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Metrics
Measuring Success
Why Measure?
What Can We Measure?
Who Measures?
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A New Media Needs New
Metrics
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2.
3.
Metrics are used to:
Define the properties of the media
Compare it to other media
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.
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Site traffic
Usage patterns
Effectiveness
Performance
Iconocast
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Michael Tchong’s Email Newsletter
"Which of the following metrics does
your organization use to measure site
activity?"
Metric
%
Unique visitors
Page views
Unique visits
Repeat visitors
Referral pages
Entry/exit pages
Browser type
Top-level domains
None of the above
Source: Nov.
59
57
50
38
32
26
22
20
15
2000 ICONOCAST Inc./InsightExpress
Measuring ROI
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Return on Investment
Most common reason for establishing
metrics is to assess the effectiveness of
what you are doing.
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Source: Iconocast, 9/02/98
One-to-One Marketing
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“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-toone marketing relationship where the
company learns more about the customer and
how to serve him/her better as an individual.
Advertising Depends On It
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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)
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Coalition for Advertising Supported Information and
Entertainment, an advertising industry group.
Measuring User Activity
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Hits, Files, Page Views & Visits
Hits
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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
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also called impressions and exposures.
a logical measure of usage based on
what the user receives.
Visits
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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
Greatest Hits
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“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!"
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Internet Measurement: Past & Future
Requests and Impressions
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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).
Tracking requests
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"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
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Online Advertising Terms
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Internet Advertising Bureau
Table: IAB Summary
Measure for Measure
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There are different tools measuring
some of the same information.
Visitor Management Tools
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Source: Iconocast, 10/07/98
CPM
Cost Per Thousand
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CPM is the cost to reach a thousand
people.
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Sample CPM Rates
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Average CPM ($20-30)
Reach
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How much of the total potential
audience without duplication does a site
capture?
Nielsen Top 10 Web sites
Nielsen Top Advertisers
Stickiness
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How long do users remain at a site?
A pattern of usage measured in
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Time
Pages
Games and Auction sites are sticky;
users stay on the site for a long time.
How effective is the Web?
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Are Web CPM's too high when compared to
other media?
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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)
Click-through Rate (CTR)
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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
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User visits site and provides some
information to the advertiser
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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.
Advertising Messaging
Objectives
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Increase Brand Awareness
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Encourage trial of a service
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Promote a product offer
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Identify target customers
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Closing a transaction
Advertising-to-Sales Ratio
(A/S)
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Computer industry spends 1.8% of its
sales on advertising
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Book publishing is 10%
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Online businesses might be 14%
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AOL = 12%; CNET = 25%; Yahoo = 49%
(41 million in net revenue; 20 million
spent on marketing and sales.)
Effectiveness of Ads
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"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)
Cost-per-sale (CPS)
Average Marketing cost for each new account
Company
CDnow
EarthLink
America Online
Credit card companies
Long distance telephone companies
Mortgage lenders
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Source: Iconocast, 9/02/98
Cost-per-Sale
$40
75
93
90-100
100
100-250
Amazon’s Amazing Numbers
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“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.
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Source: Gretchen Morgensen, Market Watch,
New York Times, 10-31-99
Revenue Per Sale Declines
While Cost of Sale Rises
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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.
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Source: Gretchen Morgensen, NYT
Ameritrade’s Costs
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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.
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Source: Gretchen Morgenson
Online Advertising
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4.6 Billion in 1999; up from 1.9 billion in
1998; somewhere over 6 billion in 2000.
Consolidation
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Top 10 sites = 74% of all ad dollars.
Top 25 sites = 87%
Top 50 sites = 95%
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Source: Veronis-Suhler, 2000 Communications
Industry Forecast.
Top 6 Web Advertising
Categories, 1999
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Computers
E-Commerce
Financial
Local Services
Media and Adv.
Automotive
663.1
278.1
191.7
133.6
126.7
79.2
Source: Veronis-Suhler. Dollars in Millions.
Web Advertising by Type of
Site
Type
Percent of Ad Revenue
Portals
49%
Niche Content
22%
Traditional/Gen.
14%
Other
15%
Source: Veronis-Suhler
Additional Resources:
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Cyberatlas
Project 2000 (Novak and Hoffman)
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New Metrics for New Media (1996)
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Flow model (1997)
MediaMetrix
Ipro – Internet Profiles
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Chronology
Nielsen Net Ratings
Additional Info on 1-to-1
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Customer Differentiation Matrix (under
Tools section on site.)
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Wired Article Martha Rogers;
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Inc. Magazine Article1 : Article 2