Coffee, Sun & Technology

For quite some time now I’ve been using analytical tools to slice and dice user data on “small sites” (Wambo gets about 50K visits a month roughly, and I have 2 other small B2C service sites that I’m managing on the side). In doing so, I’ve realized that the kinds of metrics you look at for these sites that need to grow fast are very different from traditional analytics.

While traditional sites look at “improving” existing business processes (increasing conversion rates, enhancing the customer experience, etc etc ), startup sites are laser-focused on finding the right formula for their site or service. Startups are always building. And speed is what matters.

For us early stage sites, we look at a completely different set of numbers. And, we compare data ALL the time. Month-over-month, week-over-week, even sometimes, hour-over-hour. So I’m thinking of another kind of analytics that’d be useful for me, let’s call that growth analytics. In an ideal interface, I’d like everything presented in the context of velocity. Velocity been the uber measure, similar to a session or a page view in traditional web analytics.

I’d want to see user acquisition velocity by hour, day, week and month. I’d like to be able to compare velocities for different time ranges (this week vs last week). I want to be able to track acquisition velocity  for different segments. I want to A/B test my site and see what the impact is on the velocity metrics. And I want to project in the future what my KPIs will look like if I can sustain the current velocity levels (i.e. if I keep growing my users by 3% a week, that will get me to the 1Million user mark by ___). A new calendar type but with dates in the future too, not just in the past.

Yes, you see where I’m going now. I think what’s a little broken with the state of analytics today is the fact that we spend 90% of our time trying to answer the “what happened” question. And that’s soooo yesterday

Website conversion rate specialist Robbin Steiff nicely summarizes a nano-confrontation between Eric Peterson (WebSideStory) and Matt Belkin (Omniture) at eMetrics. For Peterson “Lack of methodology is responsible for the failure of web analytics”. Peterson has written a number of reference books in the area and has been on both sides of the fence - vendor and customer.
Belkin too has been on both sides of the fence. He responds to Peterson “that analysts should find quick wins (”I saved us $30K on Google Adwords with the use of our web analytics last quarter,”)” and that with those quick wins, the rest of the organization would quickly get on board the web analytics train.”

Belkin’s an outstanding marketer, his answer is tactical, exactly what a prospective customer would want to hear. But his “instant gratification” strategy assumes quick wins come by easy - they don’t. Peterson fails the marketing test - but he’s more thoughtful, and does provide the correct answer for sustained analytics success. There ain’t no magic bullet!

I’m giving a talk about Web analytics today in San Fran, at the Web Publishing Conference (4PM - Web Analytics: What to measure and why).

I’ve been biting my tongue for the last few months not to talk too much about Perenety on this blog. Many of my blog readers and friends have asked me why I have kept this blog focused on Online marketing and Web analytics (my former start-up) - and do not quite understand the value of being stealth.

Staying stealth for another few months is hugely important for us. Most people think that stealth companies are trying to hide a “secret” for as long as they can - then launch with enough IP to make their competition a distant follower right away.

This is not the case at Perenety, and possibly not the case for any Web 2.0 company that I know (”possibly”). Being stealth and having a limited and manageable customer base lets you quietly build a product away from the media, bloggers and VCs - which in general, do not constitute your target market as such. It lets you focus on your real customers, and change direction multiple times if need be without having to think about marketing communication issues.

It is only when you think you’ve nailed your product that it makes sense to get out of stealth mode. A highly subjective decision only your target customers can help you with.

The French are playing Portugal this evening, in the last semi-finals of the FIFA world cup. It will be a very difficult game for France, as Portugal has a fantastic team and a legendary coach (Scolari led Brazil to victory in 2002).

Zidane (back) congratulates Henry after his goal against Brazil

For me, this game goes beyond supporting France - or earning $20 (I have bet on France winning the world cup before the tournament started). The entrepreneur in me is immensely inspired by what Zidane, Thuram, Makele and Viera are doing.

“They’re too old”. “They’re too slow”. “They’re not motivated anymore”. “Zidane should just go”. “Let’s retire Zidane”.

Just when everyone believes they’re finished, done, dead - they find the moral strength to go on and win, and win, and win and win, and win again, always and forever.

That’s the mark of a champion - be an athlete or an entrepreneur. Nothing is impossible.

ALLEZ LES BLEUS.

Viral marketing and word-of-mouth fascinate me. I’ve posted on this topic before and it’s nice to take a look at some numbers from time to time, between 2 shooter releases. Feedburner has been serving all my feeds for over a year now, and I’ve also been running Fireclick and Google Analytics to analyze traffic patterns on this blog. It’s fun to compare and contrast Feedburner with traditional analytics reports.

The first chart I want to discuss features visits to the site (sessions to http://www.coffeesuntechnology.com) to readership numbers (via RSS). As you can see below, the RSS readership is on a nice upward trend, whereas the number of visits to the site is stagnating. In this same chart you can see the actual first time visits as well, i.e. how many new people came to the site.

Most visits to the actual site are from first time users. Very few loyal readers actually routinely visit the site: they subscribe to the RSS feed. Now, let’s do a quick Excel extrapolation: everyday that goes by, I get 0.71 new feed subscriber on average, about 10 times higher than my site visitor growth (~0.072/day).

Now pushing the numbers a bit, let’s compute an RSS conversion rate for the blog, defined as:

Conversion rate = [Site visits] / [RSS subscriptions]

Since May 1st ‘05 I got an average of 17.5 visits per day (95%ile) and a since my daily growth is about 0.71 new RSS subscriber per day. It gives me an average conversion rate of 0.71/17.5 = 4.06%.

A few quick comments - for this blog (may or may not apply to others)

(1) RSS
- builds loyalty
- needs to be monitored
- captures an audience of qualified readers, therefore could be monetized

(2) Direct traffic to a blog
- Mostly junk (up to 96%), looking for coffee beans, coffee analytics, and some random people
- doesn’t need to be monitored
- basically unqualified readers, spam and headaches

[Read related articles: “Using Web analytics to drive more traffic to my site” series - part 1 part 2 part 3 part 4 part 5 part 6 part 7 part 8 part 9 part 10 part 11 What lessons have you learned and A blogger’s theory]

I’ve had the $500 front row ticket for the Google show for years now… From the days when I was a EE grad student at Stanford (1998-2000), to the days when my baby Fireclick (my prior company) was measuring phenomenal ROIs from Google Adword Campaigns (2001-2003), to the days when the same Fireclick, located on Charleston Road - Mountain View, got slowly surrounded by Googlers (2003-2005). One floor after another in our building - one building after another around us.

I still cannot accept the idea that “search”, or rather “finding” is the fundamental reason why people are online. It’s not just about efficiency, at least for many of us - and the emergence of the so-called “social Web” is proving the Web can be just another place where you can hang out.

Now understand my astonishment when I read this CNN Money article - Don’t believe the MySpace hype - specifically this paragraph:

There have been rumblings that News Corp. is looking to forge a deal with Google or Microsoft’s (Research) MSN which would allow those companies to post their search results on MySpace and split the ad revenues. There has also been some speculation that News Corp. could just build or buy its own search engine.

“Searchify” MySpace? Please don’t. Searchify blogging? Even worse. If we want the Web to become a social destination we need to give it a soul - dim the lights a tiny bit and keep Mountain View geeks under control.

The New York Times reports: “U.S. Wants Companies to Keep Web Usage Records” - in order to help fight terrorism and child pornography. There is a small problem however: retaining 2 years of server logs isn’t going to help fight terrorism or child pornography, because there is a simple way for the bad guys to remain anonymous: block cookies.

But unfortunately this isn’t about the bad guys. It’s about the honest people who are getting the message that they don’t get any privacy online - to the most extreme level. Where you live, what your house looks like, how much you paid for it, what job you have, what sites you’ve visited, what you’ve searched, what your political affiliation is, etc.

When are we finally going to go beyond the child pornography or terrorism cliches and recognize that (a) online privacy is a concern to all of us, (b) something’s got to be done to protect it.

Georges Anidjar, president of Omniture France (Web analytics vendor) says in this article: “10 to 15% of worldwide Internet traffic goes through our server rooms” (in French: “10 à 15 % du trafic Internet mondial transite aujourd’hui par nos salles serveurs”, from the article published here - in French). Is this bad journalism, ignorance, or just Omniture FUD?

I was thinking the other day about my quick stop at the eMetrics Summit in Santa Barbara, talking to former competitors, customers, etc. The Web analytics space is hot, customers are engaged, consultants busy, vendors optimistic - this is a healthy “industry”, no question. I do however think that the intense competition between the top vendors has somewhat killed product innovation. And it’s only now, 6-months into Perenety, that I am realizing that the next generation Internet - what some call Web 2.0 - needs a totally different kind of Web analytics. Let me explain.

Most analytical products available today have been designed in 2001-2002, when there was a strong need to measure marketing campaign ROI, after the dot-com bubble burst. I would even go further and say the only thing that mattered at the time was measuring Google Adwords and Overture (for 90% of customers at least), because Search Engine Marketing was the only marketing program that really worked and could be justified in those recession years. It’s interesting to remember that Webtrends at the time was an easy target for the newest vendors, primarily because they missed the SEM turn (they’ve nicely recovered since then). It’s also interesting that Omniture, which can be considered to be the current market leader, reinvented itself right at that time - repositioning itself, redesigning its product and aggressively targeting large content sites (automotive, publishing, corporate).

Since 2002, leading vendors have been adding powerful capabilities to analyze behavior on the site, nicely complementing the marketing analysis capabilities - and adding consulting brains to help customers understand the reports. And since 99% of customers typically use no more than 10% of the reports available to them, it is not too surprising to see vendors focusing on helping customers better use their product, as opposed to creating more features that will likely not get used. In other words, the Web analytics market is becoming a consulting business.

Web 1.0 analytics: [Marketing campaign] –> [Landing page] –> [Path on site] –> [Checkout sequence] –> $

Now some major changes are happening online - which are going to make the current analytics products look like Webtrends in 2002. These changes (RSS, Social Networks, blogging, etc…) are affecting even transforming e-commerce because more purchasing decisions are made outside of their site, on a forum, a comparison shopping site, or a blog - places where the marketer has no visibity and no control. Moreover, it is becoming increasingly difficult to effectively manage customer loyalty programs online because (a) customers are harder to reach via traditional tools like email, and (b) repeat customers and visitors are harder to track since they may connect from multiple devices and sometimes (up to 30% according to Jupiter Research) block cookies.

For all these reasons, it seems natural that marketers will need more effective ways to monitor what’s happening outside of their site - as well as tools to fight for customers before they even decide which product or service they really need. In my humble opinion, the two important variables here to be monitored are buzz and pricing. Product buzz determines which product you want to buy (for instance the Casio Exilim 7.2 Megapixels camera), pricing where to buy it from (for instance NewEgg). The site’s conversion efficiency then determines if customer Jane landing on NewEgg to buy the Casio Exilim camera will buy there or not.

Web 2.0 Analytics: [Buzz] –> [Traffic broker: Google, Pricegrabber, etc] — > [Site] –> $

I have no stat to share (sorry), but it seems to me that the amount of free, uncontrolled buzz has skyrocketed over the last 2-3 years. I’m also under the impression that pricing continues to be the most important factor when selecting retailer X over retailer Y. So instead of trying to lift conversion rates from 2% to 2.1% on the site by changing the color of the “Buy now” button, why not:

(1) Monitor buzz (measure online presence on blogs, forums, product reviews), against the competition
(2) Monitor pricing across major “traffic brokers”, against the competition
(3) Nicely integrate this into traditional analytics reports - and, as always,
(4) Act on the reports.

Easier said than done, but think about it…