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Page 1: Coremetrics web2 0 white paper

Winning in a Web 2.0 World: Metrics-Driven Success

WHITE PAPER �

WHITE PAPER

Winning in a Web 2.0 World:

Metrics-Driven Success

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Table of ContentsExecutive 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 of Web 2.0 technologies? 5

Where should I invest my marketing dollars? 7

LIVE Profiles in action 8

Summary 10

Web 2.0 at a glance 11

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Winning in a Web 2.0 World: Metrics-Driven Success

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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 different technologies. For marketers, the underlying issue is that consumers are becoming more sophisticated, engaging in longer term relationships, 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 of new options (RSS, blogs, Ajax, etc.) to an already long list of options (email, banner ads, affiliates, 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 scientific approach to marketing. Web 2.0 technologies must be measured based on the business value they create for 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 of 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 how organizations are using these technologies to drive business results.

What is Web 2.0?

Web 2.0 is simply a phase in the evolution of the World Wide Web. The overarching characteristic of this phase is that the Web is no longer simply about information, it is now about interaction. There are new and existing technologies associated with Web 2.0—from blogs to social networks to AJAX. These technologies enable consumers to interact with your company and other consumers, participate in and influence 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 of time. As options for communicating with consumers expand, companies have an increasingly difficult task of 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 of Web 2.0, particularly as it relates to your traditional digital marketing investments.

Web analytics is of course not new, but there are new requirements for measuring in the Web 2.0 world. Companies that are able to effectively measure all their web interactions with visitors—whether Web 2.0 or traditional web—will enjoy a competitive advantage.

While the value of 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 means that 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 of the relationship over time, and the many ways that an individual can add value to your business.

Measuring Web 2.0

This white paper focuses specifically on the nuances of 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 of Web 2.0 that create opportunities for businesses to leapfrog their competition.

Analysis is fundamentally 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 to adopt 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 of Web 2.0 technologies? • How do I know when my use of these new technologies is successful, 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 first 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 and comment on blogs? Will they share their views in user reviews? If 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 influence others.

• Do your users have a special skill or knowledge that relates to your product or service? If so, wikis and forums are a great way for them to contribute to the body of knowledge around your products and services, enriching their experience and that of others.

• Are your customers likely to be comfortable with rich internet applications that function somewhat differently from those to which they are accustomed? Is your user base change averse? The more accepting of change your audience is, the more rapidly you can adopt Web 2.0 technologies.

• Have your competitors deployed leading technologies? If so, you may want to escalate your adoption of Web 2.0.

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

• Do you serve a technically savvy group of customers? If your target market readily adapts the latest technologies, Web 2.0 technologies are likely an excellent way to invest your resources. If your customers are slow adopters, consider waiting until they are farther along in the adoption curve.

What are the business applications of Web 2.0 technologies?

There are a number of technologies associated with Web 2.0 that enable interaction, participation and consumer control over their experience. Web 2.0 technologies serve three key functions:

• Enabling users to develop content

• Providing new means to reach a target audience

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

Each of these capabilities and its associated technologies provide different value to companies, and each needs to be measured and tracked in its own way. However, they share common characteristics that drive the need for new measurement strategies.

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Opportunity for visitors to contribute content

A number of Web 2.0 technologies enable visitors to contribute content on your site. These include user reviews, blogs, wikis and forums. The “word of mouth” concept is well understood and has always been considered to be a reliable and trusted source of information about a product or service. The Internet, and especially new Web 2.0 technologies, has extended “word of mouth” into “word of mouse,” whereby a single individual can reach a much larger number of 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 influences visitor behavior. Moreover, it is important to identify the content contributors, and which ones are influencing other site visitors.

User reviews are an excellent way for companies to engage their clients in dialogue. PETCO deployed user reviews and has realized tremendous business advantages. After deploying user reviews, PETCO created navigation that allowed visitors to drill into top rated products. They found that visitors who chose the top rated product navigation path converted at a higher rate than other browsers. In fact, PETCO found that they converted 10% higher within a session, and 49% higher when shopping over 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 significant impact on other marketing activities. Businesses have found 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, after deploying user reviews, CompUSA they saw a dramatic increase in traffic coming from natural search. All the product reviews provided additional content to be indexed thereby increasing natural search listings. Interestingly, CompUSA discovered that this traffic 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 from 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 affords companies the ability to identify the top contributors, and to ensure that they are treated according to the value they provide. In a recent study, Yahoo! defined a group of people known as “brand advocates,” who are typically:

• Well-connected consumers with a larger sphere of influence• 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—influencing other people’s purchase decisions.

By focusing on this group, and valuing not only their direct purchases (or conversions), but their influence on the market, you can harness a truly awesome power: word of mouth marketing. (Source: Yahoo!, Engaging Advocates through Search and Social Media, Yahoo Summit Series, Jan. 2007)

New means of reaching customers

Some of the technologies associated with Web 2.0, such as RSS feeds, podcasts, social networks, and comparison shopping sites, provide new vehicles for reaching visitors and can drive customer retention.

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It is important to understand how many people use these channels, how they perform as referral sources for your site, and what visitors from these sources do once they are on your site. You may find it beneficial to define new visitor segments based on how customers respond to each of these sources.

For example, RSS feeds are gaining popularity with many companies. Travel companies, such as Orbitz, are using RSS as an alternative to email for pushing promotions to consumers. Likewise, companies like Circuit City are using RSS feeds to push promotions to loyal visitors. Perhaps more than any other site type, media sites like MSNBC make extensive use of RSS to push out content to their loyal readers.

Podcasts are another new way to reach consumers. KeyBank suspected that podcasting would be effective means of reaching customers, and launched a podcast program featuring a well-known financial analyst who speaks about industry forecasts and market trends. KeyBank’s program resulted in 70,000 podcast downloads in 2006. Other businesses are leveraging podcasts by identifying 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 feeds and podcasts, social networks are an additional Web 2.0 technology that can drive the acquisition of new customers. Consider posting content on social networks such as YouTube or advertising on special interest social networks, such as the “cat lovers” section of My Space. By offering content that is delivered in the format that is most appealing to a given segment, you create visitor loyalty.

Enhancing visitor experience with rich internet applications

Putting web visitors in control of their own online experience means offering 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 for mobile devices, offer precisely that opportunity. Some visitors may prefer to receive content via video, while others may prefer audio or text, depending on where they are at the time, what technology is available to them, and their personal preferences. Visitors who come to a traditional website can also enjoy an enhanced experience through the use of RIA applications. Companies from all verticals are discovering the benefits of 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, filter on multiple criteria (such as brand and price) and complete the checkout process in less time than it would take if they were forced through a traditional linear, multi-page process. Streamlining processes such as checkout can drive a tremendous lift 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 flex. (Source: Internet Retailer, February 22, 2006)

Where should I invest my marketing dollars?

Web 2.0 marks a shift in how you interact with consumers, with increased focus on longer term relationships. Of course, immediate conversions—such as sales—are still critical to measure. But understanding your visitors and customers over time is an increasingly important aspect of this new paradigm.

To understand your customers’ behaviors and preferences over time, you need a complete record of

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every interaction, and you need that interaction associated to a unique individual. In other words, you need a Lifetime Individual Visitor Experience (LIVE) Profile™. With a complete picture of 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 Profiles in action

To understand the value of LIVE Profiles, let’s look at a scenario that illustrates how such a record provides marketers with a holistic picture of a customer, thereby empowering them to make better decisions.

A financial services company wants to understand the value of various aspects of 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 for RSS and an email newsletter, and then leaves.

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

on refinancing.

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 refinancing on a financial 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 for a mortgage loan.

If 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 from 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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Winning in a Web 2.0 World: Metrics-Driven Success

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Session Based Approach

LIVE Profile Approach

Using only session-based data, your conversion rate was 20%. A full 80% of your sessions did not result in conversion, and there is no apparent value. The conclusion you would draw is to eliminate investment. However, if you look at this scenario from 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 of 100%.

• 100% of 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 from the scenario that these activities were vital components in driving Tom to complete an application. Without your paid keyword, Tom may never have found your site. Without your RSS feed, he might never have understood the value of refinancing. Without the email, you would not have prompted him to look at rates. And if you had not advertised on the blog, Tom may not have come back to your site.

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If 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 of establishing a relationship with the customer, and points out how looking at that relationship as a whole drives you to a very different conclusion than what you would have reached based on session data alone

By tracking the right metrics, you will understand the value of Web 2.0 content and interactions to your business—not just in a single session, but over the lifetime of your relationship with an individual. By understanding how these tools and techniques affect your business, you can make the right decisions about your marketing investment.

Summary

Web 2.0 is not an end in and of itself. Rather, it is part of the continuing evolution marketers are experiencing as the World Wide Web matures. Just as we are becoming comfortable with Web 2.0 and its technologies, one day soon we will be facing Web 3.0, 4.0 and beyond.

The one constant is that technology will evolve, consumers will become more sophisticated and more empowered, 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 of a reality. To be successful, marketers need a robust behavioral analytics solution and a complete record of all visitor behavior—not a sampling of 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 of the Internet and provide their visitors with a truly personal experience that optimizes their business goals.

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Winning in a Web 2.0 World: Metrics-Driven Success

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Technology Definition 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 often include a

comment feature.

Build relationships with

consumers.

• How do people get to my blog?

• What do they do after visiting my blog?

• Do blog visitors convert at a higher/lower rate

than other visitors?

• Who is adding content?

• How often do they visit my blog?

• How many unique visitors do I have?

Tool that enables site

visitors to provide

reviews of products,

content and services.

Provide consumers peer

product reviews.

Establish site as resource

for 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 of Web site

that allows the visitors

themselves to easily

add, remove, and

otherwise edit and

change some available

content, sometimes

without the need for

registration.

Allow individuals with

special knowledge to

contribute to data set.

• Is the content popular?

• Does it affect 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 facility on Web for

holding discussions.

Develop relationship with

consumers.

• Is the content popular?

• Does it affect 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?

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Technology Definition BusinessUse WhattoMeasure

New means of reaching consumers

RSS

Podcasts

Social

Networks

Comparison

Shopping

RSS delivers its

information as an XML

file, commonly called

an RSS feed. Programs

known as feed readers or

aggregators can check

a list of feeds on behalf

of a user and display any

updated articles that they

find, giving the user a

single place to aggregate

information of their

choosing.

Push time sensitive data

(news, blog entries, and

promotions) to consumers.

• How frequently are RSS feeds accessed?

• Do the people who sign up for RSS feeds visit

your site more often and for longer periods

of time?

• Do they browse content or products more

deeply or visit that specific content or product

and leave?

• What is the impact on conversions?

• How often is my feed viewed?

• How many people are subscribed?

• What is the growth rate of my subscribers?

• Which content is most engaging to visitors?

A podcast is a multimedia

file distributed over the

Internet using syndication

feeds, for 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 of the Podcast?

• What was the impact of podcast on

conversions?

• How long did people listen to the podcast?

A social network service is

social software specifically

focused on the building

and verifying of online

social networks for various

purposes.

Identify and advertise

to targeted groups of

individuals.

• Are the social networking pages discussing

my site/linking to my site?

• How many visitors are coming to my site

from social networks?

• How do these visitors convert?

• How many impressions, clicks and

conversions are coming from my

advertisements?

A price comparison

service (also known as

shopping comparison

or price engine) allows

individuals to see lists

of prices for specific

products. Most price

comparison services

do not sell products

themselves, but source

prices from retailers from

whom users can buy.

Reach a broader audience

by placing your offerings

on a comparison shopping

engine.

• How many people come to your site from a

comparison shopping engine?

• What products/services most frequently

generate these referrals?

• What is the quality of referrals in terms of

conversions?

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Convey content that is in video

format.

• How often 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

feel more responsive by

exchanging small amounts

of 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 friendly

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

from 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

forms of information

processing such as

text, audio, graphics,

animation, video) to inform

or entertain the user

audience.

A site on the Web

that typically provides

personalized capabilities to

its visitors

Provide a single place for

visitors 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 Definition BusinessUse WhattoMeasure

Richer, user defined experiences

Video/

multimedia

Ajax/Flash

Mobile web

Portals

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