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What do to when thinking of buying a website – Basic Research to avoid getting ripped off.

What do to when thinking of buying a website – Basic Research to avoid getting ripped off.

This is my first article in a long time and to be honest I never really thought I would find the time or inspiration to write again, but recent events that impacted friends of mine online pushed me to write at least one more piece.  With websites being easier than ever to publish online (we’re talking MINUTES), it is getting easier for people with less than stellar business practices to create legitimate looking websites and then sell them to unsuspecting beginners that are looking in to buying their first website or e-commerce business.  In this article, I will give you tips on how to perform very basic research that can avoid thousands of dollars in losses, legal fees and hours upon hours of anxiety and heartache from being ripped off, or at the very least, completely misled.

It’s important to note that most online website purchases that go awry are not illegal or necessarily fraudulent.  It’s simply a case of the buyer not asking the right questions, or perhaps more precisely, not know what the right questions are in the first place.  You wouldn’t buy a house without performing an inspection would you?  Or a car without taking it for a test drive?  Even buying something as simple as a cantaloupe, you probably have a trick to tell if it’s ready such as thumping it, or pressing the end of it and smelling it, or maybe rolling it down the aisle to see if it rolls straight and true.  Whatever your fruit purchasing methods are, the point is you have a vast database of checklists or must-do procedures before you buy anything.  Same thing goes for buying a website.

When it comes to buying a website, I actually have 3 simple rules I follow and I recommend to anyone.

  1. If the seller is boasting “HUGE POTENTIAL” or similar wording as a main selling point, I run away.
  2. The numbers have to make sense.
  3. A fair price in the simplest terms in most cases is the average monthly income for the last 3 months x 12.

Everything else in this article is centered around these 3 rules and if you stick to them, you’ll greatly decrease your chances of getting burned.  Let’s go over them.

This site has HUGE Potential!

When it comes to web real estate, nothing is more plentiful or as worthless as potential.  One of my favorite expressions is that money talks and bullshit walks.  When folks are touting potential as a reason to buy a website, you need to keep walking.  Classic example:

potentialexample

Potential is very subjective and quite frankly is something being sold to you on an emotional level, a gut feeling or maybe the promise of something great to come.  Emotional decision making in website purchasing, or any business decision really, will lead to disaster.

When someone is selling a site and they are pushing that it has “high potential”, “untapped niche”, or “proven market” or some other buzzwords without any kind of actual sales information or traffic information, this is a giant red flag.  It usually means that the seller has created a templated whitelabel website of some kind in the last month, assigned it to a recently purchased domain name and is looking to dump it for a quick sale.  This means the site has no customer base, no SEO optimizations, no traffic and ZERO revenue.  Basically you bought a site that probably cost $50 to make and will take you months of work and probably hundreds, if not thousands of dollars of additional development to get going.  These types of sites sell for prices all over the map, from $150 to $5000 and beyond, it’s crazy.

You should also be wary of people mentioning that the product or service being sold has been mentioned in Times Magazine or some other sort of publication.  If it says something about it being recommended by Doctor Oz, don’t walk… RUN!

Revenue

Most of the time, these template sites will have next to no revenue, or conveniently enough, revenue in the last month or so since the sale became available for purchase.  Get proof of all revenue claims by either bank statements, deposit statements, shopping cart reports or affiliate payout screenshots.  NEVER just accept revenue claims at face value, get proof.  Understand that if the site has JUST started making revenue, no matter what the amount is, assume this is a new site that isn’t making a dollar and won’t without you making a considerable effort to monetize your site.

In the example of a site suddenly making money in the last month, it’s safe to assume that the seller is pumping adword campaigns to drive some initial sales up as fast as possible to get the best price for their site.  As soon as you take over, those campaigns will be cut and the site will go to $0 in daily revenue almost overnight.  The same goes for a site that relies on ad revenue such as Adsense.  It takes tens of thousands of daily visitors to make decent revenue from the online ad market as CPM and CPC rates are minuscule.  If the site is suddenly generating hundreds of dollars a month in ad revenue, the seller is likely driving traffic to increase value.

As a general rule for anyone looking for a site that has an established revenue stream, look for a site that has been generating consistent or increasing revenue month to month for the last 6 to 12 months minimum.  Get proof and details of all earning claims and if a seller isn’t willing to share that kind of information, move on.  Obviously don’t expect the seller to divulge the magic sauce that makes the site a financial success in all cases (it’s usually obvious) but they do need to back up all revenue claims.

Site Age

When you buy a car or a home, what’s the first thing you ask?  Hopefully it’s the same thing I ask… how old is it?  The same thing goes for purchasing a website, you absolutely need to know how old the site is.  And once again, don’t just take the seller’s word for it, find it for yourself.  There’s a number of ways to check and see how long a domain has been around, but also to verify how long that site has been running on it.  It’s easy to own a domain for 3 years, but only launch a site on it 2 weeks ago.

First off, find out how long the domain has been registered, and you can do that at http://www.whois.sc for free, it’s a great site I’ve used for my whois searching for many years.  If you run this search for my blog, you can see that danrichard.com has been registered since February 9th 2006.  Wow, 11 years already?!

whois

You’ve now established that the site has been registered for several years, but that could just mean that the person owned the domain for years and only recently decided to launch a site on the domain or perhaps they only recently purchased the domain from someone else.  So what’s the next step?  Find out how long the website has been operating on that domain, and I love to use the Wayback Machine at https://archive.org/web/ to check that out.  This will show you just about every major change to that site running on that domain since the domain was registered.  You’ll see a lot of broken images but it still gives you a very good idea of what that site you are thinking of buying looked like a month ago, 5 months ago or 5 years ago.  If the seller is claiming the site has been running for 6 months but never monetized so it has “huge potential”, this is a good way to check out how long the site has actually been around in its present form.  Here’s how it looks when looking at my blog’s archive:

wayback01

Here’s how my site looked back in 2006 when we first started… awww!

wayback02

Traffic

Similar to revenue, traffic claims must all be proven, and again can be misleading.  First off, if a site is being sold claiming it has established traffic of any kind, do not accept any other source of proof other than Google Analytics.  Server logs can be tampered with and screenshots can be from anything, so the only acceptable proof should be GA.  Again, if the user gives a seemingly valid excuse for the site not running Google Analytics or it happens to be broken, big red flag.  A website seller with good intentions would make absolutely sure that GA was running properly on their site.  If you’re seriously considering purchasing a site, create a Gmail account and ask the owner to add your Google account as read only to the site’s Google Analytics profile.  You will then be able to access the GA account for that site for yourself to analyze the traffic.

Again much like the revenue, check and see if traffic has been steady or growing for the last 6 to 12 months.  If the site is brand new yet has traffic pumping in, the seller is probably purchasing traffic to boost the value of the site.  Again, if you purchase the site, those campaigns will stop and your traffic will plummet back to nearly zero.  Use GA to look at where the traffic is coming from, referrers and geographical breakdown.   If the bulk of the traffic is coming from just a few key sites (and they are probably irrelevant to the topic of the site being sold) or 70% of your traffic is from India, there’s a VERY good chance the traffic is purchased trash traffic.

Costs

DO NOT FORGET COSTS!  Websites cost money to run so along with those beautiful revenue reports and traffic reports, do not forget to get full cost breakdowns.  Hosting, ad costs, traffic buying, affiliate payouts, shipping or processing costs, vendor payouts, licensing costs, software licensing etc.  Make sure you account for every dollar!  $2000 in monthly revenue doesn’t looks as impressive when you realize it required $1500 in Adwords to get that.

Do the numbers make sense?

Don’t be so overwhelmed by the fact that this is a website that you forget some very common sense and logical business decision making.  Check and make sure the math adds up.

Is the seller claiming thousands in monthly revenue but selling the site for $1000 or some other low asking price that makes no sense?  Why sell a site that makes $5000 a month for $2000 when the seller could probably just leave it on autopilot or hire someone off-shore to run it and make a profit with next to no effort?  Red flags… red flags EVERYWHERE!

Generating online revenue and traffic takes effort and time, it is not overnight for a new site unless someone wants to flip a site as quickly as possible for the best possible price.  If a site is new, then expect it to take a long time to generate revenue and traffic, there are no shortcuts and the price should reflect that.  If a site that was established a month ago is bringing in 25,000 visitors a day and making $150 a day out the gate, that just doesn’t make sense.  The only exception to this would be if the site was launched by a company that has a massive network of other sites that were leveraged to pump traffic to the new property, and if that’s the case, what happens to that support after you buy it?  The most likely answer is you can kiss it goodbye.

Another expression I like… value perceived is value achieved.  If the seller can convince you the site is worth a fortune, you’ll pay a fortune, easy as that.  Be very wary of sellers temporarily launching heavy ad and/or traffic campaigns to boost up a site’s KPIs to get the biggest price possible.

For older sites, check out as much data as possible and look for seasonality and other factors that can influence revenue.  Run a trend report on the niche and see if it’s steady or in decline.  A good example would be phone cases… several years ago, you could make a fortune selling phone cases and accessories online and drop-shipping to customers.  Dollarama stores, the Wish app and Amazon cornered and killed that market and it’s almost non-existent for independents now.  How many bought those sites without knowing the decline and paid a fortune for a business that became worthless a year later.  Here’s a simple trend report from Google trends on cell phone cases:

cellphonetrend

Check the numbers and make sure everything makes sense.  If you’re not sure, either back out or get professional help from a qualified web analyst.

What is a fair price for a website?

It is really hard to give you a hard-coded recipe for the proper asking price for a website, but as a general acceptable rule, you want to start off with a price that is somewhere around the monthly average net revenue of the last 3 months, multiplied by 12.  Depending on cost of sales, some folks will also use gross revenue, but I would recommend being very careful if COS is more than 20% of gross revenue.

So if a site made $1500 in January, $1300 in February and $1600 in March, you would do the following:

((1500 + 1300 + 1600) / 3) * 12 = 17,600

So expect to be in the $17,600 range for this site.  Previous performance is mostly irrelevant so that’s why you want to stick to the last 3 months.  This works in favor for both the seller or the buyer… if the site is increasing in revenue month to month, then the seller is getting a better price whereas if the site is on a downward trend, you’re not buying the site based on performance that is no longer valid.  If the site has been steady for many years, check the seasonality for revenue and traffic to avoid getting jacked on the price.  For example, perhaps the site sales are very low in the spring but super high in during the holiday seasons and you’re buying in January.  If you use the 3 month rule mentioned above, you’ll be basing your numbers on a very high average.  You should normalize the revenue to account for seasonality and adjust accordingly, but remember you need a few years of steady revenue to know if you’re dealing with a growth or loss trend vs seasonality.  With a trend, the incline or decline will be consistent, whereas with seasonality you should see inclines and declines that repeat year over year.

I would also highly recommend you use an Escrow service for large transactions.  Personally I would go with Escrow for any website purchase over $5000 with 50% released at start of transition and the remaining balance after client sign-off on transition completion.

Final Thoughts

Remember that there are thousands of websites available for purchase every day so there is no need to rush.  Be patient and only buy when you’re 100% comfortable (and followed everything in this article) and you’ll virtually eliminate getting ripped off or purchasing a site that did not come even close to your expectations.

You should also consider WHAT you are purchasing in terms of functionality and addressing your business needs.  Ask yourself, does the site in question even work the way you want?  Is it easy to maintain?  Is it cost-effective?  Are you paying $5000 to inherit someone else’s problem when you could be spending that same amount for a site completely custom designed from the ground up to your exact specifications?

When in doubt, don’t be afraid to consult and hire a professional in the same fashion as hiring a house inspector when purchasing property.  Treat digital real estate the same way, know what you’re getting in to or hire an unbiased professional to give the web property a thorough inspection and provide you with a detailed breakdown to assist you to make an informed decision.

I hope this article will help you make smart business decisions and I invite you to contact me should you need additional advice or would like to me to audit a site for you.  You’re also welcomed to leave a comment below with your own feedback or suggestions for smart site shopping.

All the best!
Dan

The Death of Tutorial Portals – A look at the Big 3 in 2013 and Suggested Counter-Measures for Webmasters.

The Death of Tutorial Portals – A look at the Big 3 in 2013 and Suggested Counter-Measures for Webmasters.

It was a matter of time I suppose, an inevitable evolution as web behavior continues to shift, morph and push technological boundaries at an alarming rate.  More precisely, the ADHD generation of web users combined with massive strides in search engine results accuracy and perhaps a dash of lack of interest has destroyed the tutorial search portal business model.  For my long-time readers, you don’t have to ask, but for those of you fairly new to the world of online tutorials you might of never heard of the tutorial giants – Good-Tutorials.com, Tutorialized.com and Pixel2life.com.  These 3 companies battled long and hard for top search engine placement, diehard fans, streamlined UIs and dominance of the tutorial aggregate site niche.  In the mid to late 2000s, these sites were huge and brought in tens of thousands of visitors every day and considered the gold standard of free tutorial listings.  But as 2010 rolled around, it appears the wheels started to break free from what appeared to be a rock-solid frame.

Today these sites have plummeted in traffic, rank and audience.  Tutorialized.com and Pixel2life.com were sold to new owners in 2010 – 2011 that converted one site in to an ad laden cesspool of affiliate offers and the other seemed to fall in to autopilot while the owners fell asleep at the helm.  For Good-Tutorials.com, they seemed to have turned off all development and just let it chug along like an old 1988 Dodge Aries that refuses to die but gets harder to drive up the hill every morning.  A quick look at Alexa paints a fairly nasty picture:

blog_alexa_gt

 

blog_alexa_tz

 

blog_alexa_p2l

 

You can see that all sites suffer from identical markers of a site dying a slow painful death.  It’s important to note that you can only see the Alexa ranks from 2012 to 2013 and there was already huge drops since 2010 to 2012 that you can’t see in the graph.  The other alarming number is the dominance of traffic from India rather than the USA, especially for GT and Tutorialized with GT at almost 30% traffic from India.  These sites were previously ALL 50% or higher USA traffic sources with Alexa US ranking way below 10k, but with the lack of social presence, development and user interest, the sites are now exposed to non-premium traffic, which destroys the ability of the site to run top paying advertisers and affiliate offers needed for the precious revenue to keep these sites worth running.  The bounce rates, time on site and page views are also unhealthy signs of sites that are on the way to a website graveyard.

The question at this point is what happened and how do you stop this from happening to YOUR website before it’s too late.  What you may find interesting is that while tutorial aggregate portals like the big 3 are petering off, original content tutorial sites catering to specific niches are still doing quite well, in fact probably better than ever.  It’s becoming easier for people to find these sites through long-tail keyword searches on search engines so they no longer have to even rely on these portals for traffic anymore.  With basic SEO and patience, it’s hard not to succeed at some small level.  With bigger investments (in terms of time and development) and smarter marketing, you can stand to make a nice little profit once you understand how the web works today.

So what happened to the big 3 exactly?  In the most basic terms, they were mismanaged at a time when Google started making huge strides in long-tail keyword search results making it MUCH easier to locate tutorials for exactly what you wanted right from Google instead of having to sift through results on an aggregate that suffered from ancient Boolean search logic with sometimes sketchy results and 404 links once you finally found what you needed.  It was the perfect storm and all 3 major sites sailed directly in to the teeth of the seething maw of web destruction.  Once the downpour ceased it’s pummeling drive, some seriously battered websites floated out of the haze and have been drifting ever since and even now the seams continue to widen and water is pouring in, dragging them under.  The sites also allowed clutter to build up and standards started to slip both in terms of tutorial quality and advertisers and the situation would only worsen as users continued to drop as they discovered much easier methods of finding tutorials for free.  The sites with forums were further mangled by out-of-control spam, rendering the forums virtually useless to any valid users looking to be part of the community.

The final straw that broke the e-camel’s back was the massive implosion of online ad pricing, which saw a massive drop virtually overnight on all major networks.  After several years of high CPC prices with AdSense and other small competitors and the absolute insane earnings from the short-lived Yahoo Ad Network beta phase (think nerds, hookers and blow) prices went from dollars per click to a penny per click or lower.  Many webmasters found themselves unable to pay basic living costs once the ad market crashed and some bailed for steady employment, others fought to get through it, and some simply moved in to their mother’s basement and continue to fight the good fight!  This was actually one of the major factors that led me to dump the tutorial portal side of P2L’s business (I still run the hosting) and focus on more productive revenue generation.  2008 was most definitely gone and would never be repeated.

Pixel2life daily traffic from better times – 30k visits a day!

I founded Pixel2life – it was my creation, my baby, my passion and my fulltime business for many years and when it changed so I could pursue new challenges, it was done so with the very best of intentions and was assured that my site was in good hands.  It pains me to see what has happened to my beloved P2L, the tutorial community and the sites I used to consider threats to my livelihood.  While I know there is nothing I can do for P2L at this point even if it handed back to me today on a silver platter, I will always value the MASSIVE amount of lessons learned in every aspect of web development and management that I carry with me today.

Another benefit from the demise of P2L is that I can impart some advise to you, my readers, to help you preserve your website and possibly your livelihood.  If you run or want to run a website and want it to thrive for years to come, here are 12 lessons from me to you:

  1.  Always try to gear your site to a particular focused niche and try to cater to a niche made up of a buying audience rather than an audience looking for something free.  P2L was geared towards people looking for free tutorials, so when it came to looking for ways of converting on that traffic, it was a nightmare.  Another site I ran that provided product reviews for a particular niche had 10 times LESS traffic than P2L, but actually generated about double the revenue. The people that used that website were looking to buy products and just wanted to find out of it was worth it… it’s not hard to convert on an audience that has one hand on the mouse and the other wrapped around their credit card.
  2. Know your niche like the back of your hand.  If you’re not an authority on your niche, your audience will know it and will look elsewhere.  Live and breath your niche and become the dominant name in that field – this was critical to both my tutorial company and my collectibles company.
  3. Write original content that has not been done to death.  Forget about aggregate sites in general – Facebook, Reddit and Google have killed most of those opportunities so focus on providing your own unique content that can’t be found anywhere else and you’ll find other likeminded people that want to digest it.
  4. Listen to your audience, they are telling you what your competitors are already working on simply by telling you what they want.  If you don’t do it, someone will – that’s actually why I started P2L to begin with.
  5. Learn everything you can about SEO, it’s really important.  There are simple factors in search engine optimization that can make a HUGE difference in how much traffic search engines send your way.  At the same time, there are fatal mistakes you can make on your site that can turn search engines away from you and could take months to recover even if you manage to fix them.
  6. Constantly question every aspect of your website to ensure you’re not instilling a sense of blind cruise control.  Don’t confuse this with indecision or questioning your business sense…  what you want to do is ensure that your site logically makes sense and your business model is relevant and effective.  Why does your site exist?  Does it make sense?  Why would users come here instead of a competitor?
  7. There’s no such thing as an auto-pilot site.  The second you take your foot off the gas and let the site run on auto-pilot is the second someone is taking advantage of your lack of interest to threaten your market share.
  8. Don’t be afraid of change and evolution of your site, the web and the audience.  As social media and user generated content continues to dominate the web, things like “I don’t need a twitter account” are emotion based statements founded on fear of change.  If you want to have a business online that thrives, you’d better know where people gather and then make yourself heard.
  9. Put yourself in the user’s shoes and pretend to search the web like a regular person who has never heard of your site before.  If you have a business called Joe’s Bowls in Sacramento with a niche site on decorative ceramic bowls, then no one is going to open up Google and type Joe’s Bowls if they’ve never heard of you.  Be realistic and search ‘ceramic bowl store Sacramento’.  Are you anywhere to be found in the search results?  Check out your social media channels and those of your competitor.  Who’s more engaging and why?  If you can afford it, hire some folks for a focus group and get honest opinions.  You would be shocked at what you find out.
  10. Manage your site like a project, with a clear charter, project scope, work breakdown structure with deadlines and milestones.  Have the capital required to hire a top notch developer if you want to do it right the first time and do not let ANYONE compromise your delivery dates.  The more your drag out and delay a project, the longer you delay building up your business and generating revenue.
  11. Easy or hard, your decisions should be based on numbers and logic, not emotions.  Don’t become so attached to something that you ignore the facts.  I have this as number 10, but it’s one of the most fatal mistakes a webmaster can make.  AB test everything, learn how to use Google Analytics and study conversion.  Your site is a business, and successful businesses have a proper business model, a P&L and management decisions are based of actual data.  If your site is on a downward trend, then you need to investigate and address it, not dig in and ride it out or stick your head in the sand.  Otherwise you could follow the big 3 in to obscurity.
  12. Love what you do.  If you’re going to run your own website and business for years to come, you had better love the subject matter.

Do you miss the good ol’ P2L days?  Have some thoughts on what I wrote?  Please share them by using the comment form below, I read everything you guys send me.

Thanks for reading!
Dan

Comscore and Quantcast – How they work and why they are the gold standard of guess-work.

Comscore and Quantcast – How they work and why they are the gold standard of guess-work.

Greetings sports fans, welcome to another post that I hope will either spark some discussion, open some eyes or perhaps help me understand this situation in a different light, granting it some legitimacy a bit heavier than the feather-weight I feel it has.  It is often said that comScore is the gold standard of measured site metrics used by advertising agencies when they make their digital media buy decisions, shortly followed by Quantcast.  These companies have the power to influence multi-million dollar decisions that can potentially be made based on their demographic reports.

I deal with comScore and recently Quantcast on a regular basis, and quite honestly I’ve come to the conclusion that they are really nothing more than peddlers of educated guesses.  I also feel that the possible error-range in their evaluations has the potential to me massive, hence unfairly denying someone possible revenue dollars due to their metrics net being too small.  I often scratch my head wondering, how in god’s green earth did these guys get so influential in the world of advertising?  Really good PR I guess.  I also often wonder just how far is the line pushed when polling the demographic data they gather in the efforts for online accuracy supremacy.

I would say one of the biggest errors the digital ad industry makes is confusing or blurring the lines between actual site metrics, vs site demographics beyond what is provided in the browsers header information.  Let me be very clear here, the ONLY way a site can truly know the age, race, income or favorite beer of any given user is if that user enters it in a form and clicks enter.  Anything beyond that, is quite honestly guesswork.

Site Metrics

Real site metrics easily defined is the collection and reporting of REAL visitor data to your website by a piece of analytical software, the most popular in the world being Google Analytics.  GA uses the REAL data from your REAL visitors, records and collects that anonymous data and provides you easy-to-read formats of that traffic information in a vast palette of reporting options.

The site demographic metrics reports you get from comScore are really just educated guesses based on a pool of poll users that are tracked via plugins, web beacons and/or tracking cookies.  They then average out that information with the number of uniques and page views you have and their advanced algorithm provides you with Gold Seal demographics… or what I call educated guesswork.

This is also why you can’t marry the data comScore spits out vs actual Google Analytics information.  So if your comScore reporting is telling you the median age of your site is 28 and 35% of your audience is gamers, you can’t ACTUALLY track who those people are and what parts of your site they are visiting.  You can’t track them because they aren’t real visitors, it’s just a guess.

What is comScore?

comScore is an Internet marketing research company providing marketing data and services to many of the Internet’s largest businesses. comScore tracks all internet data on its surveyed computers in order to study online behavior. You can visit their site at http://www.comscore.com.

How does comScore work?

One of the most common questions asked is how does comScore work?  Where do they get the demographics information that almost seems to come out of thin air?  Well, they in fact have a couple of primary methods.

comScore is a paid measuring tool, meaning you must subscribe to their services in order to track and report your comScore metrics reports.  The website to be tracked must have the comScore tag propagated throughout the entire website in the same way you would a GA code and this will allow comScore to accurately measure your traffic, pageviews and other information that you a standard analytics program would collect.  So typically pageviews and unique visitors are quite accurate and should line up with GA numbers, although UVs will likely be a bit lower due to the way comScore measures uniques vs Google Analytics.  GA uses actual uniques, comScore magically tracks you and guesses when you are using your work PC, phone and Home PC and then numbers you as a single unique.

When I asked a comScore rep how exactly age is calculated by comScore for the demographics reporting, they confirmed the above:

“Demographic information is gathered from our panel.  When someone opts into the comScore panel, they are required to fill out a short questionnaire where we gather demographic information for themselves as well as other people in the HHLD who will be using the metered computer.  We then use census populations estimates to project out to the total internet population.”

So how does this part of the magic happen? How does it know what color your poop is, how old your car is and how much you make a year?  A couple of ways.

The Research Panel

comScore maintains a group of around 2 million monitored research panelists that run a background monitoring software package that tracks everything they do online.  comScore partners up with several technology brands to create and maintain this software, such as Permission Research, Opinion Square and VoiceFive Networks.  The users in this group are given benefits for being a panelist, including free software, online storage data, and chances to win cash and prizes from comScore.  comScore then uses a series of weights to adjust the statistics so that they have a better reach that reflects US and global browsing than just the two million panel members bring to the table.  This is where the guess-work comes in, as well as comScore panelists…

comScore Panelists

comScore regularly recruits panelists through random digital dialing, as well as additional online and offline methods such as polls, quick questionnaires and much more.  comScore then uses that data to determine total people online, geographic location, income, age, and other factors and then apply that information to “massage” their research panel stats and generate an accurate global or US demographic.

Additional information about comScore

I sent comScore a request with some of my questions and got back some great information directly from comScore:

comScore measures people and not cookies or IP addresses as your internal data does.  The way we do this is as follows:

When a company wants to become unified they sign up and place a beacon (or a tag) on every page of their website.  Whenever anyone goes to one of those pages (regardless of whether they’re in our comScore panel or not) our beacon call will place a comScore cookie on the machine. We count these cookies and then we use the people in our panel to understand the following:

  • Users deleting or blocking cookies
  • Users using multiple browsers per machine
  • Users using multiple machines across home and work
  • Users using multiple machines at home
  • Multiple users on the same machine
  • Computer Overlap: An adjustment is applied to the cookie counts to account for usage across multiple machines within the same household.

Based on our findings from the above criteria, we then assign an average Cookie Per Person ratio for that site. This CPP is updated every single month for every single entity we report on.

We then take the following steps to calculate the Unique Visitors:

  • We sum up the number of cookies for the particular country we’re measuring and  just for Home and Work (so we filter out International traffic, shared computers and mobile devices)
  • We use the Cookie Per Person ratio based on the criteria above to calculate Census Only Unique Visitors from cookies
  • We use the panel to understand the number of UV’s NOT seen from cookies.  Since the site may not have tagged every single page, some UV’s will go unnoticed by cookies.
  • We sum the Panel only Unique Visitors and Census Only Unique Visitors to reach Unified Home and Work Unique Visitors
  • We use the panel to understand the overlap between people using BOTH home and work computers
  • We report the final UNIFIED UNIQUE VISITORS

Page View numbers are calculated by the following:  

This measure comes 100% from the tags on your site.  We take the raw tag number and filter it from: 

  • International traffic (if you are only purchasing US data)
  • Shared environment/mobile traffic
  • Auto refreshes and don’t comply
  • Forced viewing (pop-ups….)
  • Nedoms (non-essential domains) comScore maintains a list of pages.
  • Non human traffic from bots and spiders are also removed

Why the comScore numbers don’t match my Web Analytics data:

  • comScore measures unique persons
  • Web Analytics “unique” numbers are a measure of unique cookies
  • Differences in the numbers come from:
    • Users deleting or blocking cookies
    • Users using multiple browsers per machine
    • Users using multiple machines for home/work
    • Users using multiple machines at home
    • Multiple users on the same machine
    • Web Analytics data totals include approximations of visitors using a  combination of IP addresses and user agent when a cookie cannot be dropped.
  • comScore filters out the following:
    • International data (for US subscribers)
    • Non-human traffic (bots and spiders)
    • Nedoms (non-user initiated traffic) pop-ups, & partial page loads
    • Shared usage environments (internet cafes, libraries, airport kiosks…..)

What is Quantcast?

Quantcast is a media measurement, web analytics service that allows users to view audience statistics for millions of websites. Quantcast Corporation’s prime focus is to analyze the Internet’s web sites in order to obtain accurate usage statistics by surfers from the USA.  It is primarily used by online advertisers looking to target specific demographics such as age, income or other traits. You can visit their site at http://www.quantcast.com.

How does Quantcast Work?

Quantcast has a large network with millions of sites running its data collection feeds, web beacons and anonymous cookies, so it can track a person as he/she visits any of the websites in its network, and can build a profile of that person’s browsing habits, and then extrapolate demographics.  Quantcast tends to associate themselves to the way search engines examine how webpages are interlinked, and thereby determine relevancy within it’s network and the demographics they collect.  You can read more about what they do from a company perspective at http://www.quantcast.com/how-we-do-it.

Is it Legal?

Both comScore and Quantcast use proprietary algorithms they use to try to make educated guesses about the age of the user based on their internal measures and then displaying that person the ad.  This is again not real data, it’s based on educated guesses based on their own measures and not on the real data of the actual visitor, which is what true analytics use.  They can only track anonymous browsing habits…  AGAIN, the only real way for a site to know 100% the age of the user is if the user enters their age on the site and submits that information… anything above and beyond that is quite honestly educated guesswork on an internal formula of indicators and measures gathered by web beacons and cookies that track behavioral browsing patterns.

This is actually why Quantcast and other demographic tracking companies have faced numerous lawsuits and privacy violations… they all have to walk a very fine line of how intrusive they can be in their data gathering methods until they start to break the law.  It is illegal to gather personal individual data without authorization via cookies, beacons and other tracking means unless the user agrees to it, which is why contest pages etc all have terms and conditions the user has to agree to (one of the reasons anyhow).  All general traffic behavior research gathering has to be anonymous and is generally mentioned in website privacy policies, which you can see on just about every company website you can think of. This is why the demographics information from comScore can’t actually be applied to the real analytical data.

Both companies have an extensive history of lawsuits, accusations and general privacy violations as they try to push the boundaries of what they collect and the collection processes.  A quick Google Search shows dozens and dozens of privacy violation lawsuits against comScore.

There is no question that online privacy is a farce, and hopefully as individuals continue to see how easily their privacy is exploited online, we learn to keep things closer to the vest.  Check out this little blog post by Robert Dempsey about comScore, a bit of an eye opener in case your head is in the sand.

Why do ad agencies LOVE Comscore?

Is it a lack of options?  Awesome marketing on comScore’s part? Dominance in the industry? Well, it’s a bit of everything to be honest.  We know that it’s nothing but educated guesswork, yet multi-million dollar deals are lost and won because of what comScore has to say, more so than REAL numbers such as the metrics provided by Google Analytics for example. comScore has positioned itself to be the leader in demographic research and through aggressive business propagation and smart marketing have made it as common and standard to digital ad planning as TVs are to a consumer’s home.  You may not realize it, but you are likely touched by comScore on a daily basis… when you surf, when you read magazines, when your boss is making decisions that affect you and your company and so much more.  It’s used daily in media kits, presentations, infographs, marketing plans and many other mediums for everything from entertainment to purchase proposals.

comScore is everywhere and has become masters of educated guesswork, ninjas of not-so-naked truth and warriors of what’s up online. There is no question that if you plan to work with ad agencies on premium ad buys for your website, you have no choice but to tag with comScore if you plan on playing with the big boys.  BUT if you’re concerned about your online privacy and how you are tracked, fact-finding on the practises of comScore, Quantcast and other demographic measuring companies is a scary eye-opener.

How do you feel about your online privacy or about comScore and their metrics?  Are you an actual comScore research panel member?  Please chime in with your comments by using the form at the bottom of the page and please share this article socially with your friends and connections.

Thanks for reading!
Dan

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