Metrics Measuring Success Why Measure? What Can We Measure? Who Measures?

A New Media Needs New Metrics Metrics are used to: 1. Define the properties of the media 2. Compare it to other media 3. Evaluate how the media performs

Early Indicators There’s a search to identify numbers that quantify the value of Internet transactions, which eventually lead to figuring out the dollar value of exchanges. Site traffic Usage patterns Effectiveness Performance

Iconocast Michael Tchong’s Newsletter "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

Measuring ROI Return on Investment Most common reason for establishing metrics is to assess the effectiveness of what you are doing. Source: Iconocast, 9/02/989/02/98

One-to-One Marketing “The One to One Future: Building Relationships One Customer at a Time,” Rogers and Pepper (Doubleday, 1993) Their site is 1to1.com.1to1.com Mass marketing will be replaced by one-to- one marketing relationship where the company learns more about the customer and how to serve him/her better as an individual.

Advertising Depends On It You have to gather information about your users and argue the value of that audience to prospective advertisers. Identify patterns that differentiate your site and your audience from others.

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. Top 50 Sites and Properties of September 1999 Top 50 Sites and Properties of September 1999

Greatest Hits “Why do hits continue to be used as a traffic indicator? One argument is that they are so easy to get: a site owner doesn't need to spend much in analysis tools or services to know their hit count. Another reason might be that of any measure a site owner can provide, hits are likely to provide largest absolute number, e.g., "we are receiving 5 million hits per month!" Internet Measurement: Past & Future

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 Online Advertising Terms Internet Advertising Bureau Table: IAB SummaryIAB Summary

Measure for Measure There are different tools measuring some of the same information. 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

Reach How much of the total potential audience without duplication does a site capture? Nielsen Top 10 Web sitesTop 10 Web Nielsen Top AdvertisersTop Advertisers

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.

How effective is the Web? Are Web CPM's too high when compared to other media? Web ads may do better because of a lower ad/edit ratio. A typical Web page is 91% editorial and 9% advertising. Dramatic when compared to magazines, which are typically in the 50/50 range, and television, which is closer to 60% programming/40% advertising. (Rick Boyce, IAB, Exploding the Web CPM Myth) Exploding the Web CPM Myth

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 to a site. 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.

Cost-per-lead User visits site and provides some information to the advertiser Enter a contest, for instance. Yoyodyne Entertainment is a company that specialized in online games and contests that allow companies to present promotional messages to the contestants. Mostly done through . Sold to Yahoo. Business information at yoyobiz.com. Yoyodyne Entertainmentyoyobiz.com

Advertising Messaging Objectives Increase Brand Awareness Encourage trial of a service Promote a product offer Identify target customers Closing a transaction

Advertising-to-Sales Ratio (A/S) Computer industry spends 1.8% of its sales on advertising Book publishing is 10% Online businesses might be 14% AOL = 12%; CNET = 25%; Yahoo = 49% (41 million in net revenue; 20 million spent on marketing and sales.)

Effectiveness of Ads "A study reports that returns on Internet advertising spending has nearly doubled since Every dollar spent on Internet advertising this year generated $7 in sales, as compared to $4 in " (Cyberatlas, Dec. 15, 1997)Dec. 15, 1997

Cost-per-sale (CPS) Source: Iconocast, 9/02/989/02/98 Average Marketing cost for each new account CompanyCost-per-Sale CDnow$40 EarthLink75 America Online93 Credit card companies Long distance telephone companies100 Mortgage lenders

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 4.6 Billion in 1999; up from 1.9 billion in 1998; somewhere over 6 billion in Consolidation Top 10 sites = 74% of all ad dollars. Top 25 sites = 87% Top 50 sites = 95% Source: Veronis-Suhler, 2000 Communications Industry Forecast.

Top 6 Web Advertising Categories, 1999 Computers663.1 E-Commerce278.1 Financial191.7 Local Services133.6 Media and Adv Automotive 79.2 Source: Veronis-Suhler. Dollars in Millions.

Web Advertising by Type of Site TypePercent of Ad Revenue Portals 49% Niche Content22% Traditional/Gen.14% Other15% Source: Veronis-Suhler

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

Additional Info on 1-to-1 Customer Differentiation Matrix (under Tools section on site.) Wired Article Martha Rogers; Wired Article Inc. Magazine Article1 : Article 2 Inc. Magazine Article1 Article 2