The World's Scarcest Commodity
The Attention Economy, what companies do wrong when they want to capitalize on it and what they should do instead.
Think of your most valuable commodity. Chances are that attention isn’t the first thing that comes to mind. But to companies all around the world, there’s nothing more valuable, and they spend millions trying to capture it. This is “The Attention Economy.
The attention economy is the result of an increasing amount of time being spent on platforms such as Instagram, Facebook, YouTube and TikTok. Being able to build an audience and capture their interest has suddenly become a very valuable skill. Content creators own an increasing share of consumer’s time and attention, so it’s not hard to understand that brands and companies want to take part of the action. Finding distribution and driving traffic is hard and being able to take part of networks that have already been built is worth it’s weight in gold.
Influencer marketing generally has a pretty bad reputation. We’ve all seen the uninspired product placement photos in our Instagram feed with no desire to engage with the product. Sadly, this is how most companies use influencer marketing today.
However, just as you can not get an Amazon-like return by investing in an index fund, companies can not run an uncreative marketing campaign and expect to get an exceptional Return-on-Investment. Similar to the stock market, outsized returns requires second level thinking.
People have limited time and attention, and you need to gain their attention for them to engage with your product or service. Americans are exposed to between 4,000 to 10,000 ads every day and to withstand the noise, companies must be able to think differently.
Dunkin’s Slam Dunk
In 2020, Dunkin’ (formerly Dunkin’ Donuts) launched a cold brew coffee drink, “The Charli”, in collaboration with TikTok star Charli D’amelio. Dunkin’ had noticed that D’amelio was a big coffee drinker, especially of Dunkin's brand, and decided to jump at the opportunity. The collaboration felt organic as D’amelio often featured Dunkin’s coffee in her videos and this authentic feel should not be understated. When viewers are constantly being bombarded with content, authenticity and relatability has become increasingly sought after.
The collaboration seems to have paid off - the day "The Charli" was launched, Dunkin’ saw a 20% boost in sales of all cold brew drinks and a 45% surge the following day. The launch also triggered a 57% increase in daily app downloads. Now Dunkin’ is doubling down on D'amelio by releasing a new coffee drink, "The Charli Cold Foam”. Talk about “FOAMO”!
So, why is Dunkin’s deal with D’amelio interesting? Lifetime Value.
Lifetime Value
Humans are creatures of habit and the the earlier they are introduced into an ecosystem, the likelier they are to stay. If Dunkin’ can convert a 16-year-old to become a customer, it is very likely that they will be customers for 10-20 years or even their entire lifetime.
Companies like Dunkin’ have an insane "subscription rate" where many customers will spend $5 or more on coffee a day. Thinking in these terms, you quickly realize that the lifetime value of each potential customer is sky high. Fans of D’amelio who convert to customers at Dunkin’ will most likely spend thousands of dollars over their lifetime. And once they are part of the ecosystem it is very likely that they will remain in it - even if they stop watching D’amelio.
Travis Scott x McDonald’s
When it comes to capitalizing on the attention economy no one has done it better than the rapper Travis Scott who, among other things, held an in-game concert in Fortnite attracting 28 million viewers. But Scott was not content there. In 2020, the rapper also collaborated with McDonald's and released a signature meal and limited edition merch. This included a pillow in the image of a chicken nugget.
If you’re a teenager or young adult, McDonald's just became a little bit cooler because of it’s association with both Travis Scott and streetwear culture. The probability that they will remain in McDonald's ecosystem a longer part of their lives is now higher.
For Travis Scott the deal was not bad either, earning $5 million upfront and another $15 million on merch sales. Not to mention that he’s now been exposed to a wider audience through McDonald’s that might otherwise never have interacted with him or his products.
How we interact with celebrities, whether it's rappers, TikTok stars, or anything else that can be categorized as “celebrity”, is almost exclusively digital. Being able to convert attention to (physical) traffic is thus incredibly powerful. If you have the audience's attention, you control where their money goes. In the attention economy, you can’t just throw money at the audience to get their attention, you have to invest time in building a relationship. Without the relationship, attention will leave as quickly as it came.
The Pyramid™
To capture attention, companies should think of a pyramid divided into three segments. At the top is D’amelio and Travis Scott. Hiring them to promote your brand creates sensation and attracts a lot of viewers.
These creators are "top of funnel" and direct the audience to "bottom of funnel", where the company has its product or service that the audience can buy. This content provides a high return, but also involves a high cost and can not be used with a high frequency so you need to fill the room with other content.
When companies work with influencers or content creators, this is often where the creativity ends. However, most companies rarely have the same calibre of marketing campaigns as Dunkin’ and McDonald's and as a result their Return-on-Investment suffers.
The next segment of the pyramid is content creators who are already employed at the company. Dunkin’ noticed their employees were filming TikToks at work, but instead of counteracting this, they started encouraging it. Employees, whether they work at the checkout, the kitchen or as as a janitor, who have built their own, niche following can give a more humorous and relatable portrait of Dunkin than anyone at the head office who is completely separated from the end customer.
Instead of spending their entire budget (and a lot of money) on billboards, TV and print advertising, Dunkin’ was able to invest a smaller part of the budget internally to foster creativity within the company by encouraging employees to create content at work and thus reach a wider audience. Content includes what it’s like to work at Dunkin’, what drinks they like to make, and "secret" menu items. At a time when relatability is being rewarded by the viewer, this has been a big hit. Dunkin’ is increasingly becoming a media company where the stores are the sets.
Dunkin’ is now the most followed fast food chain on TikTok with 2.5 million followers. The economics of investing in smaller creators are also sound - on the internet, platforms with smaller audiences tend to have higher engagement rates which means that these investments often give a higher "bang for your buck".
Employees creating content can reach a wider audience and deeper into different niches than what the company would otherwise be able to do because of limited resources, time or knowledge. This content is more frequent and has a more variable return but humanizes the brand to the audience.
Last but not least, you have the most valuable segment of the pyramid: the end customer, especially content creators who want to be like D’amelio or Travis Scott. And how are you like them? By drinking Dunkin 'or eating McDonald’s and including it in your content.
This is the most valuable segment because user generated content creates an incredible flywheel that is impossible to reproduce internally and reach is exponentially higher than in the other segments. This content has a very high frequency and variable return but comes at zero cost.
An example of how user generated content can create virality for brands was when Nathan Apodaca created a TikTok where he drank Ocean Spray cranberry juice with Fleetwood Mac's "Dreams" blasting from his speakers while riding his skateboard down an empty street.
The TikTok became a viral hit and in less than 2 months, the video received over 70 million views just on TikTok (and even more if you consider Instagram, YouTube, and Twitter). "Dreams" topped the Billboard Hot 100 list for the first time in 43 years and became the best selling song on iTunes. Ocean Spray reported 20 billion (free) media impressions as well as increased sales.
While this post went viral by chance, it is possible for companies to create this type of viral reach. See e.g. David Dobrik's collaboration with Chipotle, which received 1.1 billion views by utilizing user generated content.
In the attention economy, the only thing that matters is eyeballs and being able to take advantage of user generated content’s crazy scalability is the key to success. It is often said that all companies will become tech companies, but most likely they will also become media companies.
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Original tweet from 29 March 2021: