For B2C businesses, the physical world has been about availability: mental availability (branding) and physical availability (distribution). They did not know each of us; we were just an aggregate whole. They piggybacked on mass media to create awareness and surface our latent needs. And then they had to ensure the product was available easily at a store near us.
Starting in 1995, the Internet has transformed the world. In recent times, consumer attention has become even more fragmented with mass media consumption giving way to many newer platforms – from YouTube to Facebook, from Instagram to Tiktok, from marketplaces like Amazon to streaming services like Netflix, and even gaming platforms. The pandemic has accelerated trends by many years. Each of us has adopted more digital tools and technologies to change how we work, shop and entertain ourselves; it almost feels like we are an avatar in a new world. The “Me” we each knew in March 2020 is so very different from present day Me – even time is a blur with each day a copy-paste of the previous, the small daily changes in behaviour have created a new persona for each of us who spends time and money differently.
In this new world, the scarce resource is our attention. We have so many more options to direct our attention now – play a game, buy a stock, order an ice-cream, watch a video, check the social stream, scan the news feed, send a message, take in a movie. In our past, we would have to take time and effort to do each of these activities. Now, we could be doing these activities all at the same time – right from the comfort of our chair, sofa or bed! (And for some of us, it could be happening even as we are in a work Zoom meeting.) Our “attention recession” is the single biggest challenge brands have to face in the digital world.
The second business challenge is the dilemma between growth and profits. While risk capital has been available for many centuries, the availability was limited to a few businesses. As such, most businesses had to make profits if they had to invest in growth. What has changed in recent times is the easy availability of capital – it is almost as if it is getting created out of thin air first by governments, then in the stock markets, and finally by the exponentially increasing valuations of companies. The digital acceleration has created a land grab moment – the focus is not on profits from existing customers but acquisition of new customers at all costs. Growth trumps profits as if there is no tomorrow. In such a world, companies which focus on profits today to reinvest for tomorrow’s growth are disadvantaged as plentiful and cheap capital is flowing to startups who are rewarded for today’s growth. For such adventurous enterprises, faster growth attracts even more capital from eager investors and pushes profits out even more in the future.
It is against this backdrop of attention recession and the growth-vs-profits conundrum that B2C brands need to start thinking about the customer of the future and the metaverse.