It keeps getting smaller.

There’s a pissing match today among several InterWebs iconoclasts about Comscore’s traffic counting methods and business models. Actually, to be more accurate, it’s a bunch of bitch-slapping about unrelated issues, but web traffic is the jumping-off point.

You can read it for yourself — be sure to follow the comment thread too, in which all the principals rebut. (Or, as one commenter deems it, “three poodles fighting over a piece of raw meat”).

But for me, the whole thing is sad because it reminds me of another “scandal” almost six years ago now. Several newspaper chains had been caught overstating their circulation. There was all sorts of hand-wringing over it, but in the midst of the mea culpas, I read one simple line in a column by Ed Wasserman that changed my way of thinking and in large part led me to create The Daily You as a major feature of Pegasus News:

“Still, there is an absurdity to the whole scam. Counting copies is a dopey way to gauge impact. The explosion of information channels necessarily means erosion of audience share held by dominant media. There is still nothing that can rivet the attention of a community the way its daily paper does.”

I’m not sure that even Ed would still agree with the last sentence, but the rest holds true today, at a different level. We’re arguing over what should be a largely meaningless metric. Yet it is the metric on which our industry’s customers make the lion’s share of their buying decisions. More than a half-decade later, we’ve dragged our old problem into the promising new world.

Why? Partly because the truly meaningful statistic is sales conversion. Despite my hopes for major strides in this area, no one has yet found a way to meaningfully connect an online view with offline commerce (which still accounts for the lions’ share of transactions). Frankly, from what I see, there’s a lot of missed opportunity in connecting online media with online transactions. (Hint: We see tons of user activity on editorial content related to offline businesses who advertise on our sites — exponentially exceeding the number of clicks on their ads.)

It’s also because the same executives and industry leaders that refused to see the bloodbath coming to “traditional media” didn’t mark the potholes on the road to the bankruptcy courts. Comscore’s panel-driven metric is just the new flavor of circulation audit or television rating — not to pick on Comscore, because we all know that no online measurement tool is perfect.

But my point is this: If the local Chinese restaurant (or dry cleaner, or Wal-Mart, or car dealer) is still just hoping to get the maximum number of eyeballs with a nonzero chance of buying, everyone is getting shortchanged. They need to be buying the attention of people who like Chinese food who will be within a five mile radius on a day the restaurant won’t be full. Five of those people are worth a million who don’t fit that rubric. Add the multiplication of messages we see every day, and finding the sweet spot in that fragmented attention is even more valuable.

The sad thing is that this problem should be much closer to solved by now — but the major media companies still have a medium-term disincentive to show their customers exactly which half seven-eighths of their advertising is wasted . The panoply of startups working this area continue to prove that this is a micro problem that requires a macro solution to create a viable business.

I see some promising activity on the mobile front, but that’s a post for another day. What we can be sure of, though, is that the value and price of advertising sold on the metric of audience size and broad demography will continue its race to $0. How quickly our industry (media and buyers) adapt will determine whether the last couple years will be looked upon as the bottom or the last bastion of the glory days.

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