Tuesday, April 24, 2007

Analytics 101

I recently attended a two-day course in web analytics, held by June Li. Analytics is a word that is often misused, generally when describing reporting, which is very different from actually analyzing the numbers in context to transactional or behavioral goals. While the future of web analytics is very bright, it's still early on in the life cycle of this service. As valuable as analytics can be, they are still seen as optional and not a requirement, despite how analytics can be used to ultimately optimize ROI.

Analytics recommendations will differ for each client, depending on the technology employed (server logs or page tags), overall online objectives, individual campaign goals, and the investment allocated to analysis. With this in mind, there are still some core basics that will be common to any analytics initiative. Below are some very high-level descriptions of a few simpler concepts for beginners.

Defining 'events': At the onset of planning for an analytics program, you must work with your client to define online events. An event could be directly related to acquisition, conversion, loyalty or any primary objective the client may have. As long as an event is defined in this context, you have a something to measure. An example of an event might be a visit for an acquisition program, or an email sign-up for a conversion program. This needs to be clearly defined with your client.

Identifying KPI's: A KPI, or Key Performance Indicator, is a measurement used to evaluate performance. Relevant KPI's are also dependent on the initial objectives. In other words, a KPI for an acquisition program may be different from a KPI for a retention program. An example of a KPI might be length of visit, number of downloads, or number of new visitors. KPI results should be assessed to determine if your online program requires tweaking.

The world of analytics can be very complex. Beginning with the basics is not only a good way of introducing concepts and demonstrating value to your clients, it is also a means to understanding analytics yourself. Eventually, analytics will be considered a mandatory element of any online initiative. Until that time, agencies must continue to educate themselves as well as their clients on the value and potential of this very powerful and insightful tool.

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