In the beginning, there was the hit counter. Like a car's odometer, the numbers clicked along with each website visit as readers travelled the information superhighway.
How times have changed. Those relics of the Internet's early days have given way to much more sophisticated audience-tracking tools that can tell you everything you could want to know: page views, unique visitors, time spent per visit, bounce rates, page depth – and much more.
Even if you're not a website designer or HTML5 aficionado, Web analytics are getting easier and more powerful all the time. In this Web Strategy series, we'll look at how audience measurement has changed and how small businesses can take advantage of it.
Knowing your customers
In bricks-and-mortar stores, it's a lot easier to know who your customers are: you can look at them. Businesses online can't see those people peering in the windows or know, for instance, how old their usual clientele is.
Analytical tools let you track your audience and figure out who they are, giving you some of the advantages physical stores offer.
"You can track what you used to be able to track with managers and eyeballs in real space," says Aimée Morrison, a professor at the University of Waterloo who studies digital media.
That extra knowledge of clientele lets businesses adapt how they work to be more efficient by seeing what customers like, or grow their business by getting a better sense of what customers are looking for.
For instance, one important measurement is the bounce rate – the likelihood a visitor will look at your site and leave without learning more about your product or, most important, do business with you. Web developers try to make pages "sticky," or less likely to make visitors want to leave.
Eric Ries, California-based entrepreneur and author of The Lean Startup, says the important measurements are those that get at the core of a business, such as the conversion rate, which is a Web page's success at getting visitors to want to actually buy your products or services. He calls everything else, like page views, "vanity numbers."
"The trap to avoid are vanity measurements – those are numbers we put in the press release to make our competitors feel bad," Mr. Ries says.
For small businesses, it's less about the absolute numbers than it is about the success rate with the clients they get. Sustainability, he says, is the key to future growth.
The art of adaptation
Fine arts and numbers don't often mix, but entrepreneur Brittany O'Donnell uses analytics to grow her company.
Ms. O'Donnell's online art gallery, Artistically Connected, provides a marketplace for fans and artists who want to avoid expensive exhibitions in art galleries.
"The big thing for us is showcasing artists at all levels, hopefully, artists you've never seen before," Ms. O'Donnell says.
She uses analytics to inform decisions like Web design, but also to attract new customers through ads. She uses Google AdWords to find common search terms and buys ads that show up when potential customers search, say, "blue art."
She also tracks what search terms led people to come to her site, and what pages they looked at when they got there.
"If I find people are interested in one particular topic, maybe I need to be focused on that," Ms. O'Donnell says.
For example, she says she found her audiences have been more interested in abstract art lately, and she's working on promoting it more heavily on her website as a result.
Too much of a good thing?
Audience tracking and customization can easily veer into privacy concerns. If a website is gathering too much information, users can start to get creeped out.
Facebook, for instance, harvests a wealth of information on all its users and customizes its ads accordingly.
"I don't like that if I tell Facebook that I'm 38 and married, it shows me ads matched to stereotypes of my gender, profession or marital status," Prof. Morrison says.
Most websites want to use personal information to serve their customers better, but there is a danger of making yourself off-putting to customers instead.
"It can be easy for businesses to forget people don't want to feel like they're being converted into data points to generate revenue," Prof. Morrison says.
The goal of analyzing your audience isn't to probe their personal lives, of course, but to make sure your business is as strong as it can be.
At their heart, these tools are the way for a business to make sure their Web strategy is on a path to success.
Next: The best free tools, and how to use them
Other stories can be found on the Web Strategy section of the Report on Small Business website .
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Chris Hannay