A while ago I read Ross Mayfield’s post on “Cost Per Influence” advertising and thought to myself “That feels important, but I don’t get it.” Something was missing, or, put another way, I was missing something. So I gave Ross a call last week and we hashed through it. What I realized during our talk was that the premise for how he got to the idea of CPI was, to my mind, far more interesting than CPI itself, at least in the near term.
Allow me to explain. Ross’s musings on CPI turn on the concept of “transitive advertising” – a very interesting idea that flips current advertising models upside down. In essence, this new model for online ads reverses the relationship between publishers and advertisers.
In traditional advertising models, the advertiser holds all the cards. They decide what they want to spend, and most importantly, where they want to spend it. But the rise of pay-for-performance networks like Overture and AdWords/AdSense has changed this relationship in significant ways. First, advertisers are only paying when their ad performs – this alone is a huge shift in media. But as I’ve pointed out repeatedly, these networks also disaggregate advertisers from publishers. The advertisers are no longer choosing the publisher with whom they are doing business, they are instead choosing keywords, concepts, context. OK, but not very good for publishers nor for audiences, in my opinion.
But here’s the heart of Ross’s transitive advertising model, or what I’d like to call Sell Side Advertising. Instead of advertisers buying either PPC networks or specific publishers/sites, they simply release their ads to the net, perhaps on specified servers where they can easily be found, or on their own sites, and/or through seed buys on one or two exemplar sites. These ads are tagged with information supplied by the advertiser, for example, who they are attempting to reach, what kind of environments they want to be in (and environments they expressly forbid, like porn sites or affiliate sites), and how much money they are willing to spend on the ad.
Once the ads are let loose, here’s the cool catch – ANYONE who sees those ads can cut and paste them, just like a link, into their own sites (providing their sites conform to the guidelines the ad explicates in its tags). The ads track their own progress, and through feeds they “talk” to their “owner” – the advertiser (or their agent/agency). These feeds report back on who has pasted the ad into what sites, how many clicks that publisher has delivered, and how much juice is left in the ad’s bank account. The ad propagates until it runs out of money, then it… disappears! If the ad is working, the advertiser can fill up the tank with more money and let it ride.
I love this model because it’s viral and it’s publisher driven – it lets the publishers decide which ads fit on their sites. Publishers won’t put ads on their site that don’t perform, and they’ll compete to put up ads that do. Now when I say “publisher” what I really mean is “blogger” – in particular the kind of blogger that uses AdSense – or would if it worked well enough. Bloggers like, well, me, and Rafat, and Om, and loads of others who provide a service that readers appreciate. This allows us to proactively vote for ads we think fit our site, that we think work for our readers. It’s also a big win for advertisers, as their downside is protected by pay for performance, and upside is that the market is optimizing the ads through both the network effect, as with AdSense, as well as honoring the crucial endemic relationship between publisher/author/blogger and reader. Publishers are, in a very real sense, endorsing the advertiser, and that publisher’s endorsement carries weight with the reader. (Publishers who endorse lame ads, or ads that take advantage of the reader, will be punished by the readers voting with their feet…)
Now, here’s how CPI comes into play. The ad tracks not only where it is at any given time, but where it came from. So when I copy an ad from, say, Om’s site to my site, Om gets a piece of the action for being the referring site. The ad reports that I got the ad from Om, and then if the ad performs on my site, he gets a bit of the juice for that. Presto – you are getting remunerated for your network of influence.
Certainly there are any number of major issues and problems with this model, and I Iook forward to hearing what you think they are. But in the end, this idea is no crazier than the PPC model itself, and, to my mind, worth figuring out how to implement. Thanks Ross, for propagating this neat meme. What do you all think?