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

See all articles by Andreas Hefti

Andreas Hefti

University of Zurich - Department of Economics; Zurich University of Applied Sciences

Shuo Liu

Peking University - Guanghua School of Management

Multiple version iconThere are 2 versions of this paper

Date Written: December 2019

Abstract

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

Hefti, Andreas M. and Liu, Shuo, Targeted Information and Limited Attention (December 2019). University of Zurich, Department of Economics, Working Paper No. 230, Revised version, Available at SSRN: https://ssrn.com/abstract=2808419 or http://dx.doi.org/10.2139/ssrn.2808419

Andreas M. Hefti (Contact Author)

University of Zurich - Department of Economics ( email )

Z├╝rich
Switzerland

Zurich University of Applied Sciences ( email )

Institut fuer Angewandte Medienwissenschaft
Zur Kesselschmiede 35
Winterthur, CH 8401
Switzerland

Shuo Liu

Peking University - Guanghua School of Management ( email )

Peking University
Beijing, Beijing 100871
China

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