Jim Sterne interview: How website analytics can help you through the recession Posted by Rachelle Money on 31 July 2009

Ahead of his Keynote eMetrics Marketing Optimization Summit speeches in Stockholm (12 October), and Washington DC (19 October), marketing guru Jim Sterne tells Rachelle Money about the problems and the merits of website analytics and how they can be used to face the new challenges confronting all website owners in the current global economic crisis.

Rachelle Money: Why does the website analytics industry continue to grow in importance?

Jim Sterne: It's a rising tide - many online industries have grown in popularity. The other issue is there is a little bit of the intuitively obvious about it. Of course people need to measure the success of their investment made online.

People are realizing they're spending millions of dollars in dribs and drabs and that now it's time to get organized and centralized. They now have to ask, “How do we know these online investments are worthwhile?”

And this is where I say that it's 'intuitively obvious' that a business needs to track their return on investment. Explaining what that means and how that's done is complicated, and that's why there's been a smaller growth in web analytics than in say, the search industry.

Rachelle: How important is keyword research to a web analyst?

Jim: It's the very beginning of online behavior, because it tells you how a customer found you, what they are interested in, their intent and what they care about. It's the starting point of all persuasion analysis.

If I am selling automobiles and people are coming to my site using the keywords 'gas mileage' that tells me a huge amount about what I should be promoting, what I should be focused on and the kinds of research and development I do. Keywords are central to this.

Rachelle: When I look at Google Analytics and I see all the graphs, maps and pie charts it can be daunting, as I'm not mathematically minded. My brain just does not work in scenarios where there are lots of numbers.

Jim: It's not just that the brain doesn't work in that way, it actively rebels it. If you want to see me run screaming from the room all you have to say is; “Two trains leave the station at the same time...” AAAAHHH!

So you have that problem, and here's another one which I have to take some responsibility for. It's called web analytics. Ewww! I already don't like it. That's why I changed the name of my conference to the eMetrics Marketing Optimization Summit, because it's about making your marketing better. It's about keeping track of your success.

In 1995 when Web Trends got started, if we had said we aren't a web analytics company - we're a web marketing success company, then it would have been a different story.

Rachelle: Even if you get your head around the statistics, isn't the problem that people don't know how to make actionable decisions based on the analytic reports?

Jim: That's really the key term here - 'actionable'. The issue is not only not knowing what action to take, but also not knowing how to read analytic reports. What do I do with the data? What business decision should I make and how do I change my website?

Actually, going about making a change is a complex thing because we've been manufacturing things for hundreds of years - but we haven't been building websites for that long. We don't really know what the best processes are yet.

Rachelle: What are the common mistakes people make when trying to decipher web analytics?

Jim: The big initial one is always the same - people get overwhelmed by the reports. There are an infinite number of useless reports. I have web analytics - look at all these reports. So what - what do they mean and what are they for? People think that just because they have these reports as a package it will answer all their problems, when in fact it's only the beginning. It is a tool that will provide answers only if you ask the right questions.

Now we are right back to remembering what your business goals are. How will knowing how many people come to your website help you? What business decisions will you make based on these results? And this is where I come across lots of analysts who aren't analysts – they're simply reporters.

Somebody comes to them and says, “Oh you're the Google Analytics guy - I need to know how many people come to my web page and click on that link.” You can give them the answer, but that person will usually come back and ask another question, and another and another. So instead you have to stop and say, “Why do you want to know? What problem are you trying to solve, because I know all these other bits and pieces and I could answer a lot of questions, if you tell me what business problem you are trying to solve.” That's the difference between being a reporter and analyst.

Rachelle: Are people now making offline business decisions based on online results?

Jim: That's the very high end of the web analytics or web optimization maturity model. You start by being a reporter [of web analytics], then a website optimizer who improves conversion. Then you're an analyst who can say that because a certain number of people show up through a given link, from a particular geographical location, during a particular period of time, you can surmise that this kind of advertising will be better if it's tested.

Then you move up to marketing optimizer who can see that, of two buttons on a home page where one is for features and the other for benefits, more people seem to be interested in the features. You can then decide to promote the features in all of your marketing - not just the stuff that's online. So you're optimizing all the advertising you do based on the behavior that people exhibit on the website.

Finally, you move up to business optimization. That's when a business notices that people like a particular feature so much that that business then decides to launch a new product range, or sell into a new territory, or open up a new store on the back of it. This is an area which is very new, and we are starting to see a few companies who trust the online data enough to say “I need to think about how I change my business to reflect the behavior I'm witnessing on the website.”

Rachelle: Do you think web analytics based research will replace traditional market research?

Jim: Yes, slowly but surely. Yes it will happen, and there are some companies doing it now, but it won't happen all at once.

Rachelle: I found an interesting quote on your website where you talk about 2009's eMetrics Summit. You say, “This is the year where measurement stops being interesting, novel or cool competitive edge stuff. This year, it's about survival.” That sounds a bit ominous. What do you mean?

Jim: When times are really good people run around trying to find a bigger wheelbarrow to roll their money around in. When times are bad, people are looking to conserve money and spend less. When they do spend they want to know how well it's spent, and that's where the survival instinct kicks it.

It's about making business decisions that are valid. When you have lots of resources you can decide - should we buy more television and radio ads, online banner ads, or should we invest more in search. That's interesting. But when times are bad you have to cut expenditure.

Now it's no longer about “Oh let's try it and see.” It's about “Let's measure it and know.” In down times it becomes crucial to know what works - it's not about experimentation any more.

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