Living Economics

Paid Attention
Customers' attention has always been a scarce resource, but has never been paid for in cash until now in cyberspace.

All scarce resources command prices. And the more scarce a resource, the higher price it can command. Thus, prices convey a signal to guide scarce resources towards optimal allocation. But the scarcity of a resource may be obscured if the price it commands is paid mostly in kind rather than in cash.

Until recently, most consumers are unaware that attention is a scarce resource that commands a price. Traditionally, vendors have attracted potential customers' attention by providing free or subsidized content, price discount, and/ or free samples. Because these payments are in kind, the scarcity of attention has been obscured. The advent of the Internet has changed this approach.

CyberGold.com is one of the first pay-to-surf Web sites that pay members cash to view ads at a certain rate, and it claims to be their "attention broker." All ads are categorized so the members can easily choose the ads they want to look at. Each ad has a different cash back value, and the members can only get cash back by signing up for the program advertised in that ads.With over 3 million members as of today, CyberGold.com promises to even match ads and other online information to each member's interests and demographics (Wall Street Journal, 11/14/1996).

AllAdvantage.com, a late comer, offers another notable approach. Members must download a Viewbar in order to get paid. The Viewbar will be displayed when the members con to the Internet, and it shows ad banners and a money meter that turns off when the PC is left inactive. The Viewbar enables AllAdvantage to track the web sites its members visit and build preference profiles to display ads accordingly (Wall Street Journal, 11/1/1999).

Perhaps paying customers to look at ads is a natural response to the proliferation of online content providers to attract visitors' eyeballs. Whatever the reason behind this direct approach, paying customers cash to look at ads has exposed the scarcity of attention for the whole world to see. If this approach is successful, it can save advertisers the expense of providing content and other in kind promotional items. It also lends support to economists' belief that payment in cash is usually worth more than payment in kind of equal costs.

References:
  • Ziegler, B. "Are Advertisers Ready to Pay Viewers?" Wall Street Journal. 11/14/1996.
  • Weber,T. "With Cash for Clicks, Web Marketers Turn Advertising on Its Head," Wall Street Journal. 11/1/1999.
Access Tools
• Advanced Search
• Browse Micro
Comparative advantage (14) Competitive strategy (27) Costs and opportunities (53) Entrepreneurship (3) Externality (28) Free Market Solutions (17) Free Ridership (3) Game Theory (22) Incentives (13) Income Distribution (25) Information (19) Labor Market (24) Marginal optimization (33) Market Demand (17) Market Entry (9) Market Exit (2) Market Intervention (12) Market Structure (29) Market supply (4) Material Flow (2) Miscellaneous (3) Price Discrimination (17) Pricing Strategy (46) Profit maximization (48) Property Rights (42) Regulation (16) Rent Seeking (2) Risk Taking (12) Scarcity (10) Tastes & Preferences (27) Taxes (7) Technology (9) Type of goods (31) What Price Means (27)
• Browse Macro
Boom and Bust (9) Budget Balance (12) Comparative advantage (13) Economic Development (1) Economic Indicators (6) Fiscal Policy (12) Incentives (1) Income and output (25) Income Distribution (5) Labor Market (6) Money and Credit (20) Regulation (5) Rent Seeking (1) Saving (6) Taxes (4) Technology (1) Trade and Foreign Exchange (30)
• Glossary
List All
Search

• Microeconomics Lectures • Macroeconomics Lectures
Instructor
• Instructor Log in • Sample TOC • Demo/Register • Video Tour
Student
• Student Log in
Close
Instructor Log in

Class
Close
Student Log in


Open Menu
Term
Definition