Metrics

1
Metrics

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

2
A New Media Needs New Metrics

• Metrics are used to
• Define the properties of the media
• Compare it to other media
• Evaluate how the media performs

3
Early Indicators

• Theres 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

4
Iconocast

• Michael Tchongs Email Newsletter
• "Which of the following metrics does your
  organization use to measure site activity?"
• Metric
• Unique visitors 59
• Page views 57
• Unique visits 50
• Repeat visitors 38
• Referral pages 32
• Entry/exit pages 26
• Browser type 22
• Top-level domains 20
• None of the above 15
• Source Nov. 2000 ICONOCAST Inc./InsightExpress

5
Measuring ROI

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

6
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.
• 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.

7
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.

8
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)
• Coalition for Advertising Supported Information
  and Entertainment, an advertising industry group.

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Measuring User Activity

• Hits, Files, Page Views Visits

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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.

11
Page views

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

12
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

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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

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Requests and Impressions

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

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Tracking requests

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

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Standard Definition of Terms

• Online Advertising Terms
• Internet Advertising Bureau
• Table IAB Summary

17
Measure for Measure

• There are different tools measuring some of the
  same information.
• Visitor Management Tools
• Source Iconocast, 10/07/98

18
CPM

• Cost Per Thousand
• CPM is the cost to reach a thousand people.
• Sample CPM Rates
• Average CPM (20-30)

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Reach

• How much of the total potential audience without
  duplication does a site capture?
• Nielsen Top 10 Web sites
• Nielsen Top Advertisers

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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.

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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)

22
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.

23
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 email.
  Sold to Yahoo. Business information at
  yoyobiz.com.

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Advertising Messaging Objectives

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

25
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.)

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Effectiveness of Ads

• "A study reports that returns on Internet
  advertising spending has nearly doubled since
  1994. Every dollar spent on Internet advertising
  this year generated 7 in sales, as compared to
  4 in 1994. " (Cyberatlas, Dec. 15, 1997)

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Cost-per-sale (CPS)

• Source Iconocast, 9/02/98

28
 Amazons 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
  Amazons market value.
• Source Gretchen Morgensen, Market Watch, New
  York Times, 10-31-99

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Revenue Per Sale Declines While Cost of Sale Rises

• Revenue per customer declined from 40.32 in 3rd
  quarter of 1997 to 27.16.
• 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
  36.08.
• Source Gretchen Morgensen, NYT

30
Ameritrades 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

31
Online Advertising

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

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Top 6 Web Advertising Categories, 1999

• Computers 663.1
• E-Commerce 278.1
• Financial 191.7
• Local Services 133.6
• Media and Adv. 126.7
• Automotive 79.2
• Source Veronis-Suhler. Dollars in Millions.

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Web Advertising by Type of Site

• Type Percent of Ad Revenue
• Portals 49
• Niche Content 22
• Traditional/Gen. 14
• Other 15
• Source Veronis-Suhler

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Additional Resources

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

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Additional Info on 1-to-1

• Customer Differentiation Matrix (under Tools
  section on site.)
• Wired Article Martha Rogers
• Inc. Magazine Article1 Article 2