Drilling Down to the Problems with Web Analytics

Posted by Paul Christ February 21, 2010

Labels: Advertising, Internet Marketing, Marketing Research

Dot-Complicated: Measuring Traffic on the Web (Wall Street Journal)

Web Analytics On the surface, determining what an advertiser should pay to place an ad through an advertising media outlet seems like a simple enough concept: ad rates are a function of the number and type of customers accessible through a particular media outlet. For advertisers the key to this pricing model is for media outlets to be honest in what they report regarding the traffic (e.g., viewers, listeners, website visitors, etc.) to their outlet. But this concept assumes advertisers trust what the media outlets report, and from the beginning of advertising that has not worked very well.

The mistrust that evolved between advertisers and media outlets is the main reason third-party media research firms, such as Nielsen and Arbitron, entered the picture by claiming to offer unbiased reporting of media traffic. Unfortunately, while the entry of research companies significantly improved traffic verification, it did not stop the conflict and now instead of directing their displeasure at each other the media outlets and the advertisers direct it toward the measurement firms. In particular, media outlets complain traffic to their outlets is often under-counted by the research firms (compared to the outlet's own numbers), thus reducing their potential ad revenue, while advertisers believe things are generally overestimated, thus forcing them to pay higher ad rates.

Nowhere is this conflict more apparent then with the measurement of website traffic, where the players who have a stake in the traffic measurement game have been at odds ever since web analytics was introduced in the late 1990s. If there is one thing these guys do agree on it's that measuring website traffic is a complicated process.

This story offers good background on the arguments from all sides on this issue.

Web-traffic measurement, despite recent advances, remains fraught with conflicting numbers. The Internet's inherent accountability, stemming from the digital trace left by every Web site visit, has spawned a multitude of measures, but little clarity.

What are the key measures of website traffic that are of most interest to advertisers?