Hack97.Key Performance Indicators for Advertising and Content Sites


Hack 97. Key Performance Indicators for Advertising and Content Sites

Companies that make money from online advertising should be primarily focused on depth of visit, visitor retention, and loyalty.

Content sites generally make money by selling other companies access to their visitor base, usually in the form of some type of advertising unit impression. Regardless of the specific strategy for presenting the adbanners, rich-media, text, emailadvertising buyers always look to get their message in front of the right audience the right number of times to generate that all-important "click."

Because the audience is so important, the key performance indicators for content and advertising sites are primarily focused on visits and visitor loyalty. Build a report similar to Figure 7-10 that you automate and send out to anyone responsible for the relationship you have with your audience or your advertisers.

Figure 7-10. Advertising KPIs and raw data


7.8.1. Basic Key Performance Indicators for Content Sites

The following key performance indicators should be considered core to the regular reporting for any content or advertising site. Each assumes a constant period of timefor example, the previous day or the previous week, unless otherwise noted.

7.8.1.1 Average pages viewed per visit.

Defined simply as the total number of pages viewed divided by the total number of visits to the site, average pages viewed per visit is a key indicator of your visitor's attraction to your content and, by extension, a proxy for the profitability of your site on a per-visit basis. To monetize this KPI, simply multiply the result by your average advertising CPM:

(Total Pages Viewed / Total Visits) * (Average CPM / 1,000) = Average
Value per Visit

You divide your average CPM by 1,000 to convert your cost per thousand to the average cost of a single page view to an advertiser. Needless to say, this number is going to be very, very small. It becomes more interesting when you multiply by the total number of visits to your site, especially in the context of "what if we increased the average number of pages viewed per visit?" As an example, consider the following valuation for a visit for a fictitious site:

(100,000 Pages Viewed / 10,000 Visits) * ($35 Average CPM / 1,000) =
10 Pages Viewed per Visit * $0.035 per Page View = $0.35 per Visit

What if you could increase the average number of pages viewed per visit by three?

13 Pages Viewed per Visit * $0.035 per Page View = $0.46 per Visit

A 28 percent increase in revenue per visit, which doesn't sound like much until you consider 10,000 daily visits, which yields an average increase of $4,600 per day. Your job is to figure out how to increase the average number of pages viewed per visit using this KPI as a guide to how you're doing.

7.8.1.2 Average visits per visitor.

Because loyalty, frequency, and recency [Hack #85] are important to any web site trying to make money online, the ratio of average visits per visitor is another important performance indicator. The calculation will always yield a number greater than one, and in general, the larger the number, the more loyal your audience.

Average visits per visitor are difficult to directly monetize, but good salespeople will use this ratio when encouraging advertisers to purchase available impressions. The general pitch is something like "We get 1,000,000 visitors per month and our average visitor returns five times a month and views 12 pages per visit."

7.8.1.3 Percent new and returning visitors.

The percent of new and returning visitors are numbers calculated by your web measurement solution and describe how much of your audience you've managed to get to return at least one time after their first visit. If, for some reason, your application doesn't provide the percentages I recommend using, simply divide the number of new or returning visitors by the total number of visitors to get each percentage, respectively.

While it's hard to be too specific about what the best ratio of new to returning visitors is for content sites, there are a few general rules to keep in mind:

  • If you're spending significantly on acquisition marketing, you want the lion's share of your visitors to be new. Even if you've got a ton of returning visitors, significant marketing expenditure should bring large numbers of new visitors. If it doesn't, take a look at your marketing strategy.

  • All other things being equal, the ideal ratio of new to returning visitors for content sites is roughly 60/40. You always want to add new visitors to your visitor mix, and if you're able to get 40 percent of your visitors to return, then you're doing a great job.

  • If you have the best, most exclusive content and everyone knows about you, don't worry if your ratio of new to returning visitors is more like 40/60. Some sites, such as eBay and ESPN, are so well-known and so relatively unique, even though they do a great job of adding new visitors, they'll always have more loyal returning visitors.

7.8.1.4 Ratio of new to returning visitors.

This ratio, simply defined as the total number of new visitors divided by the total number of returning visitors, provides another view of your audience mix. The calculation yields a number between zero and n (with n being some positive integer that can, in theory, be very, very high if nobody ever returns to your site). This indicator quickly tells you whether you're acquiring, retaining, or basically neutral regarding your visitors.

Smaller numbers indicate that you're retaining more visitors than you attract, something referred to as visitor retention mode. The smaller the number, the better the job you're doing at retaining visitors. Very small numbers should create concern since you're not bringing in fresh blood.

Larger numbers indicate that you're attracting more visitors than you retain, something referred to as visitor acquisition mode. Say, for example, the calculation yields a ratio of new to returning visitors of 2.0: this tells you that for every visitor you retain, you acquire two new visitors. In theory, the number can be very large, but high numbers paint a picture of poor customer retention.

Much like the 60/40 ideal split of new to returning visitors, the optimal ratio is between about 0.80 and 1.5, the former slightly describing healthy visitor retention and the latter healthy visitor acquisition. The ratio is attractive because it's easily trended and, once you get used to using it, the number tells you a great deal about your audience very quickly.

7.8.1.5 Average time spent on site.

Similar to the percentages of new and returning visitors, the average time visitors spend on your site is calculated by your measurement application. A relatively simple number, average time spent is fundamental to content sites, since often more time equals more impressions and a greater connection with the content.

Watch for dramatic changes in the average time your visitors are spending on your site, because they can indicate a significant change your audience. Often, a large decrease can indicate poor acquisition marketing that brought a large number of visitors who were uninterested in your content and left quickly. Also keep in mind that, especially if you're a news site, significant stories can impact or skew the measurement.

7.8.2. Advanced Key Performance Indicators for Content Sites

The following metrics are more advanced but should be seriously considered in addition to the basic indicators.

7.8.2.1 Percent of visits less than 90 seconds.

The percent of visits under 90 seconds is a valuable indicator of the interest your visitors have in your content; in general, the higher the percentage, the greater the number of uninterested visitors to the site. Although there are no hard and fast rules, 90 seconds is a rough proxy for the minimum amount of time a visitor needs to do or learn anything meaningful on the average site; you may want to lower the threshold to 60 or even 30 seconds, depending on your site. While the visitors may not truly be uninterested, when they spend very little time, it's unlikely they're going to spend enough time to truly connect with your content (or advertising content). For details on how to calculate this valuable metric see [Hack #96].

7.8.2.2 Percent committed visits.

Committed visits, especially in the content and advertising model, are those visits made up of a relatively large number of page views. Depending on your site, the number of pages that defines "committed" will vary, but in general, it's between 5 and 10 pages (providing nominal revenue, per the average page views per visit KPI). Obviously, if your site monetizes page views, you want as many committed visits as possible.

Most measurement applications provide the data you need to calculate this KPI in a "path length" or "depth of visits" report (Figure 7-11). To make the calculation, simply add the number of visits over your particular threshold and divide by the total number of visits.

Using Figure 7-11 as an example and assuming we had 1,000 total visits to the site and a threshold of six or more pages, the calculation would be:

(110 Visits to 6 Pages + 74 Visits to 7 Pages + 35 Visits to 8 Pages + 21
Visits to 9 Pages + 9 Visits to 10 Pages + 4 Visits to 11 Pages) / 1,000
Total Visits = 0.253 = 25.3% Committed Visits

While you can adjust the threshold that defines "committed," you want to be careful to set it high enough to be meaningful and not change it once it's set.

7.8.2.3 "Stickiness" for key pages.

The stickiness of the first page in a visit should keep visitors interested and encourage them to click more deeply into the site. Built from two page reportsthe entry page report, describing the number of visits that begin at a given page, and the single-access pages reports, describing the number of visits in which the page is the only one a visitor seesstickiness is one minus the ratio of single access to entry pages:

1.00(Single Access Page Visits / Entry Page Visits)

Figure 7-11. Depth of visits report


The result of the calculation will be a percentage, and higher percentages are better than lower, indicating greater stick on the page in question. It is recommended that you make this measurement only for important landing pages like your home page, your campaign landing pages, and the top five percent of entry pages from search engines [Hack #43].

Like many of the other KPIs described in this hack, page stickiness provides an indicator of changes in audience make-up. If the "stick" of a key entry page drops suddenly, many of your other KPIs will likely be affected. Also, make sure to not just set-and-forget this listkeep an eye on your entry page report and make sure to adjust which pages you track if you change your marketing campaigns.

7.8.3. Other Important Measurements

In addition to the KPIs discussed here, don't forget to keep careful track of any important conversion rates such as subscription sign-up or registration events. You should also track the number of visits you get from your top 10 referring sites, your top 10 entry pages, and the top 10 search keywords visitors are using to find your site. If you have internal search, track the top 10 internal searches as well. Finally, if you are spending money in specific local markets to drive traffic to your web site, you should track the top 10 cities by visitors.

All of the aforementioned measurements, while not technically KPIs, are important enough to content sites that they should be delivered with the performance report. For a sample key performance indicator worksheet, built in Microsoft Excel from the measurements recommended in this hack, visit the author's web site at http://www.webanalyticsdemystified.com/kpi_worksheet.



    Web Site Measurement Hacks
    Web Site Measurement Hacks: Tips & Tools to Help Optimize Your Online Business
    ISBN: 0596009887
    EAN: 2147483647
    Year: 2005
    Pages: 157

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