The Denominator Problem: Understanding the Rising Cost of Human Attention
Today is just 24 hours long. Tomorrow will be 24 hours long, too. We sleep an average of 7.7 hours a night, which leaves 16.3 hours in which we humans can pay attention to, well, everything. That’s not increasing. So, in other words — no matter how much we think we can multitask, human attention is finite.
What does this mean for the media business? Well, it’s no secret that people have more options for content than ever before. There’s more and more “TV-quality programming” being made every year. Online publishing and social media have resulted in a nearly infinite well of even more content seeking human attention. All this means that the cost to acquire human attention is skyrocketing, at least in a mathematical sense.
Think back to math class, when you learned about fractions. You learned that fractions have a numerator (what’s being divided) and a denominator (what you’re dividing it by). We can talk about the rising cost of human attention like an equation, too: The numerator in this equation is every single dollar being spent on content seeking people’s precious attention, and the denominator is the amount of time, or attention, that people have to pay to it.
The important thing to keep in mind here is that the denominator cannot really change. We’ve already said that there are only 24 hours in a day, and our attention is finite. But I can hear you out there now: “No way! With all that cellphone and tablet time, video consumption must be going way up.”
Well, let’s try to apply some logic, and remember, this is not screen time, this is video consumption:
- Sleep: 7.5 hours (I’ll round down)
- School/Work: 8 hours (Let’s say the kids do very little, if any homework)
- Other: 2 hours (Socializing, drinking, video games, playing sports, texting, showering, brushing your teeth, talking to family…)
That is 17.5 hours a day taken up by, well, living and stuff. So if every other waking second was spent consuming long and short form video — which it isn’t — that would only be 6.5 hours per day.
But let’s dig a little deeper: Multiply that 6.5 by 365 days in a year, and we estimate that the average American consequently has 2,372.5 annual hours of potential video viewing time. This amount is fairly constant in spite of the fact that our potential screen time has indeed been increasing because much of that screen time is being used for communication and utility functions (like texting) that are less conducive to advertising integration than content consumption is. So, again, the denominator is not changing in a meaningful way.
So, let’s at least agree that the denominator is relatively fixed. But the numerator? Well, that is not so fixed. Not by a long shot.
The numerator in this equation is the value of the total resources allocated to capture that finite human attention — e.g. the money spent on all those TV shows we love. That dollar amount is growing so fast that the attention equation is, metaphorically, at risk of collapsing under its own weight. And this is wreaking havoc on the ad industry. To put it mildly, the attention market has a denominator problem.
Let’s take a look at just how much that numerator is exploding…
There’s more TV show content available to us than ever before — and it’s still growing.
To put the premium that should exist for human attention into perspective, the amount of content available to us at all times is exploding and not stopping its growth any time soon. There are estimates of 100,000 hours of content available right now on Netflix, thousands of hours of premium digital-first video from Vice, 72 hours of new videos posted every single minute on YouTube, and tens of millions of pirated, ad-free video content being accessed right this second.
But it’s not just the amount of content — it’s also the cost. It’s not hard to see that the cost of new shows being produced is rising amid the fight for that attention. Remember when “Lost” made headlines for having the most expensive TV pilot in history? Well, now we’re in an age of “Game of Thrones,” and Flight 815 is a comparative Cessna. It’s estimated that an hour of television now costs $3 million to produce, a significant rise from even just a few years ago.
TV shows are getting more expensive to make in the fight to attract our ever-limited human attention
And not only are new shows more expensive, there are more of them. There will be approximately 400 scripted TV shows releasing new episodes this year, each with an average of 13 episodes. If we conservatively assume these are all half-hour shows — which they aren’t — that is already 2,600 hours of new, human-attention-seeking TV shows.
So, let’s do some back-of-the-napkin math: About 2,600 hours of television are being created in 2015. Each costing around $3 million per hour. The total approximate cost of all the TV content that’s being created in 2015? $7.8 billion dollars. And this is just new originals. And this is conservative, I promise.
So with more shows, and more expensive productions, we can quickly see that the actual price to compete for human attention is exploding.
When you combine the rising production cost of TV content with the increasing amount being created, you see just how much more we’re spending on TV than we were even a few years ago. Or put more simply…
The cost of competing for attention is exploding.
Okay, so all of this says that the competition for people’s attention is at an all-time high, driving the market price for attention into the stratosphere. So what?
Well, there is a bit of a problem. In the advertising industry, when it comes to the main currency for buying people’s attention, the math isn’t keeping pace. The price of an advertising “impression”, the proxy for attention that advertisers trade on, is holding flat, or even decreasing in some case.
The cost to compete for attention in video is rising. Yet advertising CPMs are flat, or decreasing.
The reason why this happens is because the currency that governs advertising, the “impression,” is not tied to actual human attention. Take a second and think about that. Impressions are actually based on the potential for human attention. This is causing a disconnect between the market value of precious human attention and the price advertisers pay to attempt to borrow that attention. How can this be? Well, it turns out, if real human attention cost is increasing, but we don’t want to pay any more for it, all we have to do is turn down the quality or lower the standards. (Half the ad for two seconds, anybody?)
Given the extremely high value people attach to their attention, and the steady increase in the cost of content begging for that attention, people are increasingly opting out of advertising by adopting “ad-freemium” subscriptions like Netflix, fast forwarding through commercials with digital video recorders, and blocking ads with the latest browser plugins. With our penchant for avoiding ads, people are putting themselves more and more in control of what they will pay attention to during their scarce waking hours.
Even more paradoxical? Advertisers are being fed a common response to the problem of humans having more control over their attention and so many more content options. They’re told: “Well, you must become content creators!”
Let’s put aside the fact that, technically, advertising is and always has been content (if an advertisement wasn’t content, then what was it?). But whether you call an ad “content” or not, advertisements still take their share from those same 24 hours in a day, and they’re still adding more and more spend onto that numerator of the attention equation.
“But what about Red Bull?” you might ask. Well, in the case of following a Red Bull Media-like strategy, it must be remembered that Red Bull’s content isn’t just good — it’s also expensive. While the company is pretty hush-hush about internal operations, popular business thinking indicates that it spends half of its approximately $5 billion in revenues on marketing. That includes some pretty costly sponsorships like air shows and F1 racing, so let’s just make a guess that its “content” amounts to $500 million annually. (Felix Baumgartner jumping out of a helium balloon in the stratosphere? Yup, that was content.)
Now let’s say that just the top 200 brands decided to invest in “content” at similar levels. Some quick math indicates that this would add another $100 billion in investment ($500M x 200 brands), meaning countless hours of new content, all competing for the same limited supply of human attention: The same fixed denominator. To put this in perspective, this would dwarf the amount being spent on original, non-ad content, which is already at a point where there’s more content than people have time to watch.
We love to talk about brands investing in “content.” But we rarely talk about just how much that content will cost to make.
Moreover, this puts advertisers in competition with that ever-expanding universe of non-advertising content creators, in addition to “traditional” television studios, digital content creators like Vice and Netflix and Amazon, and now countless YouTube content creators, all making content that doesn’t have a dual goal of selling a product or advancing a brand.
And, yes, there is some inexpensive video content that will attract people’s attention. But if you put a value to these videos and added up all the man-hours required to produce the 8 hours of content that is uploaded every second to YouTube, I’d be willing to bet the cost per second of attention earned by YouTube is right in line. This is because you have to consider all of the other low-cost content that’s getting very little, or no attention, in addition to the content that goes viral. Think of it this way: If we assigned a value to the time and energy of everyone creating content for YouTube and Facebook, and then divided it by the total attention, I would think you would get a lot closer to the cost per minute of attention that we are seeing in high-end content.
How can humans pay attention to it all? The answer is that they cannot; they will have to make choices. Will they choose advertising content in a world of limitless content choices? Maybe. Maybe not. Is that the new risk for every brand?
“Creative without strategy is called ‘art.’ Creative with strategy is called ‘advertising.’” — Jef I. Richards
If the traditional ad impression is defined as the potential for human attention, and there is seemingly an “infinite” number of those “impressions” in a digital world, maybe we should build a bottom-up model instead of a top-down one. We start with the limited amount of human attention available in the world, and go from there.
Today, we lie to ourselves about how much human attention there is to go around. We say that there are more ad “impressions” than ever before, without considering the logic that the number of hours we have to consume content is not increasing (and, to add onto that, that more content is being consumed without ads). The equation for the cost of human attention is in danger of collapsing under the numerator’s own weight. But if we take the total minutes per day that humans pay attention to advertising, that should help create a better picture of the value of human attention for advertisers, and content creators, even when they are the same thing.
That the true price of human attention is at an all-time high is inarguable. What we do need to figure out is what this means for traditional — and now broken — currencies in media and advertising. Our industry needs to accept that it is going to do what everyone else has to do when the price of something goes up: Do more, with less.