Saturday, March 3, 2012

What Website or Websites Do You Want to Monitor?

While you can find all sorts of sites online, these are the five most common types of
websites today:

• Media sites (CNN, Wall Street Journal, etc.)
• Transactional sites (, Zappos, etc.)
• SaaS (Software as a Service) (, etc.)
• Collaboration sites (Facebook, etc.)
• Affiliate sites (, Groupon, etc.)

Each site has its own unique needs and challenges. Each site also has a different way of producing revenue. Revenue is typically generated directly online in three ways:
• Advertising (the selling of advertising space, as Google does with AdWords)
• Product sales
• Signing up users to a service

Media sites and collaboration sites typically generate revenue through ad impressions. When advertising is sold by impressions instead of clicks, it is to that company’s benefit to drive as many people to their site as possible. In these cases, you can find the value of a user based on the average number of impressions you can generate. For example, every ad may be worth 5 cents an impression. If you can generate 10 impressions, then you have earned 50 cents. If that is your average value earned, then each customer is worth 50 cents.

Monetary transactions and subscriptions are typically the driving force on transaction sites and SaaS sites. That is, they generate revenue by selling or getting subscribers to opt into a product or service.

When dealing with product purchases, you will have an average order value (AOV). The average value is calculated by adding up the number of orders and the total amount of revenue, then dividing total revenue by the total number of orders.

The last way of generating revenue is through affiliates. Technically, Groupon is not a true affiliate, but it does act on behalf of other companies, selling products and receiving a commission for each sale. In a traditional sense, affiliate sites make money by marketing and creating leads or selling products through a storefront for another company. Affiliates, such as product sales sites, can track average lead value. This is typically the average amount of money each lead to the parent site is worth. This value may be based on actual transactions occurring on the parent site, or it may be good enough simply to generate the lead. Amazon offers an affiliate program rewarding leads based on purchases that happen on its site.

To add more complexity to tracking affiliate sites, if you are the parent company, you may want to get reports and data back from the affiliates. You may want to know how many impressions your products get on these sites, or how many people click on a product on an affiliate site but do not come to your site. You also will want to track which affiliate sites refer more traffic, and which refer the best-converting traffic. You should have an idea of what type of website you are responsible for. You should
also consider any competitor websites you would like to monitor. Deciding which websites you want to track may impact what is measurable. An affiliate site should
provide much more data than a competitor site, but regardless, know who you want to track, and build those lists up.

If your business is based on referrals from other sites, such as affiliate sites or affiliate marketing, reach out to your affiliates and request weekly, monthly, quarterly, or annual reporting. If you have the option to install your own tracking methods, ask for your affiliates to set those up too if it will help provide a better picture of what is happening. With affiliates, there are also several pitfalls to watch out for. It is usually in their best interest to report higher volumes, as that is usually what determines if they get paid. Establish some key affiliates to work out pilot programs with, and build from there. It is also key to note that tracking beacons may create privacy issues for some websites.

The impact of privacy on metrics is another important issue you need to be aware of.
Today there is talk of “do not track” legislation, and of companies implementing do-not-track technology and opt-outs ( Google has made its own announcement on this, which impacts personalized advertising but not all analytics directly as of yet (
.html). Tracking people through your site needs to be done in a way that respects their privacy, providing you with insights through anonymous data, and there are legal implications that are beyond the scope of this book. Most off-the-shelf software does
not cross the privacy lines, but with constantly changing legal stances and concerns, it is a hotly discussed topic.

When dealing with tracking competitor sites, be prepared to get sampled data and estimates. Unless you have a very generous competitor, most numbers you will be able to get will be based on sampling and panels. This means that data on your competitors may be more or less accurate, but you will never get exact numbers, and the degree of variance is unknown. ComScore and Nielsen are examples of sources for this type of data.

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