Targeted Information and Limited Attention
University of Zurich, Department of Economics, Working Paper No. 230, Revised version
48 Pages Posted: 15 Jul 2016 Last revised: 7 Jan 2020
Date Written: December 2019
We examine the implications of limited consumer attention for the targeting decisions of competing firms. Limited attention alters the strategic role of information provision as firms may become incentivized to behave as mass advertisers, despite perfect targeting abilities. We analyze the consequences of limited attention for targeting, strategic pricing, market shares, attention competition between firms, and the value of marketing data to firms. Accounting for limited attention in an otherwise standard targeting framework can explain several recent key issues from the advertising industry, such as consumer-side information overload or the increased usage of ad blocking tools.
Keywords: Targeted advertising, limited attention, ad avoidance, salience competition, privacy concerns
JEL Classification: D43, L13, M37
Suggested Citation: Suggested Citation