The Price of Passed Links

Everyone's favorite Venture Capitalist, Fred Wilson, wrote a terrific article today on "The Power of Passed Links." The conversation that ensued was equally as robust. He excerpted a quote from a previous comment that raised earned media vs. unearned media as it related to conversion rates. This comment seemingly implored Fred to take a critical look at where traffic is coming from, where it is trending from, and how that will effect conversion rates, growth rates, and value to marketers.

Fred, admittedly, unscientifically analyzed traffic patterns to websites to determine the effectiveness of shared links (twitter, facebook, email) vs. Search (paid or natural).

Here is the chart he shared:

(Photo from A VC)

An email link is a direct suggestion from one friend to another. A Facebook link is a suggestion passed from one friend to a group of friends. I get that those links would be more potent than a search link. And I understand why a Facebook is a more potent link than a Twitter link since Facebook is friends following friends, and Twitter is more like blogging where people follow other people who aren't necessarily friends.

As noted in the comments, where traffic comes from is completely dependent on what kind of site you are analyzing. For e-commerce sites you should expect a large majority of referrals to come from search (50-80%). For small and medium-sized blogs you should see a majority of referrals from search but a much more sizable audience come from 'friend' referrals... sometimes 15-30%. This is probably due to the fact that the bloggers are much more active in the communities that share than are the ecommerce companies and other organizations.

Where the rub of this whole argument lies is in the eyeball economy. How much is a view worth?

We may be seeing the beginnings of a standard for the worth of an online eyeball thanks to the AP's desperate grasp to make up for lost time.

In this image, taken from Betanews.com, the AP is demanding $12.50 from publishers and websites that display between 5 and 25 words from one of their articles. The rates, as you can see, go up to $100 for 251 words and up. Does this mean they think a view is worth $12.50? $100? With newspaper and magazine circulations drowning, we are finally reaching the point where the online will be worth more than the offline.


Comparing this to the STRAWMAN from Fred Wilson where a view is valued at $0.50, we have a slight difference. Should the value be determined by the content or the content creator? What about time spent? What about referral type? How much less if it's not a unique visitor?

These are all questions that need to be addressed before a standard is created or adopted and I fear that it is such a complicated endeavor that we'll have to get the other geeks involved... applied mathematicians.


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