Understanding Your Future: Analytics & the Ever-Evolving Web

By Ken Harrop, Infintive Analytics

What to Do Online

Most executives I know believe that their organizations have barely scratched the surface in terms of leveraging the potential value of the Internet. Many of them – including some who work at well known and successful firms – have confessed to me that their companies have little or no idea what they’re doing online, or what they should be doing.

On the one hand, this is unbelievable, considering how long the Web has been around. On the other hand, it’s understandable. Because online technology is evolving faster than ever, it’s difficult to differentiate between hype and value, between truly important change and a short-term trend. This morning, you were worried about optimizing your ad words and search engine placement; tonight, on the evening news, the anchor asked viewers to send tweets. No wonder lots of executives feel a bit dizzy.

Ironically, the fundamental problem should be familiar to even the most old-school of business strategists: many brands and organizations have never defined the precise role the Internet should play in their business. Is the big idea to sell products directly? Serve customers, or make it easier for customers to serve themselves? Connect with suppliers? Build the brand?

In my decade-plus of online experience, I’ve found that very few companies give these central questions enough thought. A related problem is the lack of analysis into the performance of current sites and online properties. The vast majority of companies have not closely studied traffic and visitor data to see who is visiting their online properties, what they’re doing there and why. Oh sure, lots of raw traffic data – page views, unique users, session length – is being collected. Perhaps sophisticated and expensive tracking software has been installed, which gathers countless metrics and lets you see everything in interesting charts and graphs.

But too often, the numbers lack value for managers (beyond making for robust presentation slides). Why? Because the relationship between Web metrics and the company’s core goals and objectives hasn’t been clearly defined. A site meant to reduce costs by streamlining order entry for suppliers will look vastly different than an ecommerce site with recommendation engines for cross-selling and up-selling. The best metrics for measuring performance will also be different, depending on the strategy. Page views per visit, session length, user registrations, abandonment rate, revenue produced – each of these could be the most valuable for different types of sites.

Provided an actionable strategy is in place, Web analytics (which we define as the capturing, reporting and analysis of user traffic and behavior data on all types of Web sites and online environments) hold a key to executing it. Through analytics, companies can more easily track the return on online investments, understand the performance of current properties and – most importantly – identify the highest-value opportunities moving forward.

About All That Data  

From the perspective of marketers, the promise of the Web was largely that every click could be tracked. It would be easier to determine what target audiences liked, and how campaigns led to sales. Marketing and advertising were going to become much more scientific and data-driven (much to the delight of CFOs and corporate controllers).

That’s all theoretically true. But, as with any set of raw data, it’s one thing to capture the numbers and quite another to make sense of them, and use them to make business decisions. A great number of companies have done the first part – capturing the data. They may be able to track users in very granular ways. But they haven’t taken the time or invested in the skills to understand what all that data means, to really break it down and extract some meaning from it. The progression from information to insight to action hasn’t been completed.

This isn’t to say there’s been no improvement; lots of corporate Web groups and digital agencies look at traffic data and then re-size headlines, re-design banners and re-think campaigns in an attempt to boost click-through rates and sales. Those micro-improvements can be effective, provided they link to some macro- or big-picture mission. But too often they don’t, and that’s a serious strategic issue. In fact, relative to the Web, it’s the strategic issue.

The question of metrics definition is only going to become more important as data volumes continue to grow. Like ERP and BI, Web tracking software can track anything and everything, so there’s some risk of getting buried or paralyzed by too much information. But if you’re focused on what’s most important, you’re less likely to be overwhelmed by loads of useless metrics. Smartphones, “non-traditional Web” devices, and networking tools and sites are going to produce massive amounts of data, exponentially more than what you have currently. So, if you’re dealing with a tidal wave of data now, get ready for the avalanche to come.

Obviously, I’m exaggerating for effect, but not wildly so. The way to deal with all this data is to simplify. Just choose the four or six or eight metrics that matter most for individual sites or specific campaigns and track those. Archive everything else. Chances are you’ll be able to find it later if you really need it.

Analytics in Action  

At the main news site of one of the Web’s dominant portals, the big idea for our team was to connect users to information however they wanted it. For the first few generations, the site looked very much like a traditional news destination. But, in analyzing traffic data, applying the insights gained from extensive user research and keeping a careful eye on major trends, we saw an opportunity to reposition ourselves with a constantly refreshed, blog-like format that better aligned to changing user expectations. In other words, we had to change because user tastes and the way visitors interacted with our site – as well as our competitors’ sites and the Web in general – were changing.

We also looked closely at the behavior our sponsors wanted, and how our site could deliver it. Strategic planning confirmed that higher frequency of visits and longer user sessions were the right metrics for us. Tactically, that required deeper engagement with enhanced content embedded into the heart of an article – a big shift for the news site.

We changed the look and feel of the site and user behavior soon changed. Early on, we lost a few page views, but only a few. And that loss was more than compensated for by the higher number of total visits, greatly increased time spent on the site and higher return frequency. All of these shifts in behavior meant we were delivering a more desirable audience for our advertisers.

A Flexible Foundation  

Many companies ask us, “What should we do right now?” It’s an understandable question, given the furious rate of online change and in the metrics used to measure Web behavior. First and foremost, companies must get off the sidelines. Many organizations still have plenty of important work to do in defining or refining online strategies and optimizing current properties. In other words, they must seek to master Web 1.0, before moving on.

As for Web 2.0, most companies are not ready to launch into advanced Facebook campaigns or smartphone-driven viral campaigns. Those waters are still largely uncharted. But that doesn’t mean you shouldn’t be studying your maps and preparing for future explorations, which are inevitable. In other words, keep an eye on these spaces.

Once you have a clearly defined strategy, it’s time to try out tactics through a “test and learn” approach. The good news is, it’s never been easier or more cost-effective to test and learn. That’s true all over the online world, from existing sites and popular search engines, to Facebook, Twitter and iPhone apps. And here again, the right metrics and a strong Web analytics capability will help you understand results in the context of your strategy. They’ll also help you identify future opportunities.

Lastly, don’t wait on analytics. Online entities – Netscape, MySpace, the famous Pets.com sock puppets – may come and go, but Web analytics is here to stay. This is a discipline that will only get smarter and more powerful in the coming years. Thus, it’s potential to deliver value to businesses will also grow. While we’ll continue to see large-scale and rapid changes in the nature of online communications, there’s no doubt that the careful tracking and analysis of user behavior data will become more important and valuable. Start applying proven techniques now, and building the capabilities you know you’ll need over the long term.

 

Big Idea: You’re An Internet Company  

As more people spend more time to online, your business has no choice but to be there. The so-called Millenial generation (those born between 1977 and 1990) doesn’t “go online,” but rather “lives online.” They are connected 24/7, and from everywhere. Beyond keeping up with friends, young adults research, plan and make decisions on all sorts of things – which bank or wireless plan to choose, where to shop and dine, and whether or not to share a cool YouTube video – through their phones and PCs. Increasingly they spend their money online too: a full 71% purchase goods and services online, according to the Pew Research Center. That’s a number bound to increase as this group reaches its prime earning and spending years.

So, if your business plans to connect with this group or serve them sometime in the future, you’ve got to be right there with them. And the sooner the better. It’s not an option. The fact is, every business these days is an Internet business, and effective analytics is a key to making Internet businesses succeed.