Underlying web site usage growth has stalled?

Usage and penetration will raise as soon as people start streaming video and music on demand, start using email and instant messaging on the go using 3G phones.

It might not reach 90%+ in short term because some groups of people (like 60+) are not easily penetratable to that technology as these people might want to see the world in real life rather than online.

Hi Colin

Yes, you are right that ultimately it is absolute values (sales values, number of registrations, uplift in brand metrics etc.) that are most important. Conversion rates are probably next most important though even they are subject to misinterpretation - we have often found site owners experience a large increase in traffic (e.g. from marketing, from press coverage, from improved search engine rankings, from an affiliate program) with a proportionately smaller increase in sales volumes with the result that conversion rates are lower.

Indeed, we ourselves experienced this when one day our traffic (measured as unique users) almost doubled but our total value of daily subsriptions on the site hardly changed. The traffic levels remained much higher but the subscriptions didn't grow in the same way. So our conversion rates had plummeted. We tracked it down to an Amazon XML book feed that we were taking - the problem was that it included ALL of Amazon's books and so Google came to our site and spidered all of Amazon's content on our site. Looking at our search referrers (and from the strange phone calls we were getting) we were clearly ranking well on fishing and cookery books... Plenty of traffic but of very little value to us. Indeed, of negative value in dealing with irrelevant enquiries and paying for additional bandwidth that had no value.

However, a few counter points I would make:

1. Many sites are still at the stage where the KPIs for management are traffic-related so volume of traffic is still deemed as important to win continuing investment in the online channel. I agree with you that these are unlikely to be the correct KPIs but if it were generally known that you needn't worry about slowing underlying growth it might be of some comfort and help to web teams under management pressure. In some cases, of course, usage levels are directly related to site objectives e.g. many government sites must justify their investment through proven usage, providing accessibility to information for all, increasing the reach of what they do.

2. Many / most publishers still rely on traffic-type metrics (page impressions, unique users, visits) which they then monetise in the form of advertising revenue. Again, I totally agree with your quality vs. quantity argument, but I suspect many publishers are still desparately in search of traffic in whatever shape or form they can get it.

3. I think the broader point (if true) about a swing towards customer retention rather than customer acquisition and conversion would be supported if underlying traffic growth is on the wane. It essentially points to the fact that there are only a limited "number of fish in the sea" (potential customers) and that they are running out. If it is true that the size of the pool of available *new* unique users that I can attract to my site is fast contracting then that has significant implications for my marketing strategy going forwards.

After the dotcom crash people were forced to recognise that the internet did not provide instant access to an unlimited customer base ('build it and they will come'), but the recent surge of pay per click search activity, and the growth in affiliate marketing, I think has given some the impression that they can simply buy however much traffic (and potentially new customers) they need - assuming they can then convert them. There is some truth in this but we are also finding many site owners (and SEM agencies) complaining that they can't spend the PPC budgets they have access to because the volume of searches just isn't there. Again, there is the sense that the market is only so big...

Ashley

On 10:12:08 9 September 2004 Colin Cooper wrote:
>Does it matter if traffic is up or down? Provocative
>perhaps but where is the value in traffic for
>traffic’s sake?
>
>There are several good reasons why traffic being down can
>be seen as a positive sign – fewer single page
>visits means you are increasing your relevance in search
>engines – improvements in site usability mean that
>visitors achieve their objective faster and more
>efficiently getting lost less etc.
>
>Plus, as you indicate, as web users become more
>experienced they tend to know what they are looking for
>and focus on their prime information needs. They’ve
>got past the stage of clicking around just to see
>what’s there.
>
>What is more important is whether sites are achieving the
>objectives set for them. Sure if what you are offering is
>an environment for branding then overall traffic levels
>are an important part of the KPI, but so is time on page,
>frequency of return etc. Quality not just quantity.
>
>Of more concern is if conversion rates are reducing or
>sales volumes are declining, as these will directly impact
>your objectives.
>
>The overall level of economic activity will eventually
>have an impact on web traffic in the same way that
>traditional retail sales fluctuate. I would argue that
>it’s still too early for this impact to affect web
>sales volumes as consumers are still expanding their use
>of the web in preference to offline purchases. But
>eventually it will get there.
>
>So it’s back to the discussions at the Emetrics
>Summit about the importance of understanding and
>communicating your objectives so you then know what you
>need to measure and monitor to determine how well you are
>performing.
>
>Colin Cooper
>ISSEL
>Aligning Execution with Strategy

Yes / agree with all of above. What I find interesting is that when all of this shakes down, and all companies are online marketing savvy, and all customers are web savvy, your ability to attract customers, convert them, and keep them, will come back to the basics: your brand, the quality of your offering, the quality of your customer service etc.

There are already signs of this realisation e.g.:

- Affiliate Marketing. Affiliates get paid a commission on sales that occur on the merchants' sites to whom they refer traffic. So, of course, they send their traffic where they know (and they do know very precisely) conversions will occur. Once all of these merchants have sorted out their usability, optimised their purchase processes, improved their product information and so on (i.e. web site best practice), who then will the affliates send their traffic to? The ones that convert best. But which will convert best if all those sites are fully optimised already? The sites with the best brands, the best products / services, the best customer service...

- Price / shopping comparison and PPC. If as a merchant you don't want to pay top dollar for your search clicks (because it has become unprofitable, say) or you don't want to compete on price solely to list top of price comparison engines, then how do you still attract clicks / users when your offering isn't listed / ranked top? Because those users recognise your brand, the quality of your products / services, the excellence of your customer service...

- Organic Search. How can you improve your organic / natural search rankings? Having good content (that's being indexed) and credible people linking to you is a very good start. But why would they want to link to you? Because of your brand, the quality of your offering, the quality of your customer service...? Just maybe.

- Your valuable customers will find you online anyway. I had a very interesting conversation recently with an e-commerce manager at one the UK's leading (multi-channel) retailers. She’s looking for anything that shows that online marketing is actually worth doing. Current evidence they have is revealing that their customers would have bought from them anyhow and she is struggling to prove that it is effective in order to secure budgets for coming years. So if you're an established, multi-channel business with a decent brand perhaps you shouldn't be worrying so much about online marketing per se (assuming you have the basics sorted) but really focus on your brand, the quality of your offering, the quality of your customer service...

All pretty obvious stuff I guess, but perhaps it means that in a few years we'll see a strong return of the mass market TV advertising campaign coupled with major CRM projects - both areas that currently seem under threat from the measurable-accountable-flexible-fast-efficient world of e-commerce and online marketing?

Ashley