Targeted Information and Limited Attention

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

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