Talking CPI over Foie Gras (or, Advertisers already understand influence)

There has been a lot of talk about CPI (Cost-Per-Influence) advertising over the past couple of months. You see, there are some of low traffic (say, less then 1M pages a month) but highly influential blogs that don’t get advertisers attention, and that is causing a little bit of stir.

Two guys who I really admire, John and Ross, have been on a noble quest to figure out a solution. When I was in Paris for LesBlogs I spent a lot of QT with Ross. When CPI came up over Foie Gras I dismissed it as pure poppycock. Of course, at the time I had forgotten that Ross had came up with the term (There I go again putting my foot in my mouth). So, I quickly backtracked and tried to explain to him my thinking which I’ll now share with you.

First, some background. The concept behind CPI is simple: influential blogs would get higher advertising rates via a systemother then trafficwhich stated how influential blogs were. OK, sounds good in theory.

However, you need to create the system to tell how influential blogs are. As I’m sure you know you can track how many times a blog has been linked to and that is for many a measure of how influential a blog is. Unfortunately the number of inbound links is flawed for a number of reasons:

1. It’s primarily a function of how long a blog has been around. Blogs that were around two years ago are still clinging to their top 100 ranks on Technorati. Why? Well, there used to be many fewer websites then there are today, and that inside circle of bloggers spent all day linking to each other. Now links are getting spread out across many, many more blogs. Put another way, the blogosphere used to very dense and now it is notjust like the Web. [Side note: Perhaps Technorati should let you filter the 100 by date range so you can see not only all-time link leaders, but who has the most links in the past 90, 180, and 365 days.]

2. A Paris Hilton nip slip on Gawker or an obscure and funny adult reference on BoingBoing (currently #1 on Technorati’s inbound list) is going to get a lot of links. We all know that funny, stupid, and sexy stuff get a ton of links, but does that make the blog influential? Of course not. Gawker and Boingboing are very influential, so it’s a bad example but you get my point. Links don’t necessarily equal influence.

3. Influence is relative. A hipster fashion company might love the inbound link on Boingboing while hating the snarky media musings of Gawker. A book company doing the unauthorized biography of Paris Hilton might have no interest in the geeks linking to Boingbonig, but might love the media geeks linking to Gawker all day long.

4. None of the blog tracking services (Technorati, Feedster, etc) are doing a complete or perfect job counting inbound links. They never will, the blogosphere is just too big and dynamic to make a measurable system.

5. Even if you could do a perfect job tracking the links gaming these services is extremely easy, and who’s to say it’s gaming anyway? You could start dozens of blogs and link to one specific blog every day, multiple times a day and get into the Technorati 100 in a couple of months, and you could do this in a totally legitimate way. Who’s going to police the system to say that someone is gaming it? How are they going to get paid?

Is the system really broke?

The current advertising systemthe one that is having huge successis based on traffic and click-through rate. It is considered the best possible measure of blog influence. The current system has the faith of advertisers because we’ve spent billions to make sure that it is impossible to game in any major way. Both traffic and CTR are very objective and predictable measures: they work.

Now, what I really don’t like about the the entire CPI argument is that it presumes advertisers and their agencies don’t know what they are doing, and that bloggers are not going to be able to reach critical mass.

Blogs are reaching critical mass, so I really think what we are experiencing right now is the natural short term pain that comes from building a media business and some folks are just not used to that pain. Bloggers of note will get to critical mass and make a living off their advertising if they stick with it for the 1-3 years it takes to build a media business. I think some folks expect things to happen overnight without investment, and that’s just unrealistic. Magazines and cable channels tkae years an years to be profitable and so will blogs.

On the issue of advertisers being smart trust me they arethey are smarter then most of the publishers and technologist out there when it comes to leveraging the power of the Internet. Advertisers and their agencies are checking inbound links, traffic reports, comments, the editorial quality, and the look and feel of a blog before they buy advertising. They run test ads on the blogs they suspect are good, and if they performance is they buy again (and again, again, and again).

That is where the rubber meets the road: performance. Online advertising is about performance first and image second.

John knows this better then anyone because he created/helped produce two of the best looking and well done business/tech magazines in history: the Industry Standard and WIRED. The advertisers knew how influential these magazines were without a CPI index. Again, advertisers get it they don’t need a CPI index.

To be blunt, as I’m prone to be, the CPI concept is appealing to those folks who don’t have the traffic to back up the claim that they are influential or who don’t want to wait till their traffic reaches that level. It also appeals to those who don’t have the ability or time to demonstrate to advertisers that they are influential.

One thing I’ve learn running online media businesses for the past 10 years is that people buy what they like to read. The advertisers in WIRED, Industry Standard, and the Silicon Alley Reporter were the folks who read the magazine and felt affiliated with it in some way.

Advertising is about affiliation more then influence. High-tech advertisers want to be affiliated with Engadget, hip companies want to be affiliated Some day very soon advertisers will catch up with the highly-influential, but lower traffic, blogs folks like Doc, Jeff, Joi, and Kottke (who knows if these fine folks even want ads, but you get my drift).

When they do catch up it will be because of a combination of those folks increasing their traffic and their sales ability, as well as the advertisers finding them. It’s a natural process, and CPI isn’t really necessary to get it done.

So, I encourage John and Ross for trying to unlock the secret code, but the fact is the secret code is as simple as:

1. Make great content that draws great readers.
2. Brand the hell out of it so advertisers feel comfortableeven proudto be placed within it.
3. Be patient there are no shortcuts.

There is no silver bulletbe it CPI or another buzzwordto save low traffic blogs. Low traffic blogs will either get bigger or not make that much money.

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