Great question. Many ways. The rising price of attention is a valuation tailwind to firms that already have attention at scale. It is also an economic moat to firms that have cultivated trust at scale as the price of doing so is becoming increasingly unaffordable. It suggests that firms with scaled attention and/or scaled trust should command a higher valuation vs. their past, and firms whose strategy involves scaling attention or scaling trust should command a lower valuation vs. their past. Economic rents to attention aggregators should go up (as we're seeing), and as the $25 shirt comment below suggests, there are a growing number of businesses and business models that are no longer viable.
Since I long to write marketing copy that captivates again and rewards attention, I support your hypothesis. As someone who considers herself a curator of creative talent, I am preparing for just such a future.
Love this John thank you. Anyone who knows and quotes Dr Iain McGilchrist’s work on attention is at the cutting edge of thinking. I also very highly recommend Attending by Dr Ronald Epstein - a brilliant read
As a freelance media buyer, this idea seems true. Other people in my profession have found meta ads for e-commerce rise so high as to almost entirely cut certain industries out of the market. Say you sell $25 shirts? Maybe possible 10 years ago but impossible now. For the people who are left, it's an arms race of more and more sophisticated ads that are analyzed in detail to hack retention rates and click through.
The solutions have been to move to lower price platforms like TikTok or reformulate business offerings to be higher ticket. Eg, maximize the amount bought with each transaction by cross/upsells. You can guess this second approach has its own practical limits, making advertising "just not worth it" for many.
It had occurred to me whether simply moving to cheaper platforms over time was the answer. But it seems even that is limited as not all platforms have quality audiences or good enough 'ad products'. For example, meta has one of the most advanced ads platform - whereas LinkedIn or X's are still very limited. Pinterest, Snapchat and other similar platforms may have an audience but I've not heard of many successfully advertising there.
Thank you for sharing! Your experiences are consistent with what I've heard as well and a more emergent version of what we've seen in TV ads -- only scale players in scale industries can afford them.
Interesting essay. How do you incorporate your thesis into your investment philosophy and practice?
Great question. Many ways. The rising price of attention is a valuation tailwind to firms that already have attention at scale. It is also an economic moat to firms that have cultivated trust at scale as the price of doing so is becoming increasingly unaffordable. It suggests that firms with scaled attention and/or scaled trust should command a higher valuation vs. their past, and firms whose strategy involves scaling attention or scaling trust should command a lower valuation vs. their past. Economic rents to attention aggregators should go up (as we're seeing), and as the $25 shirt comment below suggests, there are a growing number of businesses and business models that are no longer viable.
Since I long to write marketing copy that captivates again and rewards attention, I support your hypothesis. As someone who considers herself a curator of creative talent, I am preparing for just such a future.
Love this John thank you. Anyone who knows and quotes Dr Iain McGilchrist’s work on attention is at the cutting edge of thinking. I also very highly recommend Attending by Dr Ronald Epstein - a brilliant read
Excellent - thank you for the recommendation.
My pleasure. I look forward to further interaction John
As a freelance media buyer, this idea seems true. Other people in my profession have found meta ads for e-commerce rise so high as to almost entirely cut certain industries out of the market. Say you sell $25 shirts? Maybe possible 10 years ago but impossible now. For the people who are left, it's an arms race of more and more sophisticated ads that are analyzed in detail to hack retention rates and click through.
The solutions have been to move to lower price platforms like TikTok or reformulate business offerings to be higher ticket. Eg, maximize the amount bought with each transaction by cross/upsells. You can guess this second approach has its own practical limits, making advertising "just not worth it" for many.
It had occurred to me whether simply moving to cheaper platforms over time was the answer. But it seems even that is limited as not all platforms have quality audiences or good enough 'ad products'. For example, meta has one of the most advanced ads platform - whereas LinkedIn or X's are still very limited. Pinterest, Snapchat and other similar platforms may have an audience but I've not heard of many successfully advertising there.
Thank you for sharing! Your experiences are consistent with what I've heard as well and a more emergent version of what we've seen in TV ads -- only scale players in scale industries can afford them.
Excellent post
Glad you enjoyed it!