Cost Per Influence

Over the course of the week, I'll guest blog about Social Media, Software and Networking and try to bring together these themes in advance of the BlogOn Event. First up, let's plunge ahead into the heart of darkness for Social Media -- advertising...

Internet advertising was subjected to broadcast media metrics from the beginning. CPM, or Cost Per Thousand Impressions, was borrowed from print and was accepted by traditional advertisers as a measure of reach and frequency. Back then, if a company had a site to point to it was largely brochureware, a corporate identity on the web. But when the bubble burst its effectiveness beyond branding was questioned. The industry shifted to Cost Per Click around the same time that most companies had transactions available on their sites. An ad was effective if it drove transactions (Cost Per Action is another metric, a step beyond a click as a lead to an action as a sale). Consumers became sensitized to how broadcasted ads were trying to influence them. Google stepped in with a market for advertising, based on CPC, that rewarded effective narrowcasting. Both ads and sites are optimizing their messages for what people are looking for to gain traffic and transactions.

This model works fine with companies as the only influencers and the only ones with sites. But it ignores the influence of social networks. And what happens when consumers become users with their own identity on the web? When conversations influence attention?

I've suggested its time to explore new ad metrics:

What's different with new media is simply that it's not the number of impressions you make, but who you impress. In other words, instead of subscription counts, its the number of subscribers my subscribers have, discounted by the probability of my memes getting through. Cost Per Influence.

Jeff Jarvis comments:

You're right: We need to define new metrics. This medium isn't about impressions; it's about relationships; it's about conversations; it's about influence; it's about authority. We are starting to measure how many conversations a blog starts (or at least takes part in) with Technorati. But it's just a beginning.

A rather longwinded post continues on Many-to-Many...

Posted by rossmayfield, July 12, 2004 04:53 PM | | TrackBack