Andrew Chen Archives

Subscribe · Featured · Recent · The Cold Start Problem 📘
Dear readers, I have moved to Substack and I will be writing here from now on:
In the meantime, I will leave up for posterity. Enjoy!

New metrics for social media sites?

Jordan, a fellow Seattle tech guy, asks: Any comments on this? The New Media Audience Measurement Business Model Conundrum.

Well, Jordan, the problem is – metrics like CPM and CPA aren’t meant to measure how users "connect" with brands – they are simply economic metrics that capture media spend. Beyond CPM, there are other rich metrics that advertisers use, such as demographics, targeting, frequency, pageviews, etc., to measure the effectiveness of a brand sell.

You can see an example of ESPN’s cross-channel media kit, and their research on audience metrics. Sometimes as part of this, people do brand studies like brand recall, message association, etc., with companies like Dynamic Logic or Insight Express.

Thinking that "brand connection" metrics can somehow revolutionize brand advertising points to a serious misunderstanding of the brand advertising industry. Much of brand advertising is NOT based on metrics. No single set of numbers can ever change advertising agencies’ minds about where to buy media, without the human relationships to match.

This is really part of a long pattern of techies encountering different cultures and then assuming they can apply their own techniques to it. For a techies, the numbers are everything – they seem objective, and correct. Surely no one can argue with numbers, can they? So with things like brand advertising (and potentially  their love lives), techies want to boil things down to numbers, and argue from there. But that doesn’t always work, and that’s why many techies are single. (Turns out asking girls’ their SAT scores doesn’t always work)

For example, if a social network were able to show X brand engagement points for a financial audience, and X was larger than the metrics for a well-branded, established site like Wall Street Journal, a logical viewpoint might be that a social network would command a higher CPM. But really, that scenario will never, ever happen. Wall Street Journal will always command more dollars based on their reputation, and relationships, until new media companies are able to establish those. (And doing this involves buying lots of steak dinners, not showing people "metrics.")

As for as advertising goes, Web 2.0 is not special. Get over yourselves, guys. Media companies will figure out ways to incorporate social networks as some % of a multi-hundred million dollar advertising budget, and they will try and buy using common metrics across all their publishers. That’s the way it works, and no amount of Ruby on Rails will fix this :)

In my opinion, Web 2.0 companies need to figure out how to speak the advertising language, and figure out how their websites support what advertisers are trying to do. Connect with the current flow of money, NOT make up new metrics that are hard to understand. That should be the goal.

PS. Get new updates/analysis on tech and startups

I write a high-quality, weekly newsletter covering what's happening in Silicon Valley, focused on startups, marketing, and mobile.

Views expressed in “content” (including posts, podcasts, videos) linked on this website or posted in social media and other platforms (collectively, “content distribution outlets”) are my own and are not the views of AH Capital Management, L.L.C. (“a16z”) or its respective affiliates. AH Capital Management is an investment adviser registered with the Securities and Exchange Commission. Registration as an investment adviser does not imply any special skill or training. The posts are not directed to any investors or potential investors, and do not constitute an offer to sell -- or a solicitation of an offer to buy -- any securities, and may not be used or relied upon in evaluating the merits of any investment.

The content should not be construed as or relied upon in any manner as investment, legal, tax, or other advice. You should consult your own advisers as to legal, business, tax, and other related matters concerning any investment. Any projections, estimates, forecasts, targets, prospects and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others. Any charts provided here are for informational purposes only, and should not be relied upon when making any investment decision. Certain information contained in here has been obtained from third-party sources. While taken from sources believed to be reliable, I have not independently verified such information and makes no representations about the enduring accuracy of the information or its appropriateness for a given situation. The content speaks only as of the date indicated.

Under no circumstances should any posts or other information provided on this website -- or on associated content distribution outlets -- be construed as an offer soliciting the purchase or sale of any security or interest in any pooled investment vehicle sponsored, discussed, or mentioned by a16z personnel. Nor should it be construed as an offer to provide investment advisory services; an offer to invest in an a16z-managed pooled investment vehicle will be made separately and only by means of the confidential offering documents of the specific pooled investment vehicles -- which should be read in their entirety, and only to those who, among other requirements, meet certain qualifications under federal securities laws. Such investors, defined as accredited investors and qualified purchasers, are generally deemed capable of evaluating the merits and risks of prospective investments and financial matters. There can be no assurances that a16z’s investment objectives will be achieved or investment strategies will be successful. Any investment in a vehicle managed by a16z involves a high degree of risk including the risk that the entire amount invested is lost. Any investments or portfolio companies mentioned, referred to, or described are not representative of all investments in vehicles managed by a16z and there can be no assurance that the investments will be profitable or that other investments made in the future will have similar characteristics or results. A list of investments made by funds managed by a16z is available at Excluded from this list are investments for which the issuer has not provided permission for a16z to disclose publicly as well as unannounced investments in publicly traded digital assets. Past results of Andreessen Horowitz’s investments, pooled investment vehicles, or investment strategies are not necessarily indicative of future results. Please see for additional important information.