Re: UKNM: measuring users and indeed "active users"

[David Bentley]

Great article.  


SAR, though often thought to be a rag, has always made a point of printing

down-to-earth articles which are rather contentious and sometimes off the

mark.  However I think this article reflects an important discussion point

which has been waiting in the wings for a while.


It would be fair to say that the perceived fortunes of many NASDAQ (and

those listed on other markets) based companies (and for that matter

companies who are in line for acquisition) are linked directly to the amount

of traffic and consumers that a site captures.  This is due to fact that the

success of an online company is still, bar a few exceptions, based on future

potential for profitability as opposed to real operating profits.  The

larger the customer and loyalty base the greater the opportunity for future

profitability and, as is becoming even more important these days, survival.

If a site is considered to have a large customer base then they are

attractive to investors etc....  But none of this is rocket science to this

list.


Obviously there is a world of difference in profit models between

"e-retailers" (please forgive me) like Amazon and content/community sites

like Six Degrees.  However both need customers and their loyalty.  Amazon to

show potential for profitability and Six Degrees to obtain higher revenues

for advertising etc.  Is it any wonder that, in a world where even those who

measure sites traffic and statistics use competing systems and measurements,

sites try to "cook the books" a bit so that they can look more attractive to

investors or suitors?


What encourages me about an article on this topic, is the realization that

this gauge of success is starting to be questioned and the relative

inconsistencies of measurement are inevitably going to be rationalized.

Though there are obvious benefits to building a customer base and loyalty

(which as we all know is very difficult on the Internet) there has to come a

point when that loyalty has to be turned into profit for the shareholders

(that's me with my British "shareholder value" hat on).


Going hand in hand with this is the significant drop in share price of

AMAZON yesterday, when they announced that even though their sales had

increased and their losses (which I believe are expected to be in the region

of ($500m) for this financial) wouldn't increase - but they weren't

decreasing.


I suspect that "tomorrow" is finally around the corner for online businesses

and that 2000 will spell the beginning of harsh lessons to online companies

who are unable to show a trend towards profitability (in the US), whether

they be through sales models or through ad revenue, and who still sell

themselves on the "look how many more hits we got today as opposed to

yesterday".  When many companies go for their next round of funding in the

Spring, we shall see a great deal of rationalization in this industry, and

that's not necessarily such a bad thing.


Well anyway - that's my story and I'm sticking too it!


David


----------

 >

From: "Bunder, Leslie" <Leslie [dot] Bunderinfospaceuk [dot] com>

 >

To: "'uk-netmarketingchinwag [dot] com'" <uk-netmarketingchinwag [dot] com>

 >Subject: UKNM: measuring users and indeed "active users"

 >Date: Thu, Jan 6, 2000, 8:45 AM

 >


 > An interesting report from Silicon Alley Reporter

 > (http://www.siliconalleyreporter.com) on the issue of measuring users and

 > indeed what an "active user" is.

 >

 > Any thoughts comments regarding this????

 >

 > Leslie



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