My first business on the Internet started in 1996. One of the challenging things about those heady days was that virtually nobody had any clue who was online, why they were online, what they were doing online, and what they might do online. For certain, nobody really knew how many people were online.
For illustrative purposes, and to jiggle the neurons of those of us with more gray hair than they’d prefer to admit, let’s review a comparative time-stat. In 2006, total online ad revenues worldwide were about $25B. Total worldwide online ad revenues in 1996, were roughly one half of one percent of that. That is to say, well before sunrise on January 3rd 2006, 1996 annual ad revenues were surpassed. The world is different now, for sure.
I remember doing all sorts of modeling in those days trying to create projections of the growth of online games and various demographics online. It was like pulling teeth – even when I was occasionally able to surreptitiously score a copy of Jupiter Research reports (et. al.) that we couldn’t begin to afford to purchase.
Are things better today, more than a decade later?
Nabeel Hyatt had a data-rich post last week comparing various online market segments to online gaming using the new Compete.com analysis tools. Om Malik pointed out many of the problems with Alexa last fall, and Brad Feld added rational fuel to that fire. David Beisel had an interesting post this week about how the means of online measurement are evolving. Curious, I dug around Compete.com today to learn how they come up with their numbers. I found this in their FAQ:
Based on the daily web usage of more than two million members (and growing!) of the Compete community, Compete calculates and estimates total traffic and rank for nearly every site on the web.
I’m sure they’ve got some kick-ass math going on under the covers (and for the record, I dig kick-ass math!), but I find it hard to believe that the demographics of those 2M people are appropriately as broad as the demographics of US Internet users. Perhaps the folks at Compete.com are doing a better job than Alexa, but only incrementally so, I have to imagine.
Do we need to measure web users?
Have we passed the point where that is an interesting statistic? Quick: what’s the population of Europe? You don’t care unless you’re playing Trivial Pursuit. Some site telling me that 115M folks visited Google last month is not generally useful. We care about segments of that large number. Demographic cuts. Time cuts. 1st and 2nd derivatives of user count curves. And so on and so forth. Absolutes aside, most folks are smart enough to only use Compete.com and Alexa data in comparisons (our site vs. our competitor’s site), but even still, GIGO, no? Absent some independent, wildly-adopted mechanism to measure, getting proper user numbers is almost certainly going to become a very fragmented business; and the companies that can best service their respective segments are going to be swimming in cash.