Unique visitors or total attention?
I wrote on Wed about the notion of “total attention” as a useful metric by which to evaluate music or other websites — but didn’t explain my thinking or actually run the numbers.
As so many have written over the last decade, a large and growing proportion of GDP comprises products and services that are (or can be) rendered in bits. As it becomes ever cheaper to create, copy and distribute bits, scarce resources in production (broadly defined) are increasingly giving way to scarce resources in consumption – i.e. consumer attention. As an aside, this is why I’ve long believed (and Chris Anderson eloquently wrote a few years back) that the most significant driver of value for digital products is really just “matchmaking” or filtering or discovery. That is, helping people find those bits of greatest interest from the digital haystack, so to speak.
In any event, if consumer attention is the most precious resource in the digital value chain, then its proper measurement is critical. Further, I’d argue that the more attention a web offering can command, the greater the opportunity for monetization, all else equal. If a person visits more pages on a website, listens to more minutes of a webcast, or uses another web-based service more frequently, there are more opportunities to place promotional or branding messages, whether priced on a CPM, CPC, CPA or other basis.
Likewise, a user’s choice to spend more of his “disposable” hours in the day on a website/cast/service also suggests that he ascribes greater value to it, and — again, all else equal — there is a greater likelihood he may be willing to pay directly for some aspect of that product, whether priced on an a la carte (commerce) or ongoing (subscription) basis.
To measure the total attention that a web offering commands, 3 factors must be considered:
- unique visitors
- frequency of visits (e.g. avg visits/unique)
- average “stay” per visit
While average stay per visit (e.g. minutes on site) would seem a logical measure to assess the magnitude of a visitor’s activity on site — since it tracks the total minutes of attention granted — another, perhaps more practical measure is page views per visit. Page views per visit is useful b/c it (1) generally corresponds to new ad placement opportunities (with each page refresh), and (2) ensures that a user is “active” on the site and does not simply have the browser open in the background while, say, writing an email.
So then total attention can be defined in 2 ways:
- unique visitors x visits/unique x minutes/visit = total minutes of attention
- unique visitors x visits/unique x pages/visit = total pages of attention
I used compete.com to rank the top 10 music sites on the latter basis (the former really won’t make sense until online audio ads move beyond a nascent stage). As this post has gotten a bit overlong, I’ll include these rankings in a new post.
Filed under: discovery, Uncategorized, valuation, ventures | 2 Comments