The world we live in is constantly evolving. With the rise of social media and the Internet, our attention is becoming an increasingly valuable commodity. This has given birth to what some experts call the ‘yellow economy’ or the ‘attention economy’. In this article, we will explore the concept of the yellow economy and its impact on businesses and society.
The term “attention economy’ was first proposed by Nobel laureate economist and psychologist Herbert Simon. In his seminal work in 1971, he predicted that the wealth of information would create a poverty of attention in an information-rich world. This concept encapsulates how our attention, rather than information itself, would become scarce.
Simon observed that in a world teeming with information, attention becomes scarce and thus valuable. His idea stemmed from the understanding that a person’s capacity to consume information is limited, leading to competition for the viewer’s attention. Today, we witness this prophecy as significant corporations vie for our attention through various digital platforms.
Thus, the yellow economy refers to the economic model that captures and monetises people’s attention. In this model, companies compete for consumers’ limited attention spans through various means such as advertisements, social media posts, and content creation. The more attention a company can capture, the more revenue it can generate. This has led to a shift in focus from traditional economic metrics such as profits and productivity to attention metrics like views, likes, and shares.
The attention economy is not a new concept. It has been around since the advent of mass media, but its significance has grown exponentially with the rise of the Internet and social media. There are well over 3.5 billion people online. And with the abundance of online information, companies must now fight for consumers’ attention like never before.
One notable aspect of the yellow economy is its impact on traditional forms of advertising. Traditional methods, such as TV commercials and billboards, are less effective in capturing consumers’ attention. Companies must now find innovative ways to engage with their target audience and create content that stands out amongst the sea of information available online. There are four critical sectors of the yellow economy.
Everything rests on the ability to attract and hold attention. We have four overlapping areas in a world full of digital assets and virtual online worlds.
The impact of social platforms like Facebook, Instagram, and Twitter on the attention economy cannot be overstated. They’ve mastered capturing and retaining attention, fueling their growth and revenue through advertising.
Streaming services like Netflix and Spotify command significant attention. These platforms understand the power of attention and use algorithms to keep users engaged with personalised content.
E-commerce giants like Amazon and Alibaba are another significant part of the attention economy. They leverage user data to provide personalised shopping experiences and hold attention with strategies like targeted advertising and recommendation algorithms.
The online gaming industry, with brands like Fortnite and PUBG, is a growing player in the attention economy. These companies use engaging gameplay and social features to capture and hold the attention of millions worldwide.
Social media platforms are the undeniable engines of the yellow economy. They have revolutionised how we exchange information, transforming users into consumers and content producers. This duality enables these platforms to attract and retain our attention with increasingly novel content.
Facebook, Instagram, YouTube, and Twitter, among others, use sophisticated algorithms to curate a personalised feed for each user. This customisation makes the platforms more engaging, as the content aligns with each user’s interests, thus keeping users scrolling, clicking, and interacting for extended periods.
Moreover, the interactive nature of social media platforms is a critical factor in maintaining users’ attention. Users can like, share, comment, or even directly message content creators, allowing a level of engagement unimaginable during the era of traditional media.
The primary business model for social media platforms is advertising. By keeping users on their platforms longer, they can display more ads, increasing their revenue. These platforms offer targeted ads, using data analytics to display ads most likely to resonate with each user. For that reason, McKinsey has written that ‘digitally native’ companies can increase by roughly 25% through personalisation.
Streaming services are another significant driver in the yellow economy. Over the past decade, platforms like Netflix, Spotify, and Hulu have profoundly reshaped the entertainment landscape, leveraging the power of personalisation to command users’ attention. These platforms offer vast content, from music to movies, series, and beyond, available on-demand, providing flexibility and convenience that traditional media channels cannot match.
Also using recommendation algorithms, these platforms curate personalised content, keeping users engaged and increasing the time spent on the platform. For example, Netflix uses a complex algorithm that considers user behaviour and ratings to suggest shows and movies that align with each user’s taste. Similarly, Spotify uses listening data to curate personalised playlists, introduce new artists, and predict music trends.
Like social media platforms, streaming services rely heavily on ad revenue, primarily for their freemium models. Platforms like Spotify and Hulu offer free versions of their services, interspersed with targeted advertisements. However, they also offer ad-free subscriptions, presenting a dual revenue stream. This model maximises attention and encourages subscriptions for an ad-free experience. The better the free experience, the more premium subscribers.
E-commerce is a substantial contributor to the yellow economy. E-commerce giants like Amazon, Alibaba, and eBay have revolutionised the retail landscape, again utilising advanced algorithms and personalisation techniques to capture consumers’ attention. What makes e-commerce unique is that convenience is at its core for a wide range of possible goods and services.
Amazon, in particular, has mastered the personalisation technique, with its recommendation algorithm accounting for a significant portion of its revenue. Alibaba thrives on consumer analytics to tailor product suggestions. Similarly, eBay’s search and recommendation algorithms play a vital role in driving traffic and maintaining robust customer engagement.
Much like streaming services, e-commerce platforms also rely heavily on ad revenue.
Amazon’s advertising business, for instance, has seen rapid growth, becoming a significant source of revenue for the company. The platform offers targeted ads based on user behaviour, ensuring higher engagement and conversion rates. Here, the dual revenue stream approach, combining product sales and advertising, maximises attention and boosts productivity in tandem.
The third layer again comes from the freemium model. Amazon Prime, generating over $35 billion in revenue in 2022, offers benefits such as free shipping, early access to deals, and exclusive access to a vast library of movies, music, and books, encouraging consumers to upgrade to a paid subscription.
In the realm of online gaming, the attention economy has also manifested itself profoundly. Major players like Activision Blizzard, Riot Games, and Epic Games have masterfully harnessed players’ attention. These companies again employ the freemium model, offering games for free while monetising through in-game purchases and advertising.
In games like Fortnite, players can buy ‘V-Bucks’ to get various in-game items, including character skins, emotes, and battle passes. This in-game currency system is an ingenious strategy, maintaining the player’s attention by incentivising them to earn or buy these ‘V-Bucks’.
League of Legends utilises a similar model. Players can play for free but have the option to purchase ‘Riot Points’ for cosmetic items or to unlock new characters faster. The emotional attachment and sense of achievement players derive from these virtual goods are potent motivators, keeping them engaged.
Advertising, too, is a significant revenue generator for these companies. In-game ads are becoming increasingly prevalent, especially in mobile games. In the United States, ad revenue from mobile games is expected to reach nearly $8 billion by 2024.
Wrapping all four sectors together, it’s clear the yellow economy is here to stay, and its impact will only continue to grow as algorithms and artificial intelligence advance. However, companies must adapt their strategies continually, staying on top of trends and evolving consumer behaviours.
Yet, this reliance on technology comes with concerns about privacy and data protection. As more personal information is collected, consumers will demand transparency from companies on how their data is used and protected.
The attention economy will also continue to face challenges concerning the spread of misinformation and fake news. As people become more aware of these issues, there will be greater demand for trustworthy and accurate content. This presents an opportunity for companies to stand out by providing reliable and of course, personalised content.
Next in this series of modern economies, we’ll revisit the green economy and cover the leading companies across the globe.
The author of this text, Jean Chalopin, is a global business leader with a background encompassing banking, biotech, and entertainment. Mr. Chalopin is Chairman of Deltec International Group, www.deltec.io.
The co-author of this text, Conor Scott, CFA, has been active in the wealth management industry since 2011. Mr. Scott is a Writer for Deltec International Group, www.deltec.io.
The views, thoughts, and opinions expressed in this text are solely the views of the authors, and do not necessarily reflect those of Deltec International Group, its subsidiaries, and/or its employees. This information should not be interpreted as an endorsement of cryptocurrency or any specific provider, service, or offering. It is not a recommendation to trade.
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