IN TERMS of efficiency, if not size, the advertising industry is only now starting to grow out of its century-long infancy, which might be called “the Wanamaker era”. It was John Wanamaker, a devoutly Christian merchant from Philadelphia, who in the 1870s not only invented department stores and price tags (to eliminate haggling, since everybody should be equal before God and price), but also became the first modern advertiser when he bought space in newspapers to promote his stores. He went about it in a Christian way, neither advertising on Sundays nor fibbing (thus minting the concept of “truth in advertising”). And, with his precise business mind, he expounded a witticism that has ever since seemed like an economic law: “Half the money I spend on advertising is wasted,” he said. “The trouble is, I don't know which half.”
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.
