Decoding the digital age
The Attention Economy: Why Engagement Matters More Than Ever
As content becomes more abundant, attention becomes more valuable. We explore the dynamics of the attention economy.
Internet Strategy
The Attention Economy: Why Engagement Matters More Than Ever
How attention has become one of the most scarce resources for internet companies
For much of the internet era, growth appeared to follow a reasonably straightforward formula. Build a product that people value, acquire users through digital channels, and reinvest the proceeds in further growth. Search engines, social media platforms, app stores and advertising networks acted as remarkably efficient intermediaries, matching products with potential customers on a global scale. For many businesses, the challenge was not reaching an audience but scaling quickly enough to serve it.
That world has become more complicated. Digital markets that once felt wide open now feel densely populated. Customer acquisition costs have risen across many sectors, competition has intensified and consumers are presented with more choice than at any point in history. In a previous No Latency article, The Leaky Bucket, we explored the growing importance of retention. For an increasing number of digital businesses, attracting users is no longer the principal challenge. Keeping them may be.
It is tempting to view this simply as a problem of marketing economics. Advertising has become more expensive. Privacy changes have made targeting more difficult. Growth is not what it once was. All of these observations are true. Yet they feel a little like describing the weather without asking why the climate has changed. They may explain what is happening without fully explaining what is driving it.
For the best part of three decades, the internet has been steadily reducing the cost of distribution. Information became easier to find, products became easier to discover and businesses gained access to audiences that would once have been unimaginable. The friction separating supply from demand gradually dissolved. Entire industries were transformed by this process. Artificial intelligence may now be doing something similar for creation itself. Articles can be drafted in seconds. Images can be generated almost instantly. Software development is becoming faster. The cost of producing digital products, content and experiences is falling across a wide range of categories.
At first glance, this appears entirely beneficial. More content. More choice. More creativity. Yet the more one thinks about it, the more an awkward question begins to emerge. What happens when the supply of something becomes almost limitless?
Economists have a fairly predictable answer to that question. Attention shifts towards whatever remains scarce. And herein lies the interesting part. The supply of digital content appears capable of expanding almost indefinitely. Human attention does not. We still have only twenty-four hours in a day. We can watch only so many videos, read only so many articles and spend only so much time listening, scrolling, playing or chatting. Every hour devoted to a podcast is unavailable to YouTube. Every evening spent watching Netflix is an evening that cannot simultaneously be spent gaming, browsing social media or experimenting with the latest AI application.
The observation is almost embarrassingly simple, which may be one reason it is easy to overlook. Yet many important economic shifts begin with observations that seem obvious in hindsight. The internet has become extraordinarily effective at creating content and remarkably efficient at distributing it. Increasingly, the constraint lies elsewhere.
We often talk about internet businesses competing for users. Increasingly, it may be more useful to think of them as competing for time. Users can be acquired, lost and reacquired. Time works rather differently. Once spent, it does not come back. Rising acquisition costs, the growing importance of retention, and the value attached to brands, communities and trust begin to look rather different when viewed through this lens. They all point towards the same underlying reality. As content becomes more abundant, attention becomes more valuable.
The Scarcity of Attention
Economists have a habit of looking for scarcity. It is often the starting point for understanding value. Land was scarce. Capital was scarce. Skilled labour was scarce. Control over these resources frequently translated into economic power.
The internet complicated this picture. Information, once expensive to access and distribute, became abundant. Publishing costs collapsed. Distribution costs fell dramatically. Consumers gained access to an almost limitless supply of products, services and content. Many of the most successful internet businesses were built on this abundance. Search engines helped people navigate it. Social networks helped people share it. Marketplaces helped people transact within it.
For a time, the principal challenge facing digital businesses was discovery. The question was not whether content could be created, but whether it could be found. This helps explain why search became so valuable. It also helps explain why distribution platforms acquired such extraordinary influence. They acted as gatekeepers to an increasingly crowded world.
Yet it is difficult to look at today’s internet and conclude that content remains the scarce resource.
If anything, the opposite seems closer to the truth. Consumers can choose from millions of videos, podcasts, articles, songs, games and applications, with more appearing every day. Artificial intelligence is likely to accelerate this trend still further. It is not difficult to imagine a future in which the creation of content becomes so inexpensive that supply ceases to be a meaningful constraint at all.
Whether that future arrives or not, it does raise an interesting possibility. The internet may be experiencing a gradual shift from one form of scarcity to another.
There is certainly no obvious mechanism by which human attention expands to match the growth in content. The average person has not become materially better at multitasking over the past twenty years. Nor has the length of the day increased. We still possess roughly the same amount of discretionary time available to previous generations, even if we choose to spend it rather differently.
The result is a curious imbalance. Content can be created faster than ever before. Attention cannot.
Once viewed in these terms, a number of seemingly unrelated developments begin to look connected. Rising customer acquisition costs. Increasing competition across digital markets. The growing importance of retention. The premium placed on brands, communities and trusted platforms. These may not be separate phenomena at all. They may simply represent different responses to the same underlying constraint.
One of the more interesting consequences is that traditional industry boundaries begin to lose some of their significance. Netflix competes with Disney, certainly. But it also competes with YouTube, podcasts, gaming, social media, live sport and perhaps even sleep. A news publisher competes not only with rival publications, but with creators, influencers, entertainment platforms and an endless stream of algorithmically curated content. What these products have in common is not their business model or their category. It is that they all make claims on the same finite resource – time.
Perhaps that is the most useful way to think about attention. Not as a metric on a dashboard, but as an allocation of human time. A business that captures five minutes of attention each month has a very different relationship with its customers from one that captures thirty minutes every day. The difference is not merely quantitative. It changes the nature of the relationship itself.
This observation sounds almost obvious when stated explicitly. Yet obvious observations have a habit of reshaping industries. If attention is becoming the scarce resource of the digital economy, then the ability to attract and retain it may increasingly determine which businesses thrive, which merely survive and which quietly disappear.
Engagement and the Economics of Habit
If attention is becoming increasingly scarce, an obvious question follows. Why do some products capture so much more of it than others?
The conventional answer is often quality. Better products attract more users and retain them for longer. There is certainly some truth in this. Yet quality alone struggles to explain why consumers return to certain products dozens of times each day while engaging only occasionally with others that are arguably just as useful.
Consider the difference between a tax return and Spotify. One may be considerably more important than the other. Yet only one is likely to occupy a meaningful place in a person’s daily routine. Importance and engagement are not necessarily the same thing.
The more one looks at highly successful internet businesses, the more another pattern begins to emerge. Many have become woven into the fabric of everyday life. WhatsApp is checked before breakfast. Spotify accompanies the morning commute. LinkedIn fills a spare moment between meetings. YouTube occupies an evening. Individually, these interactions may seem trivial. Collectively, they account for a remarkable share of our attention.
This is where the economics become interesting.
A business that captures five minutes of attention once a month has a fundamentally different relationship with its customers from one that captures thirty minutes every day. The latter benefits not only from greater engagement, but from repetition. The product becomes familiar. The habit becomes established. Switching to an alternative begins to require a small amount of effort, then a little more, until eventually the behaviour feels almost automatic.
The process is so gradual that it is easy to miss. Habits rarely announce their arrival. One day a product is something we use occasionally. A few months later it has become part of the background architecture of everyday life.
What begins as a product advantage can gradually become an economic advantage. A business that occupies a regular place in a customer’s routine enjoys a degree of resilience that is difficult to replicate through advertising alone. Competitors may offer similar features, lower prices or superior technology, yet consumers often remain attached to familiar behaviours long after the original reasons for adopting them have faded.
This may help explain why some digital products become surprisingly durable. Their value lies not simply in what they do, but in the role they play within established routines. The habit itself becomes part of the product.
The challenge, of course, is that habits cannot simply be designed into existence. Many products aspire to become part of their users’ daily lives. Relatively few succeed. This suggests that engagement is not merely a consequence of usage. Something deeper is taking place.
In our recent Secrets of Engagement series, we explored why some games retain players for hundreds or even thousands of hours while others struggle to maintain attention beyond the first few sessions. Interestingly, many of the underlying mechanisms had little to do with graphical fidelity, production budgets or even the volume of content available. Instead, engagement often emerged from a combination of mastery, ownership, continuity, belonging and identity.
Although these observations emerged from gaming, they appear surprisingly relevant across the wider internet economy. Spotify benefits from years of listening history and carefully curated playlists. LinkedIn derives much of its value from professional identity and accumulated networks. Reddit is strengthened by communities and reputation. WhatsApp is embedded within social relationships that users are understandably reluctant to abandon.
What these products have in common is that they create reasons to return. The distinction may sound subtle, but it matters. A product that depends entirely on novelty faces a difficult challenge. New content must be created continuously simply to maintain attention. Products built around ownership, identity, community or routine often become self-reinforcing. Each interaction increases the likelihood of future interactions.
Economists sometimes describe this phenomenon as path dependency. The choices available today are shaped by the choices made yesterday. Many digital products exhibit similar characteristics. A playlist becomes more valuable as it grows. A professional network becomes more useful as connections accumulate. An online community becomes richer as relationships deepen.
Time invested in a product often changes the nature of the relationship. What begins as consumption gradually becomes commitment.
Why Brands, Communities and Trust Matter
If habits and routines help explain why some products retain attention more successfully than others, they still leave an important question unanswered. How does a product earn that attention in the first place?
After all, consumers cannot form habits around products they never try. Before a routine can emerge, there is usually a moment of selection. A user chooses one service over another, one platform over another, one source of information over another. In theory, the internet should have made these decisions easier. Consumers have access to more information than ever before. Reviews are readily available. Competitors are only a click away. Comparing products has become remarkably simple.
Yet something rather curious appears to have happened. Brands seem, if anything, to have become more important.
At first glance this feels slightly contradictory. If information is abundant, surely consumers should rely less on reputation, not more. Why place so much value on a brand when facts, reviews and alternatives are readily available? The answer may lie in the sheer volume of choices now confronting consumers. The internet has become extraordinarily effective at creating options. Streaming services compete with social media. Social media competes with gaming. Gaming competes with podcasts. Podcasts compete with news. Faced with this abundance, consumers are required to make an endless series of decisions about where to spend their time.
Most people do not approach these decisions as economists might. They do not conduct exhaustive research before deciding what to watch, read or play. Life is too short for that. Instead, they rely on shortcuts. Familiarity reduces uncertainty. Reputation reduces effort. A trusted brand provides a useful signal in a world saturated with alternatives. In many cases, the decision has effectively been made before the evaluation begins.
This may help explain why established intellectual property has become so prominent across gaming, entertainment and media. Familiarity does not guarantee success, but it often makes the initial battle for attention considerably easier. The success of Monopoly Go provides an interesting example. At first glance, it appears to be a story about intellectual property. Monopoly is one of the most recognisable brands in the world and consumers immediately understand the proposition. That familiarity undoubtedly helped attract attention.
Yet the more one examines the product, the less satisfying this explanation becomes on its own. Many products benefit from strong intellectual property without achieving comparable levels of engagement. Monopoly Go appears to have succeeded not simply because users recognised the brand, but because the product gave them reasons to return. Collections, events, progression systems, social interactions and regular content updates transformed familiarity into habit. Recognition may have secured the first interaction. The challenge was winning the second, the third and the hundredth.
Communities appear to operate in a similar way, although through a rather different mechanism. A user may leave a product without much hesitation. Leaving a community is often more difficult. Relationships, reputations and shared experiences create forms of value that are not easily replicated elsewhere. Anyone who has spent time in a thriving online forum, Discord server or professional network will recognise this intuitively. The content matters, certainly, but much of the value resides in the connections between people rather than the platform itself.
Trust may become increasingly important as well. Artificial intelligence is likely to create an unprecedented abundance of content. While this may increase choice, it may also increase uncertainty. Consumers will be asked to evaluate a growing volume of information, recommendations and digital experiences, some excellent, some mediocre and some entirely fabricated. In such an environment, trusted brands, communities and platforms may enjoy an advantage that receives surprisingly little attention. They help people decide where to spend their time.
Scarcity often determines value. If attention is becoming the scarce resource of the digital economy, it is hardly surprising that brands, communities and trust appear increasingly valuable. Each reduces friction in the allocation of attention. Each helps answer a question that consumers are being forced to ask more often than ever before: what deserves my time?
Attention as an Asset
The more one thinks about attention, the harder it becomes to regard it simply as an ingredient in someone else’s business model.
Traditionally, internet businesses have tended to value attention indirectly. Attention generates advertising revenue. Attention supports subscriptions. Attention creates opportunities for commerce. Investors, analysts and executives therefore focus on these outcomes rather than the attention itself. This is perfectly sensible. Revenue is easier to measure than attention and businesses ultimately require cash rather than engagement metrics.
Yet there is a risk that focusing exclusively on the outputs obscures something important.
Consider two hypothetical businesses. The first persuades a customer to spend £10 once each month. The second captures forty-five minutes of that customer’s attention every day but monetises that attention relatively poorly. Conventional accounting would almost certainly favour the first business. Yet the comparison feels less straightforward than it initially appears. The second business possesses something that may prove extremely valuable, even if its current monetisation model leaves much to be desired.
The reason is that attention creates optionality. A business that consistently commands a meaningful share of its customers’ time has opportunities that may not yet be fully reflected in its current financial performance. Advertising can be introduced or improved. Commerce can be layered on top. New products can be launched. Subscriptions can be tested. None of these outcomes are guaranteed, but they become considerably easier when attention already exists. Building a loyal audience is often far harder than finding new ways to monetise one.
This may help explain why apparently different internet businesses frequently attract similar levels of investor interest. Social networks, streaming platforms, gaming companies, creator ecosystems and media businesses operate very different economic models, yet they all compete for the same scarce resource. Their long-term value often depends less on how they monetise attention today than on whether they continue earning it tomorrow.
One begins to see this dynamic in unexpected places. Discussions about the future of news organisations, for example, often focus on subscriptions, advertising and the broader challenges facing journalism. All of these issues matter. Yet viewed from another angle, the most valuable asset possessed by a successful publication may be the attention of its audience. A publication that consistently earns thirty or forty minutes of attention from readers each day has built something of considerable value, regardless of whether that value is currently being extracted efficiently.
The same observation extends across much of the digital economy. Consumers do not develop routines around advertising models. They do not wake up excited about subscription mechanics. They develop routines around products, communities and experiences. Revenue often follows attention rather than the other way around.
Perhaps this is why engagement has become such a central concern for founders, investors and product leaders. It is easy to dismiss engagement as a dashboard metric, but that risks understating its significance. In many cases, engagement is simply a visible expression of something deeper: the strength of the relationship between a product and its users. In an economy where attention is becoming increasingly scarce, relationships of that kind are difficult to build and surprisingly difficult to dislodge once established.
Conclusion
The internet has spent much of the past three decades reducing friction.
Information became easier to access. Products became easier to discover. Distribution became cheaper and more efficient. Artificial intelligence now appears poised to reduce the cost of creation itself, making it possible to produce content, software and digital experiences at a scale that would once have seemed implausible.
Much of the discussion surrounding these developments focuses on supply. More content. More products. More choice.
Yet scarcity has a habit of reappearing in unexpected places.
As digital content becomes more abundant, attention becomes relatively more valuable. Consumers still have only twenty-four hours in a day. They can watch only so many videos, read only so many articles and devote only so much time to any particular product or service. The battle for attention is not entirely new, but it is becoming increasingly difficult to ignore.
Viewed through this lens, a number of trends begin to look less surprising. Rising acquisition costs. The growing importance of retention. The value attached to brands, communities and trust. The success of products that become embedded in daily routines. Each reflects the same underlying reality. In an increasingly crowded digital environment, earning attention is difficult. Retaining it is harder still.
Perhaps this is why engagement has become such a persistent theme across the digital economy. It is often discussed as a product metric, yet that description feels incomplete. Engagement influences retention, monetisation, competitive positioning and ultimately the durability of a business. More fundamentally, it reflects the strength of the relationship between a product and its users.
The most valuable internet businesses of the coming decade may not necessarily be those that create the most content, spend the most on advertising or even possess the most advanced technology. They may simply be those that secure a place in their users’ routines and continue earning a share of their finite attention, day after day.
The internet has become remarkably good at producing things. The increasingly difficult challenge is persuading people to spend time with them.
