Tuesday, April 3, 2007

The "analytic" in "web analytics"

In my previous posts on the exploration of the Attention Economy in web analytics, I highlighted the use of RFM in marketing as well as some views on the user engagement metric. Let's now take a few minutes to get back to the basic: what is web analytics?

What is web analytics?

Web analytics relies on a variety of qualitative and quantitative metrics to evaluate the effectiveness of a site at answering user goals, according to the business strategy and objectives. The analysis activity brings a broader and more accurate understanding of the user behavior before, during, and after the visit to the site. This understanding of threats and opportunities ultimately leads to recommendations for improvements in various areas: user experience, content quality and effectiveness, process improvement and technical performance.

The atoms of web analytics

While the vast majority of businesses understand and agree on what constitute an "impression", less than half agree on what exactly is a "visit" or worse, a "visitor" (74% according to a Net Genesis Corp, Jim Sterne, 2000 study). A recent thread on the web analytics discussion forum seems to indicate things haven't changed that much in 7 years!

At the beginning of the World (Wide Web) there were only "hits" - the most basic and simple element at the base of the HTTP protocol. A very technical and low-level representation that quickly became too hard and inconvenient to manipulate.

The next definitions are taken verbatim from the Web Analytics Association Standard Committee:
  • Page Views: The number of times a page (an analyst-definable unit of content) was viewed.
  • Visit (or session): A visit is an interaction, by an individual, with a web site consisting of one or more requests for an analyst-definable unit of content (i.e. “page view”). If an individual has not taken another action (typically additional page views) on the site within a specified time period, the visit session will terminate.
  • Visitor: The number of inferred individual people (filtered for spiders and robots), within a designated reporting timeframe, with activity consisting of one or more visits to a
    site. Each individual is counted only once in the unique visitor measure for the
    reporting period.
Since our goal isn't to dig too much into the web analytics practice itself, and for sake of simplicity, we will not delve into the intricacies of Rich Internet Applications measurement or more complex metrics. These simple metrics; page view, visit and visitor, will be sufficient to understand the evolution to "attention" metrics.

What constitutes a transaction?

Another area that seems to confuse everyone is the notion of "transaction". To my surprise, I found out in an important ebusiness project the definition of a transaction is very different depending on who I talked to. The IT people related to a database "transaction" while marketing people used interchangeably the words "conversion" and "transaction", or considered any type of online form that submits some information to be a transaction.

In financial terms, Wikipedia definition says "a financial transaction involves a change in the status of the finances of two or more businesses or individuals."

The monetization of attention

The definition of a financial transaction is critical in the concept of "Attention Economy": money was typically the scarce and sought for resource. In the industrial age, the more you had, the more successful you were.

In the information age, money isn't the scarce resource people are seeking. What we lack, what we have in limited quantity and what we need to spend carefully is our attention. What every company is trying to get from us is our attention. Our whole economical model is slowly shifting from valuing money to valuing the "cognitive process of selectively concentrating on one thing while ignoring other things". Simply put, once you get attention, other "lower" considerations such as money usually come naturally. Think about artists, politicians, managers, and even some bloggers!

We've set the table for the next step: the attention process.