The End of the Attention Economy

The idea that "the media is dying" is so clichéd that a Twitter account chronicling its alleged demise is now 10 years old. But this time is different, according to Aaron Shapiro, CEO and founder of Huge, a New York-based digital marketing and consulting firm.

Machine learning, big data, and consumer exhaustion with traditional ad formats are re-writing the rules of digital media—and there will be casualties, Shapiro said during a chat at SXSW.

"There is a very big shift happening," Shapiro said. For the last 20 years, digital media was based on capturing our attention. We got all this stuff for free in exchange for service providers selling our data to advertisers.

The End Of The Attention Economy - Aaron Shapiro

But now, "advertising isn't working as well as it used to," according to Shapiro. "People see an average of 3,000 advertisements every day. If you are a marketer, you are just one of those 3,000, [and] that is a difficult position to be in."

The economics aren't much better for publishers and service providers forced to do battle with Google and Facebook for digital scraps. "Like it or not, we are in a duopoly," Shapiro said. "Over 80 percent of digital spend goes to one of those two companies."

What about pivoting to video? That won't help either, as 90 percent of YouTube users click "Skip ad" as soon as possible, while others flock to the ad-free confines of Netflix. "Advertisers are spending millions on a 30-second ad and users are only seeing four seconds of it," Shapiro said. "That just isn't sustainable."

Going forward, Shapiro sees a digital world focused on efficiency. Uber replaced traditional taxis because it made it easier to hail a cab. The Dollar Shave Club took a commodity product directly to the consumer and now owns the entire value chain, upselling users on shave cream and aftershave. When Unilever bought Dollar Shave Club, it also bought into the efficiency economy.

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"The way to be viable long-term is to be direct-to-consumer and own the entire value chain," Shapiro said. "[It's] how more and more companies are going to evolve."

Check out our full interview with Shapiro in the video above.

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