Purple Cow

Seth Godin
The Law of Large Numbers
The magic of mass media and the Web is all tied up in the
large numbers: 20 million people watching The Sopranos;
100 million watching the Super Bowl; a billion watching
the Oscars; 3 million people using KaZaA at the same
time, all the time; 120 million registered Yahoo! users.
The numbers are compelling.
What if just one out of a thousand Oscar viewers tried
your product? What if one member of every family in
China sent you a nickel?
The problem with large numbers is that they’re almost
always accompanied by fractions with huge denominators.
If you reach 100 million people, but only .000001 percent
of the audience buys your product, well, you’ve just
sold exactly one unit.
Years ago, when I first predicted the demise of the banner
ad as we know it, people laughed at me. At the time,
banner ads were selling for a CPM of $100. (CPM is the
cost per thousand ad impressions.) That means you’d pay
$100 for a thousand banners.
What advertisers who measured (the vast minority) soon
realized was that every time they bought a thousand banners,
they got exactly zero clicks. The banners had a hit
rate of less than .000001 percent. The law of large numbers
was at work.
Today, you can buy banner ads for less than a dollar a
thousand. A 99 percent drop. I did a deal with one site in
which I bought 300 million banner ads for a total cost of
$600. The funny thing is that I lost money on the deal.
Those 300 million banner ads (that’s more than one banner
impression for every single person in the United States)
ended up selling less than $500 worth of merchandise.
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