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I'm Lucia Raheli.
And I'm Roberta Fasaro.
People typically look and say, who are my super consumers?
And they like spend a lot of time thinking about who's spending the most time on the platform.
But that's actually not the best indicator of who spends the most or who's the most valuable.
It's actually attention that drives that.
That's senior partner Kabir Ahuja.
He's talking about a more accurate way to measure consumer engagement.
And we'll hear more about that in a minute.
But before we get to all that, here's what's new at McKinsey.com.
We have a report about how today's foreign direct investment may shape the future of industry and trade.
And our Strategy Champions article describes how top performing companies design their plans and mobilize their organizations.
Because especially in turbulent times, great business strategies really matter.
And now, our conversation with Kabir Ahuja.
Kabir, thanks so much for joining us on the podcast today.
Thank you for having me.
So since the beginning of time, companies have been trying to get consumers' attention, right?
Get them to do something or get them to buy something.
How has that become more difficult nowadays?
And thinking about it, because I look at my kids.
They're playing a video game and They're watching a television show on the big screen and they're also texting with friends.
So what's going on with consumer attention these days?
Yeah, it's funny.
I do the same thing when I think about attention.
I think about my kids, but we're as bad as they are.
Everyone has fragmented attention these days.
So what's fascinating about what's happening with our attention is that more and more of it is going into media.
The average person spends about 12 to 13 hours a day with media.
Where does that come from?
It's both longer periods of time, but also we're always on two devices.
And what's really fascinating about our relationship with attention and media is that it jumped during the pandemic.
So we got like big growth, but it never came back down.
At the same time as the time is going up, the amount of content out there is going up.
And a lot of that's driven by user generated content.
So we have this really interesting dynamic of a lot more hours of attention but even yet more content in the world.
What I could do with 12 to 13 hours a day.
It's crazy to think about.
So tell me this, Kabir.
What's the implication here then, for companies' ability to break through and attract consumers and then monetize this attention?
The truth is reach is easier to find than ever. right?
You actually can find people in digital channels.
So in this world where second screen usage is an all-time high, 90 of Gen Z actually is a second screen user.
It's not that far behind for the rest of the demographic cuts.
The real question isn't, can I find someone?
It's how effective is my reach and am I using it the right way?
Are there particular channels that are more effective in terms of breaking through?
Are people living in one channel over another?
Talk a little bit more about the differences between channels.
There's differences between channels and there's differences inside channels.
We just did a piece of research.
We surveyed thousands of users all over the world on their attention behaviors.
And social video is one that is popping, man.
It is growing fast.
And there's some really interesting dichotomies here.
One is that not all social video is created equal.
Like whatever algorithm lives on TikTok and YouTube and is much more effective than other channels.
But social video, ironically, is one of the most isolated activities.
80% of social video consumers actually watch video alone.
And that's another learning.
There's a couple other interesting ones, like video games in general generate extremely high focus levels and yet that focus maybe isn't monetized properly.
You know, premium streaming video, high loyalty, very interesting, it's still growing.
People spend a lot of time looking for what to watch.
That's not surprising.
But when they find something to watch, it's actually one of the channels where people actually multitask the most right.
So almost 90 of consumers actually will pick up their phone at least once, probably more than once, during a streaming video session.
This all resonates.
I want to go to this phrase, the attention equation.
Define that for us.
We had the privilege of gathering data from all over the world, all the different sources we could find.
We did our own surveys and we put it all together.
And what we tried to answer was, why is a unit of attention worth what it is?
And what we did was we found that attention can be explained actually, and that's the attention equation.
It can be explained with two things.
So the CQ is the commercial quotient.
That's consumer value and platform sophistication.
And AQ is the attention quotient.
So the level of focus paid while consuming content and the intent, which is the job to be done by the media.
And on the commercial side, it's what is the profile of the attention that you're getting in terms of like the demographics, who's watching, what is their income level and spend profile.
Also, how good of a mousetrap have you built?
So think about it.
Like, if you have social videos, a great mousetrap you can click and you have an immediate buy moment.
We've already got a payment method versus something like books where, on the commercial equations, once you've made the purchase, you're like deep in it, you're in a world, you're reading.
It's a very high focus moment, but maybe not as good for commercialization.
What we found was that 33 of the variance in why content is monetized the way it is is not explained by the commercial factors.
Instead, it's explained by the quality of attention.
So tell me a little bit about how companies can deploy this equation to target a particular set of customers.
The first thing is just to understand what is happening online. in each of these channels, right?
Let's take it from a marketer point of view.
You look at some version of how many people can I reach for what cost and what demographic profile do they have?
So one of the things you might look at and say well, where actually do I see mismatches between how I can monetize the commercial and attention quotients right?
One of the ways is there's places that we think are under-monetized.
And examples of that are streaming video and mobile gaming.
What you might see is, in streaming video, things like more targeted advertisements based on connected TV, based on advertising becoming a bigger part of the diet of streaming video platforms.
And then how you might use that might change.
Knowing that you have high attention, I could use it in a different way than I might otherwise.
Use it as generic, targeted media.
Mobile gaming is interesting too.
We think that's unmonetized.
Now, if you look at mobile gaming, if you look at the advertising that drives it, a lot of that is kind of remnant inventory or interstitials, where you're going to play a game, all of a sudden the screen comes up and you're forced to watch it and you're waiting for that X to click.
Then when you finally click the X, it's actually not a real X, it's a fake X or the pixels misaligned so that you get an ad anyway.
But with a high attention and a high engagement platform, why is the advertising such low quality?
So I think those are two places where you might see a different approach by advertisers.
Also, as the content itself evolves and You might see different ways you can integrate advertising.
So we know that there are all these opportunities that are under-monetized.
What strategies can companies use to change that situation?
Are there data, analytics?
For sure.
But I guess even before you get to like what's the piping and analytics, you'd say what problem do I want to solve?
One is, you know, residents.
Can I match the content I offer with to the consumption state of the consumer.
So we took our attention equation and then exploded it for each of the streaming platforms and found that two of them had extremely high consumer lifetime values.
Many of them fall in the middle zone of medium focus and it's not always clear or it's not the highest signal.
And the way streaming platforms drive focus is not just the content, it's also how good they are at recommendations and batch releasing and making sure you have the right next thing to watch.
And we're coming back because of a variety of things.
It's like the total package of product experience.
So the two platforms that have the highest focus one is Netflix, where they actually do have a really high ability to drive focus.
And the other was driven by job to be done, which is what you're delivering more than anything.
And that was Disney, where you had the combination of that, and ESPN, where you had sports lovers and kids who both have very, very clear reasons to engage in those streaming platforms.
So it's very interesting to see that the customer value and the engagement levels actually tie directly to this thing we call the attention quotient.
Now let's shift from streaming to gaming.
How does the attention quotient apply here?
I talked about the mobile gaming dynamic, which is that it's a lot, it's growing, but it's not necessarily considered high value inventory.
A lot of it's advertising other downloads.
So gaming, mobile gaming, has been kept away from upper funnel brand presence advertising, which I think is an under-monetized opportunity.
And, like PC and console gaming, you have this dynamic around high focus, but also like longer play sessions.
It's both combination of single player, but also communal.
A lot of that communal comes from live simultaneous online gaming.
But the numbers didn't explain it because basically, the attention quotient suggests it should be worth more than the commercial quotient, but the commercial quotient suggests it should be worth less than it actually generates.
It's already being monetized really well.
It's a high cost per hour medium fundamentally.
You're going to spend 60 on a game and then there's microtransactions and there's other versions of how you get monetized.
But it's not really an advertising monetized channel, PC and console gaming.
And there's a bunch of reasons for that.
One is fundamentally, the medium doesn't really encourage it, right?
We don't expect to be playing a console video game and then get interrupted for an ad.
And in the game, there are now attempts to create native advertising inside games.
But the inventory is getting built.
And there's now enough inventory if somebody really wants to invest.
But you need the brand willing to invest.
You need to know what budget it's going to come from and how you're going to measure it.
You need agencies to know how to use this.
You need the developers who are willing to have games contain advertising.
Then you need the gaming advertising to be intrinsic and native enough to the communication channel that gamers actually accept it.
So there's quite a number of systemic hurdles, but all that leads to consumer paid at high dollar numbers.
And yet we think it's under-monetized from an attention point of view, even if it's too expensive today if you just look at the commercial quotient.
So that's a fascinating channel that I think we'll see a lot happen in the near future.
How do you think about the use of Gen AI nowadays?
So on one hand, I think AI is really going to enable this kind of explosion of content.
On the other hand, I think AI is also going to reduce the cost of production, which hopefully top tier content whatever you want to call it across mediums has gotten incredibly expensive to produce.
The broad base of consumers that will consume anything has gone up.
The marketing costs of getting people to pay attention have gone up.
The one thing that might go down over time is actual mechanics of production cost.
And then also maybe efficiency of marketing that to the right people.
So I think it might actually counterbalance some of the economics of professional content production.
And hopefully that all is underpinned still by this real value of humans driving the AI with creative spirit.
Actually, it's really funny.
Just as an aside, I did my degree in artificial intelligence, which is now like 25 years old.
So I actually have a piece of paper which says computer science focus in artificial intelligence.
And when I did it, it was like complete theoretical math.
It was the most painful thing because it was all just doing intense math.
There was no real tooling.
And my senior thesis was actually creating a camera that looks at poker table and recognizes cards.
And Today I think you could probably tell any of these LLMs to build that for you and it would be done in about 20 minutes.
It took us three months.
Let me tell you some signal we see, like user-generated content versus professional content generates more focus, which I found interesting as a finding.
In general, regardless of length, short form or long form, user-generated content generates more focus because we can relate to the creation of it.
I think there's a bunch of reasons.
One is just circumstantial, which is, I think, narrower groups of people find the UGC they like and they buy into it.
If I'm generating long-form UGC, my older son will sit there and watch hours of YouTube basketball videos, because that's what he loves.
AI actually underpins this ability to generate more content.
And so you might actually see more focus being generated by AI, because AI can create things that are much more targeted in both short form and long form.
When I was at a games developer conference, I was sitting in the hotel lobby talking to a bunch of really really high class developers who have moved their entire production studio outside of the traditional ecosystem into building on top of Fortnite and Roblox, using lots of AI tools in order to create what they see as really compelling experiences for.
So it's definitely the same level of professional, but with very high targets in terms of the engagement levels and focus and love that their content will create.
What's one strategy that you'd recommend, say for advertisers or for content creators?
How can they pick the right battles and capitalize on consumer attention?
For advertisers.
I would look at this and say can we match the message that we're trying to get across?
Tailor that across the portfolio, but actually have attention in mind.
So I'll give you an example.
If I'm trying to build a brand message or communicate something, how would I communicate that in a mobile gaming versus a live event, versus a connected TV?
Maybe there's one message that shows up in different ways, but recognizing that it's going to go on a certain channel with a certain audience, do I understand how they're paying attention and what role it might play and how I might match that, what I'm trying to say for that audience.
I think advertisers have a huge opportunity here.
And then for content creators, there's a lot of decisions we make as content creators.
Greenlighting, acquisition, recommendation strategy.
How do I continue to create an increased amount of focus?
Do I understand whether or not the focus of my consumers is going up or down?
And based on what content and based on what experience there's a bit more you could give to creators, your content creators and your content delivery engine creators, to give them insight into what to make.
Super consumption doesn't equal super spending, but super attention does.
People typically look and say, who are my super consumers?
And they spend a lot of time thinking about who's spending the most time on the platform.
But that's actually not the best indicator of who spends the most or who is the most valuable.
It's actually attention that drives that.
Thanks so much, Kabir, for taking time out and chatting with us today.
I know we're probably second screened in the background, but happy to be part of your 12 to 13 hours of media consumption today.
Thanks so much for listening to the McKinsey Podcast.
I'm Lucia Rahilly.
And I'm Roberta Fasaro.
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