Digital economy growth

This article, written by Neil Mason, was originally published on Clickz.com on 23/04/10 and is republished here with permission.

When the graphs are going up and to the right, people are generally happy. Life feels fine when there’s good growth in the right kind of metrics and despite the tough economic trading conditions over the past 18 months, the digital economy has generally been doing OK. Here in the UK spending on online advertising grew by just under 5% in 2009 compared to 2008 with spend on Search up by just under 10%. Whilst that isn’t the kind of stellar growth seen in previous years, the indicators are positive. Business confidence amongst advertisers is higher than it’s been previously and we’re continuing to see growth in the active online audience (up 10% vs. a year ago), some of that being driven by the growth in population of social networking sites such as Facebook.

But is “good” good enough? We all know that graphs that go down and to the right are generally bad news, when is good news really good news? Trends in looked in isolation are useful (after all “a trend is a friend”) but they’re much more useful when you have some context to compare them against. Most of us operate in a competitive environment and so it’s useful to know how we compare against our competitors, so we can put that trend into context. Whilst we generally have relatively easy access to our own data, getting data on competitors can be a bit tougher. The availability of that data is also very dependent on the type of industry you are in, the market that you are in, the size of your own digital property and the size of your competitors. So it can be difficult to generalise about how to get competitive benchmarking data but here potentially are a few avenues worth exploring.

Commercial services
There are a number of commercial services available in most markets around the world that provide data on the traffic and customer profile of different websites. Companies such as ComScore and Nielsen NetRatings create panels of users and monitor their internet behaviour. Their reports provide detailed information on a site’s traffic patterns and visitor profiles so it’s possible for example to compare say the reach and frequency of visitors to your site against those of your competitors. Some companies, such as Compete and Quantcast, use hybrid methods to collect their data and estimate a site’s traffic. Hitwise aggregates data from ISPs to build up a profile of the market and can use that data to provide raking reports on traffic to different websites in your category.

The commercial model varies from each provider of these services. However the good news is that in some cases you can get access to some limited data for free. However, there are also a number of other free services which may be useful.

Free services
Data on the internet is being aggregated all the time, all over the place and in some cases you can hands on it for free. Tools such as Google Trends for Websites, Google AdPlanner, Alexa and others all enable you access reports on website traffic and visitor profiles on your competitors and compare them to yours. The way that the data is collected varies from service to service and it’s worth taking the time out to understand (as much as you can) how the data is collected and how the reports are created. You need to be aware of the potential limitations of these types of services particularly if you are dealing with websites with relatively low traffic volumes. Caveat Emptor! – even if it’s free.

In some cases you may be also get some benchmarking data as part of the service offered by your web analytics vendor. In this cases you won’t be able to see your competitors data in detail but you will be able to compare your own performance against a group of similar websites to your own.

Do it yourself
In the examples above the data that you can get is mainly looking at traffic volumes, visitor profiles, search behaviour and the like. You can also go out and collect your own information on your competitors. You can use additional research techniques such as surveys, focus groups and usability testing to find out how you compare against your competitors in different ways. It won’t be the quantitative data that we’ve already looked at but it will be customers’ opinions about how you compare and can be enormously insightful in helping you to evaluate your competitive position. Again this type of research needn’t cost the earth. You can get benchmarking data from customer surveys like 4Q and low cost remote testing methodologies are being developed all the time.

As we come out of the recession and the market begins to accelerate, it’s always good to ask yourself whether good is good enough. You can do that by keeping an eye on what’s going on around you. How you do that will depend on your circumstance but hopefully there’s a few ideas here.