Web Metrics Web Analytics Why Measure? What Can We Measure? Who Measures?

Why Measure? Return on Investment Most common reason for establishing metrics is to assess the effectiveness of what you are doing. (Source: Iconocast, 9/02/98)9/02/98 To indicate progress towards a goal.

What Metrics? "Which of the following metrics does your organization use to measure site activity?" Metric % Unique visitors59 Page views57 Unique visits50 Repeat visitors38 Referral pages32 Entry/exit pages26 Browser type22 Top-level domains20 None of the above15 Source: Nov ICONOCAST Inc./InsightExpress

Why Measure? Track interest in content Examine patterns of visitor activity Monitor effectiveness of advertising campaigns Track the success of promotions and how they lead to transactions.

Who Measures? Traffic Analysis Log files Advertising Servers Advertisers check on results of campaigns Auditing Third-Party oversight

The Clickstream Tracking User Activity "the database created by the date-stamped and time-stamped, coded/interpreted, button- pushing events enacted by users of interactive media controlling their systems via remote control channel changers, alphanumeric PC keyboards and mice, numeric keyboards of PDAs and similar devices, and voice command of screen media." (CASIE)CASIE Coalition for Advertising Supported Information and Entertainment, an advertising industry group.

Measuring User Activity Hits, Files, Page Views & Visits

Hits correspond to physical files served graphics intensive pages show more hits (HTML pointing to lots of gif or jpeg files) an index of server load not a reliable indicator of usage.

Page views also called impressions and exposures. a logical measure of usage based on what the user receives.

Visits a single user session perhaps the most useful indicator but difficult to track unless cookies are used.

Requests and Impressions Internet Advertising Bureau -- "METRICS AND METHODOLOGY" (9/97) Internet Advertising BureauMETRICS AND METHODOLOGY Careful to draw the distinction between what is requested and recorded on the server side versus what is actually delivered to the client (impression).

Tracking requests "The requested elements can be fulfilled from a number of locations: 1. the visitor's local cache, 2. the ISP's proxy server, 3. the publisher's Web site, 4. or not at all -- images turned off, connection terminated,etc."

Standard Definition of Terms Internet Advertising Bureau IAB Guidelines (PDF)

Visitor Management Tools Source: Iconocast, 10/07/9810/07/98

CPM Cost Per Thousand CPM is the cost to reach a thousand people. Sample CPM Rates Average CPM ($20-30) Average CPM CPM vs. Performance-based Pricing

Reach How much of the total potential audience without duplication does a site capture? Nielsen Top 25 Web sitesTop 25 Web

Stickiness How long do users remain at a site? A pattern of usage measured in Time Pages Games and Auction sites are sticky; users stay on the site for a long time.

Click-through Rate (CTR) Advertisers calculate cost-per-click: how much it costs to advertise divided by the number of users who actually click- through in response to the message. Click-through initially averaged higher than it does today. Down below 1%. Publishers argue that click-through rate fails to account for value of an impression.

Trial Use Number of people who Receive offer Respond to offer Convert to customer

Advertising-to-Sales Ratio (A/S) Computer industry spends 1.8% of its sales on advertising Online businesses might be 14% AOL = 12%; CNET = 25%; Yahoo = 49% (41 million in net revenue; 20 million spent on marketing and sales.)

Cost-per-sale (CPS) Average Marketing cost for each new account CompanyCost-per-Sale CDnow$40 EarthLink75 America Online93 Credit card companies Long distance telephone companies100 Mortgage lenders

Advertising Messaging Objectives Increase Brand Awareness Encourage trial of a service Promote a product offer Identify target customers Close a transaction Source: Iconocast, 9/02/989/02/98

Amazon’s Amazing Numbers “Its revenues doubled but its net loss in the period was $197 million, up more than four-fold from $45 million it lost in the same quarter last year.” Shares plunged 6.5%, wiping out 1.6 billion of Amazon’s market value. Source: Gretchen Morgensen, Market Watch, New York Times,

Revenue Per Sale Declines While Cost of Sale Rises Revenue per customer declined from $40.32 in 3 rd quarter of 1997 to $ Revenues per new customer declined almost 20% from $51.68 in 1997 to $41.51 today. Cost per customer has risen 10.2%, from $32.73 to $ Source: Gretchen Morgensen, NYT

Ameritrade’s Costs Cost to sign up a new user have tripled from the $157 per customer in the third quarter of 1997 to $451 in the fourth quarter. Source: Gretchen Morgenson

Online Advertising How Much? $1.46 billion for the second quarter of 2002 in US. A 4.1 percent decline from Q1 2002, and a 21.9 percent decline from Q The first six months revenue for 2002 totaled $2.98 billion, off 20.8 percent from the comparable period of Source: IAB Press Release 10/15/02IAB Press Release 10/15/02

Advertising By Segment Q2 – 2002Q Consumer32%30% Computing19%18% Financial Services14%13% Media12%10% Telecom7%8% IAB and PWC

Consumer Segment Q2 – 2002Q Retail44%51% Auto18%11% Music12%10% Travel15%11% Entertainment4%5% IAB and PWC

Advertising Consolidation Top 10 sites = 76% of all ad dollars. Top 25 sites = 89% Top 50 sites = 97% IAB and PWC

Types of Advertising Q2 – 2002 Q2 – 2001 Banners32%36% Sponsorships24%28% Classifieds15%16% Key Word Search 9%3% Slotting Fees8% Other12%9%

DoubleClick Largest Ad-related Internet company An advertising network Ad server technology (DART)

Additional Resources: Cyberatlas Project 2000 (Novak and Hoffman) New Metrics for New Media (1996) New Metrics for New Media Flow model (1997) Flow model MediaMetrix Ipro – Internet Profiles Chronology Nielsen Net Ratings

Two Approaches Rich Media Ads Will Rich Media Win the Day? Google’s Adwords Eric Schmidt