July 08, 2004

cost per influence and meme arbitrage

Ross Mayfield is on to something with his post Connections are Options.

Now I’m not suggesting that the model to replace CPM is a combination of Black Scholes and Reed’s Law. Too complex, and they are models, not measures. What’s different with new media is simply that its 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.

At some point a smart media buyer is going to wake up to this fact: that it’s not about how wide an individual meme maker can spread the seed, but how deep he can plant it into his/her first degree network, and those folks into theirs, and those folks into theirs, etc. (Cue that damn shampoo commercial.) Somewhere, someone is building a mechanism to describe this behavior and play not only the supplier side of the market, but the demand side as well. Case in point: Anil Dash wins the DarkBlue “nigritude ultramarine” search engine optimization contest. Who’s to say that you couldn’t replicate that behavior on the content network end, and corner the market on related keywords on the other? It’s inside-out SEO; meme arbitrage.

NB. Getting back to the “Cost Per Influence” concept. In 1999/2000 “forward to a friend” functionality was hot in the email space. Having read just a bit too much Seth Godin (but not really taken his viral lessons to heart) marketers were attempting to capture and measure that pass-along activity. The thing is, in the email client there’s the “forward” function, so in order to actually incent in-message, trackable behavior (“click here to forward to a friend”) instead of the bulit in client functionality that users know and love, marketers were forced to game the system with promos, sweepstakes and the like. Which drove recipients to juice the system, forwarding mail on to bogus email addresses in order to take part in the madness. (Note that CAN SPAM has almost put an end to this practice, due to the deliberately unclear definition of “sender” in the legislation, and the technical hurdle of real-time opt-out suppression and the related contingency design challenge.)