Three Minds On Digital Marketing @ Organic

Although not new, the notion of a personal CPM seemed to be threaded through more than a few panels at this year's SXSW interactive conference. Popularized by former Forrester analyst Charlene Li, the PCPM can be loosely defined as the value of one thousand page views multiplied by an individual's influence. More specifically, it's the idea that, if you can quantify the amount of influence someone has in their social graph, then you can use that person as a filter for advertising.

So, if I'm influential within a group of people and I raise my hand by interacting with a brand, then there's a good chance that the people who hold me in some esteem will also be interested in that brand. Presumably, a value would then be placed on my filtering power in specific verticals based on the size and composition of my social graph. From there, advertisers would pay a premium to serve ads to members of that influencer's social graph.

As standards like Facebook Connect, Google Friend Connect, and Open ID come into force and become interoperable we will move to a web where the PCPM is technically viable. It's true that as social functionality seeps into every corner of the web "wuffie," as Tara Hunt another SXSW keynote speaker, has dubbed social capital, will be a juicy target for monetization through targeting. But, there are still a lot of unanswered questions to be addressed.

Perhaps as interesting as the idea of the PCPM was the impetus behind its prominence at SXSW. People are starting to realize that there's something fundamentally wrong with the ad-supported business model. When sites as popular as the NY Times, Facebook, and Twitter can't, through display advertising, make enough money to sustain themselves let alone turn a profit, it's clear that change is needed.

There are many pieces to the puzzle of why high traffic doesn't always equate to high profits. Many would argue that Twitter and Facebook are only interested in maintaining growth without compromising user experience. Or, that both have viable business models that just need to be "discovered." The fact remains that these sites have value to many millions of people that is not being converted my display advertising.

Is the PCPM the answer to the problem of monetization and profitability for some of the web's most loved sites? The answer is likely "no." But, that won't stop it from becoming a reality and, I suspect, add a new dimension to the value of display advertising inventory.

Dan Neumann