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Winning in a Web 2.0 World: Metrics-Driven Success

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WHITE PAPER

Winning in a Web 2.0 World:

Metrics-Driven Success





Table of Contents

Executive Summary 4

What is Web 2.0? 4

Measuring Web 2.0 4

How are my customers moving to Web 2.0? 5

What are the business applications o Web 2.0 technologies? 5

Where should I invest my marketing dollars? 7

LIVE Profles in action 8

Summary 10

Web 2.0 at a glance 11




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Executive Summary

Web 2.0. You can’t turn around without hearing this buzzword. What is Web 2.0? And what does it

mean to you?

The term “Web 2.0” encompasses multiple trends and many dierent technologies. For marketers,

the underlying issue is that consumers are becoming more sophisticated, engaging in longer termrelationships, and maintaining greater control over their online experiences. Not only is your

relationship with site visitors becoming more complex, but Web 2.0 adds a host o new options (RSS,

blogs, Ajax, etc.) to an already long list o options (email, banner ads, aliates, etc.) as to where to

spend your marketing dollars.

To make sure you spend your marketing dollars where they will have the greatest impact, you need a

scientic approach to marketing. Web 2.0 technologies must be measured based on the business value

they create or you, and evaluated against all your other alternatives. To make the right marketing

decision, you need the right data—data about how your investments are helping maximize the value o

every customer relationship and improve your bottom line.

In this white paper, we will discuss various Web 2.0 trends and technologies, and we will explore howorganizations are using these technologies to drive business results.

What is Web 2.0?

Web 2.0 is simply a phase in the evolution o the World Wide Web. The overarching characteristic o

this phase is that the Web is no longer simply about inormation, it is now about interaction. There

are new and existing technologies associated with Web 2.0—rom blogs to social networks to AJAX.

These technologies enable consumers to interact with your company and other consumers, participate

in and infuence discussions, and control their experience.

What does this all mean to your business? Consumers are now better equipped, and accustomed to

more interactive relationships, sustained over a longer period o time. As options or communicating

with consumers expand, companies have an increasingly dicult task o determining where to invest

their scarce resources. To make the best investment decisions, you need a measurement strategy and

solution that enables you to track and monitor the business impact o Web 2.0, particularly as it

relates to your traditional digital marketing investments.

Web analytics is o course not new, but there are new requirements or measuring in the Web 2.0

world. Companies that are able to eectively measure all their web interactions with visitors—whether

Web 2.0 or traditional web—will enjoy a competitive advantage.

While the value o measuring unique visitors (as opposed simply to clicks and visits) has always been

important, the Web 2.0 paradigm accentuates this importance. Winning in a Web 2.0 world meansthat you need to measure and value engagement with your consumers. It is no longer about conversion

at a point in time. It is now about the nature o the relationship over time, and the many ways that an

individual can add value to your business.

Measuring Web 2.0

This white paper ocuses specically on the nuances o measuring Web 2.0 technologies. It is

not intended to be a comprehensive resource book on Web 2.0, but rather a guide to the new




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measurements required to evaluate those areas o Web 2.0 that create opportunities or businesses to

leaprog their competition.

Analysis is undamentally about answering questions, and there are several unique questions

businesses need to understand as they embark on utilizing Web 2.0 technologies:

• How are my customers moving to the Web 2.0 paradigm? What indicators tell me it makes sense toadopt these technologies? Does my target market participate in blogs? Do I service a demographic

that actively consumes streaming media and podcasts?

• What are the business applications o Web 2.0 technologies?

• How do I know when my use o these new technologies is successul, and how do they compare to

other opportunities? In other words, where should I invest my marketing dollars?

How are my customers moving to Web 2.0?

The rst question you need to consider is how Web 2.0 technologies are being adopted by your

customer base.

• Are your customers likely to participate in user-generated content? Will your site visitors read andcomment on blogs? Will they share their views in user reviews? I your target audience is loyal

and passionate about your company, providing them an opportunity to share their views can be

extremely valuable, enabling them to infuence others.

• Do your users have a special skill or knowledge that relates to your product or service? I so, wikis

and orums are a great way or them to contribute to the body o knowledge around your products

and services, enriching their experience and that o others.

• Are your customers likely to be comortable with rich internet applications that unction somewhat

dierently rom those to which they are accustomed? Is your user base change averse? The more

accepting o change your audience is, the more rapidly you can adopt Web 2.0 technologies.

• Have your competitors deployed leading technologies? I so, you may want to escalate your

adoption o Web 2.0.

• Do your customers requent sites that have leading edge technologies? A positive response indicatesthat your customers are ready to accept Web 2.0 technologies.

• Do you serve a technically savvy group o customers? I your target market readily adapts the latest

technologies, Web 2.0 technologies are likely an excellent way to invest your resources. I your

customers are slow adopters, consider waiting until they are arther along in the adoption curve.

What are the business applications o Web 2.0 technologies?

There are a number o technologies associated with Web 2.0 that enable interaction, participation and

consumer control over their experience.

Web 2.0 technologies serve three key unctions:

• Enabling users to develop content

• Providing new means to reach a target audience

• Providing richer, more interactive applications that give visitors more control.

Each o these capabilities and its associated technologies provide dierent value to companies, and

each needs to be measured and tracked in its own way. However, they share common characteristics

that drive the need or new measurement strategies.




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Opportunity for visitors to contribute content

A number o Web 2.0 technologies enable visitors to contribute content on your site. These include

user reviews, blogs, wikis and orums. The “word o mouth” concept is well understood and has

always been considered to be a reliable and trusted source o inormation about a product or service.

The Internet, and especially new Web 2.0 technologies, has extended “word o mouth” into “word o

mouse,” whereby a single individual can reach a much larger number o people, including people they

do not personally know.

As you adopt technologies that invite user-generated content, it is important to understand who is

viewing that content, and how it infuences visitor behavior. Moreover, it is important to identiy the

content contributors, and which ones are infuencing other site visitors.

User reviews are an excellent way or companies to engage their clients in dialogue. PETCO deployed

user reviews and has realized tremendous business advantages. Ater deploying user reviews, PETCO

created navigation that allowed visitors to drill into top rated products. They ound that visitors who

chose the top rated product navigation path converted at a higher rate than other browsers. In act,

PETCO ound that they converted 10% higher within a session, and 49% higher when shoppingover multiple sessions. (Source: Bazaarvoice, Ratings, Reviews and ROI: How Leading Retailers Use

Customer Word of Mouth in Marketing and Merchandising )

User-generated content, and in particular user reviews, has signicant impact on other marketing

activities. Businesses have ound that utilizing the content in other marketing channels—such as

email—has increased conversion rates. Furthermore, user-generated content can have a tremendous

impact on natural search. For example, ater deploying user reviews, CompUSA they saw a dramatic

increase in trac coming rom natural search. All the product reviews provided additional content

to be indexed thereby increasing natural search listings. Interestingly, CompUSA discovered that this

trac was particularly valuable in that they purchased higher price items (43% higher average item

price) and spent more per order (50% higher average order value) than visitors rom other sources.

(Source: Bazaarvoice, Ratings, Reviews and ROI: How Leading Retailers Use Customer Word of Mouth in Marketing and Merchandising )

Finally, consumers who provide content represent a high value segment. Providing these individuals

with a measurable environment in which to contribute content aords companies the ability to

identiy the top contributors, and to ensure that they are treated according to the value they provide.

In a recent study, Yahoo! dened a group o people known as “brand advocates,” who are typically:

• Well-connected consumers with a larger sphere o infuence

• Avid researchers who consider multiple brands, making them more open to dialogue with marketers

• Committed to a brand once they purchase

• Likely to recommend brands, and who tend to talk about positive experiences

• Opinion leaders—infuencing other people’s purchase decisions.

By ocusing on this group, and valuing not only their direct purchases (or conversions), but their

infuence on the market, you can harness a truly awesome power: word o mouth marketing. (Source:

Yahoo!, Engaging Advocates through Search and Social Media, Yahoo Summit Series, Jan. 2007 )

New means of reaching customers

Some o the technologies associated with Web 2.0, such as RSS eeds, podcasts, social networks, and

comparison shopping sites, provide new vehicles or reaching visitors and can drive customer retention.




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It is important to understand how many people use these channels, how they perorm as reerral sources

or your site, and what visitors rom these sources do once they are on your site. You may nd it

benecial to dene new visitor segments based on how customers respond to each o these sources.

For example, RSS eeds are gaining popularity with many companies. Travel companies, such as

Orbitz, are using RSS as an alternative to email or pushing promotions to consumers. Likewise,companies like Circuit City are using RSS eeds to push promotions to loyal visitors. Perhaps more

than any other site type, media sites like MSNBC make extensive use o RSS to push out content to

their loyal readers.

Podcasts are another new way to reach consumers. KeyBank suspected that podcasting would be

eective means o reaching customers, and launched a podcast program eaturing a well-known

nancial analyst who speaks about industry orecasts and market trends. KeyBank’s program resulted

in 70,000 podcast downloads in 2006. Other businesses are leveraging podcasts by identiying existing

podcasts relevant to their product or service, and then seeking out advertising opportunities in these

podcasts. (Source: Forrester, January 24, 2007, Making Podcasts Work for Your Brand )

In addition to RSS eeds and podcasts, social networks are an additional Web 2.0 technology that candrive the acquisition o new customers. Consider posting content on social networks such as YouTube

or advertising on special interest social networks, such as the “cat lovers” section o My Space. By

oering content that is delivered in the ormat that is most appealing to a given segment, you create

visitor loyalty.

Enhancing visitor experience with rich internet applications

Putting web visitors in control o their own online experience means oering content and applications

in such a manner that they can access it where, how and when they want. Rich internet applications

(RIAs) such as video, AJAX and Flash applications, or even portals, as well as applications and

content built or mobile devices, oer precisely that opportunity. Some visitors may preer to receive

content via video, while others may preer audio or text, depending on where they are at the time,what technology is available to them, and their personal preerences.

Visitors who come to a traditional website can also enjoy an enhanced experience through the use

o RIA applications. Companies rom all verticals are discovering the benets o implementing

multimedia on their sites, whether video (popular in media), Flash applications (popular in retail)

or AJAX. For example, a single screen checkout process allows a visitor to compare options, lter

on multiple criteria (such as brand and price) and complete the checkout process in less time than it

would take i they were orced through a traditional linear, multi-page process. Streamlining processes

such as checkout can drive a tremendous lit in conversions. TJMaxx.com and Homegoods.com were

able to boost their conversion rate by 50% by deploying a single screen checkout process using a rich

internet application developed in Macromedia fex. (Source: Internet Retailer, February 22, 2006)

Where should I invest my marketing dollars?

Web 2.0 marks a shit in how you interact with consumers, with increased ocus on longer term

relationships. O course, immediate conversions—such as sales—are still critical to measure. But

understanding your visitors and customers over time is an increasingly important aspect o this

new paradigm.

To understand your customers’ behaviors and preerences over time, you need a complete record o




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every interaction, and you need that interaction associated to a unique individual. In other words,

you need a Lietime Individual Visitor Experience (LIVE) Prole™. With a complete picture o an

individual’s online visitor behavior, you are able to personalize site experiences, enable one-to-one

marketing, understand behavior across channels, and accurately assess the value both customers and

your marketing activities.

LIVE Profles in action

To understand the value o LIVE Proles, let’s look at a scenario that illustrates how such a record

provides marketers with a holistic picture o a customer, thereby empowering them to make better

decisions.

A nancial services company wants to understand the value o various aspects o its marketing mix,

which includes RSS, email, and paid search.

1. A visitor, Tom, comes to the site via a paid search advertisement.

Tom browses through several pages, registers or RSS and an email newsletter, and then leaves.

2. Tom regularly reads your RSS eed, and returns based on some new “how-to” inormation

on renancing.He reads the article, browses your mortgage loan pages, and leaves.

3. You then send Tom an email promoting the current low mortgage rates.

Tom returns to your site, reads more about the current rates, starts an application, and leaves.

4. Tom reads a blog entry about renancing on a nancial site: “The time is now and rates have

never been lower.”

He sees your ad on the page, clicks through to view your current rates, starts the application a

second time and leaves.

5. Tom then direct loads your site and completes an application or a mortgage loan.

I you only look at session-based data, you will undervalue all your marketing activities, or assign

inappropriately high value to the last activity that results in conversion. Marketing happens over time,

and marketing activities that acquire new visitors, or move the visitor along in the sales cycle, are

equally valuable as the activity that results in conversion.

Let’s examine the above scenario rom a session-based perspective:

• Paid search didn’t convert

• RSS didn’t convert

• Email didn’t convert

• Blog didn’t convert

• Direct load converted.




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Using only session-based data, your conversion rate was 20%. A ull 80% o your sessions did not

result in conversion, and there is no apparent value. The conclusion you would draw is to eliminate

investment.

However, i you look at this scenario rom a visitor-based perspective:

• Paid search, RSS, email, a blog ad and direct load all contributed to a single conversion, so

you had a conversion rate o 100%.

• 100% o your visitors converted to customers.

Based on the session-based perspective, you would likely stop investing in paid search, RSS, blog

advertising and email. However, it is clear rom the scenario that these activities were vital components

in driving Tom to complete an application. Without your paid keyword, Tom may never have ound

your site. Without your RSS eed, he might never have understood the value o renancing. Without

the email, you would not have prompted him to look at rates. And i you had not advertised on the

blog, Tom may not have come back to your site.

Session-Based Approach

LIVE Profle Approach




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I you are only looking at session-based data, you are not seeing a complete picture, and you will

inevitably make poor decisions about your marketing investment. Our scenario clearly illustrates the

value to your company o establishing a relationship with the customer, and points out how looking

at that relationship as a whole drives you to a very dierent conclusion than what you would have

reached based on session data alone

By tracking the right metrics, you will understand the value o Web 2.0 content and interactions

to your business—not just in a single session, but over the lietime o your relationship with an

individual. By understanding how these tools and techniques aect your business, you can make the

right decisions about your marketing investment.

Summary

Web 2.0 is not an end in and o itsel. Rather, it is part o the continuing evolution marketers are

experiencing as the World Wide Web matures. Just as we are becoming comortable with Web 2.0 and

its technologies, one day soon we will be acing Web 3.0, 4.0 and beyond.

The one constant is that technology will evolve, consumers will become more sophisticated and moreempowered, and it will become increasingly important to know your visitors and customers at an

individual level, and to build long-term, deep relationships with them. Personalization and relationship

marketing are becoming more o a reality. To be successul, marketers need a robust behavioral

analytics solution and a complete record o all visitor behavior—not a sampling o data, and certainly

not simple statistics about click throughs and page hits. Only with a customer-centric data asset will

marketers be able to harness the power o the Internet and provide their visitors with a truly personal

experience that optimizes their business goals.




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Technology Defnition BusinessUse WhatQuestionsDoYouNeedtoAnswer?

User Generated Content

Blogs

User Reviews

Wikis

Forums

Web 2.0 at a Glance

Websites where

entries are made

in journal style,

displayed in a reverse

chronological order,

and oten include a

comment eature.

Build relationships with

consumers.

• How do people get to my blog?

• What do they do ater visiting my blog?

• Do blog visitors convert at a higher/lower rate

than other visitors?

• Who is adding content?

• How oten do they visit my blog?

• How many unique visitors do I have?

Tool that enables site

visitors to provide

reviews o products,

content and services.

Provide consumers peer

product reviews.

Establish site as resource

or researching products.

• How many user reviews will a potential

buyer read?

• Do these reviews increase repeat visitor

behavior?

• Do the reviews draw new visitors to the site?

• Do they see increase in unique visitors or

sessions to product pages?

• Do they increase conversion?

A type o Web site

that allows the visitors

themselves to easily

add, remove, and

otherwise edit and

change some available

content, sometimes

without the need or

registration.

Allow individuals with

special knowledge to

contribute to data set.

• Is the content popular?

• Does it aect conversions?

• What visitor segment uses the wiki?

• Who contributes to it?

• Does it encourage more visitors to come to

the site?

• Does the contributed content get picked up

by search engines and help pick up new

audience?

A acility on Web or

holding discussions.

Develop relationship with

consumers.

• Is the content popular?

• Does it aect conversions?

• What visitor segment uses the orum?• Who contributes to it?

• Does it encourage more visitors to come to

the site?

• Does the contributed content get picked up

by search engines and help pick up new

audience?




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Technology Defnition BusinessUse WhattoMeasure

New means o reaching consumers

RSS

Podcasts

Social

Networks

Comparison

Shopping

RSS delivers its

inormation as an XML

fle, commonly called

an RSS eed. Programs

known as eed readers or

aggregators can check

a list o eeds on behal

o a user and display any

updated articles that they

fnd, giving the user a

single place to aggregate

inormation o their

choosing.

Push time sensitive data

(news, blog entries, and

promotions) to consumers.

• How requently are RSS eeds accessed?

• Do the people who sign up or RSS eeds visit

your site more oten and or longer periods

o time?

• Do they browse content or products more

deeply or visit that specifc content or product

and leave?

• What is the impact on conversions?

• How oten is my eed viewed?

• How many people are subscribed?

• What is the growth rate o my subscribers?

• Which content is most engaging to visitors?

A podcast is a multimedia

fle distributed over the

Internet using syndication

eeds, or playback on

mobile devices and

personal computers.

Provide value add, topical

content in a manner easy

to digest.

Reach new audiences via

podcast aggregators (e.g.

iTunes).

• How many times was the podcast

downloaded?

• How many people came to my site as a

result o the Podcast?

• What was the impact o podcast on

conversions?

• How long did people listen to the podcast?

A social network service is

social sotware specifcally

ocused on the building

and veriying o online

social networks or various

purposes.

Identiy and advertise

to targeted groups o

individuals.

• Are the social networking pages discussing

my site/linking to my site?

• How many visitors are coming to my site

rom social networks?

• How do these visitors convert?

• How many impressions, clicks and

conversions are coming rom my

advertisements?

A price comparison

service (also known as

shopping comparison

or price engine) allowsindividuals to see lists

o prices or specifc

products. Most price

comparison services

do not sell products

themselves, but source

prices rom retailers rom

whom users can buy.

Reach a broader audience

by placing your oerings

on a comparison shopping

engine.

• How many people come to your site rom a

comparison shopping engine?

• What products/services most requently

generate these reerrals?• What is the quality o reerrals in terms o

conversions?




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Convey content that is in video

ormat.

• How oten was content accessed?

• How long was it viewed?

• Was it viewed in its entirety?

• What was the impact on conversions?

• How much ad inventory do I have?

• How many ads were viewed?

Ajax makes web pages

eel more responsive by

exchanging small amounts

o data with the server

behind the scenes, so that

the entire web page does

not have to be reloaded

each time the user makes

a change.

Flash is commonly used

to create animation,

advertisements, various

web-page components, to

integrate video into web

pages, and more recently,

to develop rich Internet

applications.

Deliver more user riendly

business applications that

are easier to use, and

provide visitors with a richer

experience.

• How has Ajax/Flash improved the process?

• What is the impact on my conversion rate?

• Is the process completion rate higher?

The Web as accessed

rom mobile devices such

as cell phones, PDAs, and

other handheld gadgets

connected to a public

network.

Enable users to access

content anywhere.

• What content is accessed via mobile devices?

Multimedia uses multiple

orms o inormation

processing such as

text, audio, graphics,

animation, video) to inorm

or entertain the user

audience.

A site on the Webthat typically provides

personalized capabilities to

its visitors

Provide a single place orvisitors to aggregate content

and create a personalized

experience

• What content or applications are accessed?• Where in the portal is the content/application

being accessed?

Technology Defnition BusinessUse WhattoMeasure

Richer, user defned experiences

Video/

multimedia

Ajax/Flash

Mobile web

Portals



About Coremetrics

Coremetrics is the leading provider o on-demand web analytics and precision marketing solutions,

oering the industry’s only web analytics platorm that captures and stores all customer and visitor

clickstream activity to build LIVE (Lietime Individual Visitor Experience) Proles. Representing

the single most accurate and comprehensive source o online customer data, LIVE Proles serve as

the oundation or all successul digital marketing initiatives. Coremetrics services more than 1,000

brands and has delivered over $300 million in documented ROI in the past two years. Coremetrics is

also the integrated web analytics solution or IBM WebSphere Commerce, delivering a best-o-breed

multichannel business analytics solution. The company is privately held with unding rom Accel

Partners, FTVentures, and Highland Capital Partners and is headquartered in San Mateo, Caliornia.

To learn more about Coremetrics, visit www.coremetrics.com or call 877-721-CORE.

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