What is Web Analytics?

Most people are introduced to web analytics by the ever-popular hit counter, a simple bit of code that counts and displays the number of visits to a web page. More sophisticated web analytics track the number of unique IP addresses visiting a site, count views for every page, break down results based on hour and day, show which countries the visitors are from, what browsers and operating systems they are using, and which links or search engine terms they used to find the site. One of the most popular web analytics services is AW Stats, which is available for free with most hosts.
Web analytics are important to anyone who cares about who visits their site and how they got there. Traffic can make or break the success of an online business or venture. Smart site owners write pages that are rich in relevant keywords and score well for Google searches on related topics. If you look at the articles on this site carefully, you'll notice that relevant keywords are intentionally repeated frequently in the text. A keyword for this article is the term "web analytics".

Google joined the web analytics scene in late 2005 with Google Analytics. The service is integrated with AdWords, which are the little advertisements you sometimes see on the right side of the browser screen when you search for a popular keyword. Because a site must pay Google for each clickthrough from an AdWord ad, it is important to make sure that each clickthrough is as beneficial as possible to the owner of the site.

Site owners want visitors that stay at their site for a decent length of time, visit several pages, and add the site to their favorite links list for revisiting. Web analytics help webmasters target such users. More advanced forms of web analytic tools can gather stats about streaming video watching and RSS feeds, create various scatterplots about visitor data, and perform other sophisticated functions.
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Discussion Comments
@clintflint - Most web analytics services are pretty sophisticated these days and will provide a lot more information than just where new customers are finding a website. They can give you a bounce rate and the time spent on each page of the site, as well as data on the country of origin and other demographic information about the visitors.
That should be backed up with surveys and other information if you really want to get into the nitty gritty of why people are coming to your site and staying or not staying and what they do once they are there, but for anyone who doesn't run a website for a mid-level or higher company, free web analytics are generally sufficient.
@pastanaga - Web analytics reports are really only going to be useful if someone is dealing with large numbers of new customers or visitors to their site. If they are running something like a web comic or a membership site, most of their hits are going to come from people who discovered the site and then come back to it through a bookmark. That doesn't really provide any useful data to work with if you're trying to increase revenue.
You're better off working with more traditional sources of information in that case.
Web analytics can be so useful in figuring out how and why customers get onto your site and how to keep them there for longer. It seems complicated at first and there is a bit of a learning curve, but once you know what all the statistics mean and why they are important it's not too hard.
It's not enough to just rely on a stat counter if you're serious about monetizing your site or even just reaching a lot of people. Those numbers are often inflated by hits that have nothing to do with people wanting to be on your site.
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