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Web Analytics Expert Interview Series: Part 1 (Jim Sterne)

Jim Sterne stands at the crossroads of the Web analytics world. He is the organizer of six eMetrics conferences around the world (see the resource box at the end of this article for information on upcoming summits). He is also the Chairman of the Board of the Web Analytics Association.

Jim Sterne warns: When we talk about Web analytics, the United States is leading its counterparts in Europe and Asia, but the U.S. still lags behind in mobile applications and uptake, and is handicapped by a generation gap between the marketing department and the executive suite.

The Web Analytics Overview

"Way at the bottom end is basic reporting," Jim Sterne says. "The next step up is benchmarking against other companies. Then analysis, where you're breaking things down by segment and asking, 'Will this ad on that medium bring in traffic that results in sales? If it does, great! Then we throw money at that source.'"

Online/Offline Integration

Getting online marketing out of the silo it has been relegated to still challenges many marketers, but Sterne sees progress on that front.

"I'm seeing it happen, because the marketing automation people are buying Web analytics tool companies. Web analytics is moving towards being the central hub of marketing, but integration is the largest problem. The holy grail is to integrate Web analytics with all of your CRM and loyalty programs, your sales and data streams and your contact center interfaces."

"This way, you can identify customers and weigh the value of a store visit versus the website. In the final game, you put all that into a digital data warehouse and run a statistical analysis."

Need an example of using Web analytics to drive business decisions? Web analytics data helped Canadian sporting goods company Mountain Equipment Co-op (MEC) identify an unexpected location for a new store:

"MEC did an analysis of online sales using a map of Canada that showed where a majority of sales were coming from around their stores. Then they compared it to the purchase value, and found the further away the customers were from the stores, the higher the dollar value was for their online purchases. MEC looked at their heatmap and found a red hot spot (for high-value online purchases). There was no store around there, so you know what? They built one."

Note: A heatmap is a graphical, colorful representation of where the "hot spots" (most active or highest-value areas) are for a particular website or business. For more information, see the blog by Joseph Carrabis, an expert regarding this concept, which is mentioned in the resource box at the end of this issue.)

The 13% Discount

Remember the old punch line about advertising: "I know half of my ad dollars are wasted; I just don't know which half?" Analytics can show you which half is working and which half isn't.

Take the typical incentive discount used to get someone to try a new product or to re-engage an inactive customer. Is 20% off the tipping point, or is that just what everybody else uses?

"The analytics let you say, 'If you as a customer come in on this search term and click on that button, we will send you this particular email and you will respond this way. Then, we will send you a 13% discount because our analytics have shown us that you are more likely to become a customer at that discount level.'"

Those analytics tell the savvy retailer that 15% is too generous of a discount and 10% is not enough to get the prospect to buy.

Wanted: Internal Advocates to Boost Analytics

Sterne says gaps between data people and their marketing co-workers and between the marketing department and the executive suite still need to be bridged.

"We need to be training Web analytics people to understand branding and awareness beyond just the numbers themselves, and we also need to train marketers to understand how to use the numbers."

Marketers who understand the need for good analytics need to share their visions with their bosses, who likely haven't had the same exposure, Sterne says. "Companies still don't understand the data. It still has to be driven by internal advocates. Senior executives say they don't know how this stuff works. Someone (often a person more junior who 'gets it') needs to show management how relevant Web analytics is and how it directly impacts the return on investment."

"When senior management connects the dots between Web analytics and optimizing ROI, a light goes on and big things can happen within that organization."

Mobile: Where the World Has Moved

The United States lags behind in mobile use, while the rest of the world has already moved into high gear, Sterne said. Although the gap is closing, marketers need to act quickly, especially to optimize their websites for mobile users and to register their domains using the top-level domain ".mobi," (a URL exclusively for mobile use).

"The number of people who are investing in 'dot-mobi' is amazing. Building a website that's optimized for mobile users is standard practice everywhere else, but it's an afterthought here in the U.S. We can also see a lot of domain-squatting in .mobi. If you don't move fast to register your domains, you'll have to buy your name from some squatter. We (U.S. marketers) just weren't paying attention."

So, how did the U.S. fall behind in the mobile market? Because we first developed landline and broadband infrastructures instead of mobile technology, Sterne says.

"In Europe, they have 3G (third-generation communications) while we (the U.S.) are still playing with texting," he said. In most places around the world, it's more cost-effective to put up cell towers than lay miles of cable and wire.

The rest of the world is catching up to Japan and Finland, who are leading the world in mobile applications. "In the U.S., however, we have the capability, but we are not tuned in to using mobile technology," Sterne says.

Privacy Issues Still Paramount

Privacy issues also divide the U.S. from the rest of the world, Sterne says.

"Internet Explorer makes it easier to turn off cookies now, so it's bringing the issue to the forefront again. But it's up to the marketer to show the value of the cookie, of handing some information over, that to do so is not a privacy issue but a service. In the U.S., consumers are saying, 'Show me that giving me a cookie has value to me.'"

"Look at grocery stores. (If you have a loyalty card), they know what I eat, how much junk food I consume, what medications I buy, what booze I drink, and that's OK, because I get $2 off at the checkout. You can nullify indignation over privacy issues if you show the relevance of the information shared.

"The reason this is not true for Europeans is because the Europeans have had grandparents 'disappear' for being on the wrong governmental list."

What's Cool and Next?

The world of Web analytics and its application is continuing to expand. Sterne cited two instances of Web analytics usage that are still way out on the bleeding-edge of technology, but may become as familiar to future number crunchers as the clickthrough rate is today:

1. Your mouse movements tell on you (see Joseph Carrabis' blog referenced below for more information):

"There's a company with software that captures your mouse movements and does an analysis on them to tell your gender, age, native language and moods."

"How you move the mouse is a neurological interaction between your motor skills and how your brain is organized. It's nature vs. nurture, how you move the mouse, the speed, angle, velocity. If you learned German and moved to the U.S. when you were six, it can tell. It can tell what you're thinking."

It sounds like a 1950s sci-fi flick, but it is this kind of analysis that can help you optimize the kinds of pages you serve to site visitors. "It's the final hop of the spectrum of sophistication," Sterne says. "The neurological analysis can show if the reader is male or female, or whatever, and that can determine which page you put up there."

2. Getting cues from your mobile phone:

"I also see more usage of 'cue codes,'" Sterne says. "We see this usage specifically in Japan, Korea and Finland. A cue code is like a UPC code. When you point your cell phone at the code (which may appear in a billboard ad or in a store window, for example) your cell phone reads the cue code and gives you the information that cue code contains. It may contain a marketing message, an offer, or the price of a particular item and whether or not it's in stock in your size." Yes, we're seeing some limited applications of this technology in the U.S. as well, but it's much more widely used in other countries.

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