Ad Age: Analytics sounds complicated. What should I be looking for?
Avinash Kaushik: There is no pat answer; it really depends on what your business needs. Here are some examples: E-commerce sites should look at bounce rates, revenue, days and visits to purchase, and conversion rate. Blogs should measure RSS-feed subscribers. Newspapers (or other content sites) should monitor length and depth of visit. Facebook should consider visitor loyalty and recency.
You'll notice one common thread is my focus on behavioral metrics. That's key. Far too often marketers tend to focus on aggregated "quantity" metrics (visits, page views, unique visitors, etc.). They're great, but at the end of the day, they fail to provide much guidance or insights. Behavioral metrics focus on measuring behavior of customers on your site, and that behavior has tremendous insights.
Ad Age: What's the biggest mistake most marketers make when it comes to analytics?
Mr. Kaushik: Two big ones: First, they focus too much on tools and collecting data. A few years back, I created the 10/90 Rule. If you have $100 to spend on decision-making on the web, then spend $10 on tools and $90 on people. Marketers underestimate the investment required in big brains to find insights. (The 10/90 rule was created before there was Google Analytics; now with free analytics tools from all three search engines, I suppose I have to change the 10 to 0.)
Second, they concentrate on aggregate metrics that aren't actionable and focus on acquisition (visits/visitors) and not enough on outcomes (increased revenue, reduced cost, increased customer loyalty).
Ad Age: Are video-heavy, rich-media sites affecting the importance of certain metrics?
Mr. Kaushik: Absolutely. We used to live in the world of hits. Then we moved to page views. Now we are moving to "interactions." ... The actions of your website visitors are measured. Play, pause, next, send, forward, click, etc. -- each is a "vote" by the customer to engaging in some kind of integration with your web experience.
Ad Age: What should I do about where my traffic comes from?
Mr. Kaushik: Traffic sources allow you to understand where your traffic comes from -- and if you pair it up with an outcomes metric, like conversions, leads, job applications, then it tells you who your BFFs are. They also help you understand a little bit more about customer intent, or what motivated the person to come to the site. From search, for example: What were they looking for, using keywords?
Ad Age: What about measuring buzz or brand advocates?
Mr. Kaushik: At the moment, "buzz" measurement is just "hits" from the early '90s. How often was your name mentioned on Twitter? That's a good start, but we need significantly more progress in understanding tone and texture and sentiment before we can make these metrics more meaningful.
Ad Age: And the other metric du jour, engagement?
Mr. Kaushik: I'm a fan of measuring customer behavior that represents engagement. For example, I visit BBC.co.uk about 200 times a month -- it's my primary source of news. To the BBC, that's engagement. Now use the same analogy for Microsoft Vista. I have visited the Microsoft website about 25 times in the past four days. I'm eternally frustrated because I can't find the one thing I need to get fixed. That is not an engaging behavior. There is no universal, golden formula to measure engagement.
So I say, don't sexify; simplify. The BBC website is measuring the fact I'm visiting its website 200 times a month. That metric is called visitor loyalty. Let's call it that, not engagement.
Ad Age: What metrics should we focus on in recession?
Mr. Kaushik: Only the one that focuses on the website's customers and adds immediate actionable value. Now is not the time to sit around and think of all the things you would like to analyze; it's the time to focus on all the things you should analyze.