PPM- is the shorthand for what I call “Profitability to Popularity Match”- the balance between how much money you’re making in your business and the size of your community of fans, followers, and friends.
I think of PPM as a ratio: Monetization of Network divided by Size of Network
The higher this number, the more likely it is that you have a strong track record of successfully selling into your community.
In straight numbers, you want to have the highest monetization of network compared to size of network that you can. This way, you can know, with some certainty, that as your network grows, your profitability should also grow.
The biggest mistake that entrepreneurs make is to flip the order- where they build huge networks first and then see if they are able to monetize them.
This can work if you are selling an item that is not too expensive- that which doesn’t represent a significant investment of money, time, or energy.
But if you are selling services or high end products, you need to start thinking about your PPM ratio.
PPM ratio is much like conversion, but I look at PPM as a larger view of your overall business, rather than just focused on one campaign.
To begin gauging your PPM, you can start by listing how much money you brought in last year. Gauge about how large your network was at that time.
So, for example:
Let’s say you earned $100,000 last year. And your networks, all together, totaled about 5,000 people. If we divide $100,000 by 5,000, we get a PPM of 20, which is pretty good.
But let’s reverse that. Let’s say that you earned $5,000 last year, and your networks, together totaled 100,000 people. If we divide $5,000 by 100,000, we get a PPM of .05, which is very low.
But you can see the point- that building your online networks, if you are in business to make money, means that you need to pay attention to the growth and size of your networks as a function of your profitability.
If you have a network that is very large, it must be returning to you in some way- in some kind of tangible resource- or else you’re building popularity without profitability.
Calculating your PPM can also help you gauge where to focus your efforts- on attracting more people to you, or selling more concertedly to the ones you have already attracted. It can tell you how and where to focus your energy and resources for your own maximum benefit.
To build a stronger business, focus on your PPM and get the ratio as high as you can. Then you can know that your profitability will grow as your networks do.
