Demystifying Web Analytics and Audience Measurement: Maximizing Your Potential
Yes, I admit it — it’s been far too long since I last posted on my blog. I do apologize. But to be fair, I’ve been deep in trenches here at Omniture working on some incredibly exciting projects that will benefit all our customers in the weeks and months ahead!
Last post I wrote why unique visitors can be so different when using web analytics or online business optimization platforms like Omniture SiteCatalyst, and audience measurement services like Comscore MediaMetrix, Nielsen Netratings, or Hitwise. My intent was to demystify the methodologies behind these very different approaches to Internet measurement. With this post, I wanted to offer some guidelines on when and why, in my opinion, you should use one approach versus another.
WHEN TO USE WEB ANALYTICS
As many of you know Web analytics and/or online business optimization has tremendous potential to improve the online and offline customer experience. There is arguably no greater weapon at your disposal to optimize your marketing ROI. From acquisition activities like search, banner, TV, and print campaigns to online and offline conversion to retention activities like newsletters, tell-a-friend, call center, and loyalty programs, web analytics should be your definitive optimization platform. Why? Because it provides the most granular insight into customer behavior. It is your lowest common denominator across all these customer touch points. And by leveraging web analytics across all these initiatives, you achieve a single version of truth — rather than trying to make decisions from 5 different data sources. In short, web analytics can help you improve online and offline success by identifying opportunities throughout the customer lifecycle. As an organizational optimization platform, web analytics helps you answer questions like:
“How effective are my campaigns?“
“Which customer segments are most valuable?“
“How can I improve my acquisition success?“
“How can I improve our conversion funnel?“
“How can we better retain our most valuable customers?“
“How can we improve customer loyalty?“
“How can we offer a better customer experience?“
“Which marketing initiatives are most profitable?“
“How do multi-channel buyers differ from single-channel buyers?“
“How can I remarket to non-converters to improve overall success?”
The list goes on and on.
WHEN TO USE AUDIENCE MEASUREMENT
In my opinion, audience measurement helps you answer a much different set of questions. Because audience measurement services aim to measure visitor activity across multiple websites, they are valuable largely from a competitive intelligence standpoint. For example, audience measurement services can enlighten you as to what websites visitors go to before and after they visit your own website. This information can help fine tune your competitive intelligence efforts and provide an important indicator as to overall visitor loyalty (i.e. how many of your visitors are multi-site visitors and to what extent?). Furthermore, if you see one particular competitor gaining visitor share, it may be worth closer examination of their website to determine if they’ve introduced any new promotions or campaigns that are attracting your visitors.
Audience measurement services have also evolved considerably to offer some really cool new metrics. For example, Hitwise has emerged as a powerful resource to identify which keywords people are using to get to your competitors websites. In today’s increasingly competitive PPC marketplace, this kind of insight can easily shift the balance of power — and profit — in your favor.
However, when using audience measurement services, I always stress that you should focus most on relative percentages, not absolute numbers. As I talked about in my last blog posting, the absolute numbers are often poor indicators of actual traffic because the underlying panels are inherently biased, limited, and so grossly normalized that they paint a very misleading picture. For example, if you’re an electronics retailer, it’s much more valuable to understand that the top keyword is driving 15% of your competitor’s traffic rather than knowing the top keyword drives 1 million unique visitors. The former is actionable; the later is not.
Beyond competitive intelligence, the audience measurement services can be an interesting source of demographic data. The quality of that data varies greatly by service — but even with the most exhaustive data sets, I personally have not used this much at all. A key challenge for me is that you can’t really segment by it. True, there are some great demographic data points — but for most sites, you can’t drill into your segment beyond one level because the panels are too small. For example, let’s say you want to understand the demographics of your top customers (based on revenue per visit).
First, you’ll be disappointed because the revenue reported by your audience measurement system won’t match your own order database or web analytics platform (both of which you know to be accurate). Second, your visits will also be off for the many reasons I discussed in my previous blog posting. Because of these two disparities, your Key Performance Indicator — revenue per visit — will vary widely from what you know to be true. But even forgetting all of that for a second — if you’re like most sites, you could only use audience measurement platform to see one level of demographics — such as gender. When you try to drill into level two segmentation — like gender and age — you’re most likely out of luck. And levels 3, 4 or even 5 are completely out of the question.
This may sound like a trivial difference, but it is not. When is the last time you ran a successful marketing campaign based on 1 segment dimension? Can you imagine going to your CEO and explaining your multi-million dollar marketing campaign targeted “Women”. Not “young women”, “affluent women”, “single women”, “athletic women” — just women. In all but a few extraordinary cases, you’d be looking for a new job (yes, I realize there are some notable cases where companies have been successful with one segment dimension, but they are very few and far between).
So again, while the demographics provided by audience measurement firms are interesting, I rarely use them.
WHEN TO USE BOTH!
To wrap up this blog post, I wanted to share one last recommendation. That is when you can actually use both services to drive marketing ROI. Yes, you heard me correctly — there are instances where the combination of web analytics and audience measurement can actually be a 1+1 = 3 proposition.
One such instance is search engine marketing. Using a product like Omniture SearchCenter in conjunction with a service like Hitwise can deliver rapid results that significantly impact your competitors. The beauty of this approach is that it can be automated, so that shifts in the competitive landscape and bid strategies can be quickly reflected in your own search campaign efforts. If you’d like to understand how to do this, please feel free to contact the Omniture Best Practices Group.