New Emerging Pricing Metric- PCPM

Today on Twitter @nelson_meg asked my thoughts on PCPM. For those not in the know, PCPM is a new term coined about this time last year which stands for Performance Cost Per Thousand. Loosely defined it is how one person’s social influence can affect 1,000 page views by that influencer’s followers. If this just flew over your head don’t feel bad, it’s kind of hard to wrap your mind around the first time out. Here is a simple example as it has been put to me: I like Band A and so I begin to talk about them on Facebook, Twitter, MySpace, and/or LinkedIn plus probably on my personal blog if I have one. The portion of my social sphere that identifies with my music tastes will take this in recommendation to the memory bank. Then as these followers are surfing the web they are served an ad of some sort for Band A and are more likely to click because of my past influence. Now those of you that know me in real life know that music discovery is not my strong suite but it’s an example I think we can all relate to (if you want a great music ear check out Ask the MD). What PCPM means to advertisers is that they would pay social influences for the direct impact their referrals bring the client, in other words virtual word of mouth that is compensated. Simply PCPM is the pricing metric that may someday replace CPM.
Meg’s next question was how do you calculate the price? Great question Meg, if I had this figured out I’d be rolling in my loot Indecent Proposal style. It’s going to be very interesting to see how this metric is developed over the next few years. I suspect that the influencer's will have to opt in for privacy reasons. Those that opt in will then be tracked to quantify their social influence ranking which would lead to some level of compensation. Additionally I think there are some further legal hurdles that need to be figured out. What if I refer a product that hurts and/or kills someone; can I be held liable for this? The platform will also have to be mammoth but in these tough times there might be the brains in a garage somewhere to figure out all the moving parts sooner than later.
I do agree that online marketing needs a new metric for pricing but until someone comes up with something better than CPM we’ll stick with it. CPA in my opinion is to far skewed to the advertiser and does not take into account the branding that is taking place as eyeballs consume a page. Additionally just selling a portion of inventory is toggled too far to the publisher and does not force them to continue to grow page views. CPM is the fairest way of selling online media currently and holds everyone accountable with the tools we currently have. If you want something to change, change the way you buy your online media. Stop buying on millions, start buying your core demo group on hyper local sites that have social aspects and high page per visit counts(in a way you are doing PCPM if you find fans mixed with new minds on these types of sites). Second, care about your creative; if your creative is free the results will probably be similarly cheap or non-effective. Pay for good creative, it’s essential and really does not cost that much. Finally localize the content, nothings worse than seeing an ad I’d see in TX here in Seattle. That’s what I’d change if I was buying media today and wait for a new metric to emerge for pricing in the future.