He emphasises that by focusing on engaging content creation, strategic product offering, and competitive pricing, small businesses can foster growth and co-exist in a frictional market with the leading seller.  “Sales are old and inaccurate, while eyeballs (attention) are new and informative.”