
During the past week I’ve had a number of conversations with different domain owners regarding their stats. What became evident was the confusion around what the statistics were actually telling them and how to best interpret the numbers. This got me thinking that unpacking some of the basic metrics of the domain industry is long overdue.
Views/Clicks & RPM
When you look at your parking account many of you may assume that views are a person “viewing” the parked page. This is actually NOT true. Every parking provider filters traffic coming into their system in an effort to determine whether there is a “real” person at the other end of the HTML request. Since each company has their own filters this means that there will be different numbers reported in their interface when you compare one company to another.
For example, if you compare the views of Domain Sponsor versus Sedo for individual domains you will see entirely different numbers, even if we could send the identical traffic during an identical period of time to both companies.
Is this the parking companies playing funny business and stealing your traffic? No, not at all. It’s one of their ways of keeping fraud out of their networks, which is actually good for everyone.
Let’s take a look at the impact of the change in views on a number of different metrics. The formula for Click Through Rate (CTR) is the following:
Click Through Rate = Total Clicks / Views
I won’t even start on the definition of a click but let’s look at the impact that filtering the views has on CTR between two parking companies that filter views differently.
Parking Company 1 - CTR = 10 / 10 = 100%
Parking Company 2 - CTR = 10 / 20 = 50%
In our hypothetical example here this is for the same traffic but the views have just been filtered differently. It’s very easy to think that Parking Company 1 is fantastic compared to parking company 2. This is plainly not true, they are both the same.
At this point most people then go for revenue per thousand visitors (RPM) as the metric to use that allows the comparison of one parking company against another. The formula is:
RPM = revenue / views * 1000
Once again, we have the problem of the views being filtered. So if you have two parking companies with identical revenues you need to ask yourself which is performing better?
Parking Company 1 - RPM = $10 / 10 * 1000 = 1000 RPM
Parking Company 2 - RPM = $10 / 20 * 1000 = 500 RPM
Most people immediately leap to parking company 1 but once again the filtering of the views completely distorts the numbers.
Next week we explain some of the confusion surrounding not only statistics of CTR and RPM but also the revenue. The entire 'Statistics Aren't Real' article can be found at www.whizzbangsblog.com