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RE: Underlying web site usage growth has stalled?

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Subject:  RE: Underlying web site usage growth has stalled? Ashley Friedlein - Favourite
Author:   Ashley :   view profile | all posts by this author | add to favourites
Date:   11:00:26 9 September 2004
 
Hi Colin

Yes, you are right that ultimately it is absolute values (sales values, number of registrations, uplift in brand metrics etc.) that are most important. Conversion rates are probably next most important though even they are subject to misinterpretation - we have often found site owners experience a large increase in traffic (e.g. from marketing, from press coverage, from improved search engine rankings, from an affiliate program) with a proportionately smaller increase in sales volumes with the result that conversion rates are lower.

Indeed, we ourselves experienced this when one day our traffic (measured as unique users) almost doubled but our total value of daily subsriptions on the site hardly changed. The traffic levels remained much higher but the subscriptions didn't grow in the same way. So our conversion rates had plummeted. We tracked it down to an Amazon XML book feed that we were taking - the problem was that it included ALL of Amazon's books and so Google came to our site and spidered all of Amazon's content on our site. Looking at our search referrers (and from the strange phone calls we were getting) we were clearly ranking well on fishing and cookery books... Plenty of traffic but of very little value to us. Indeed, of negative value in dealing with irrelevant enquiries and paying for additional bandwidth that had no value.

However, a few counter points I would make:

1. Many sites are still at the stage where the KPIs for management are traffic-related so volume of traffic is still deemed as important to win continuing investment in the online channel. I agree with you that these are unlikely to be the correct KPIs but if it were generally known that you needn't worry about slowing underlying growth it might be of some comfort and help to web teams under management pressure. In some cases, of course, usage levels are directly related to site objectives e.g. many government sites must justify their investment through proven usage, providing accessibility to information for all, increasing the reach of what they do.

2. Many / most publishers still rely on traffic-type metrics (page impressions, unique users, visits) which they then monetise in the form of advertising revenue. Again, I totally agree with your quality vs. quantity argument, but I suspect many publishers are still desparately in search of traffic in whatever shape or form they can get it.

3. I think the broader point (if true) about a swing towards customer retention rather than customer acquisition and conversion would be supported if underlying traffic growth is on the wane. It essentially points to the fact that there are only a limited "number of fish in the sea" (potential customers) and that they are running out. If it is true that the size of the pool of available *new* unique users that I can attract to my site is fast contracting then that has significant implications for my marketing strategy going forwards.

After the dotcom crash people were forced to recognise that the internet did not provide instant access to an unlimited customer base ('build it and they will come'), but the recent surge of pay per click search activity, and the growth in affiliate marketing, I think has given some the impression that they can simply buy however much traffic (and potentially new customers) they need - assuming they can then convert them. There is some truth in this but we are also finding many site owners (and SEM agencies) complaining that they can't spend the PPC budgets they have access to because the volume of searches just isn't there. Again, there is the sense that the market is only so big...


Ashley


On 10:12:08 9 September 2004 Colin Cooper wrote:
>Does it matter if traffic is up or down? Provocative
>perhaps but where is the value in traffic for
>traffic’s sake?
>
>There are several good reasons why traffic being down can
>be seen as a positive sign – fewer single page
>visits means you are increasing your relevance in search
>engines – improvements in site usability mean that
>visitors achieve their objective faster and more
>efficiently getting lost less etc.
>
>Plus, as you indicate, as web users become more
>experienced they tend to know what they are looking for
>and focus on their prime information needs. They’ve
>got past the stage of clicking around just to see
>what’s there.
>
>What is more important is whether sites are achieving the
>objectives set for them. Sure if what you are offering is
>an environment for branding then overall traffic levels
>are an important part of the KPI, but so is time on page,
>frequency of return etc. Quality not just quantity.
>
>Of more concern is if conversion rates are reducing or
>sales volumes are declining, as these will directly impact
>your objectives.
>
>The overall level of economic activity will eventually
>have an impact on web traffic in the same way that
>traditional retail sales fluctuate. I would argue that
>it’s still too early for this impact to affect web
>sales volumes as consumers are still expanding their use
>of the web in preference to offline purchases. But
>eventually it will get there.
>
>So it’s back to the discussions at the Emetrics
>Summit about the importance of understanding and
>communicating your objectives so you then know what you
>need to measure and monitor to determine how well you are
>performing.
>
>Colin Cooper
>ISSEL colin@issel.co.uk
>Aligning Execution with Strategy
 
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  • Underlying web site usage growth has stalled?, Ashley , 7 Sep 14:22
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    • re: Underlying web site usage growth has stalled?, Alex Chudnovsky, 8 Sep 10:50
      Usage and penetration will raise as soon as people start streaming video and music on demand, start using email and instant messaging on the go using 3G phones. It might not rea ...
    • Underlying web site usage growth has stalled?, Colin Cooper, 9 Sep 10:12
      Does it matter if traffic is up or down? Provocative perhaps but where is the value in traffic for traffic’s sake? There are several good reasons why traffic being down can be ...
      • RE: Underlying web site usage growth has stalled?, Ashley , 9 Sep 11:00
        Hi Colin Yes, you are right that ultimately it is absolute values (sales values, number of registrations, uplift in brand metrics etc.) that are most important. Conversion rates ...
        • RE: Underlying web site usage growth has stalled?, Colin Cooper, 9 Sep 12:07
          Hi Ashley, It has been said that managing your boss is as important as managing the people who report to you! Communicating your objectives is an important part of this to get t ...
          • RE: Underlying web site usage growth has stalled?, Ashley , 9 Sep 13:46
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          • RE: Underlying web site usage growth has stalled?, Alex Chudnovsky, 9 Sep 15:02
            >Maybe Google’s shares aren’t overpriced! At 140 P/E not overpriced? Maybe if you compare that to Yahoo or similar companies, but certainly not to companies that produce "real" ...
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