Advertising in the Age of Attention Economy: A Dual Perspective of Managerial and Applied Economics on Media Strategies, Consumer Engagement, and Pricing Models

Abstract

The attention economy has revolutionized the advertising industry. Management and applied economics should adopt a dual view to understand it. In this paper, we explore media strategies, consumer engagement and pricing strategies from both management and applied economics perspectives. From management perspective, we investigate how the firm can decide the advertising investment to attract and maintain consumers' attention. The brand prominence citation and AI-personalization citation are taken into account. While from applied economics perspective, we focus on understanding consumers' engagement in response to different advertising stimuli. Only by understanding consumers' behavior biases can we design more effective advertising campaignscitation. An integrated regression model is built based on synthesized dataset from simulated social media platform. The regression model shows that 1% more spend on AI-personalization ads in advertising budget will lead to about 0.85% more sales, while 1% more spend on generic display ads in advertising budget will lead to about 0.35% more sales. In addition, brand prominence plays a major moderator role in enhancing effectiveness of engagement on conversion rates. The whole study builds bridges between theory and experiment. We conclude that only adopting a synergistic strategy, management theory-based resource allocation and applied economics theory-based understanding of consumers' behavior biases can help to win the attention economy, which is the core of digital finance. The paper offers valuable insights for advertisers to improve their strategic planning in advertising and for policymakers to regulate attention-monopolizing practices and data privacy protection.