Traffic as a false indicator of business success
I’ve noticed a renewed trend nowadays in companies pulling out those traffic numbers (and people asking about them) as a indicator of success of their startup. In fact, at Twiistup, I heard at least one audience member ask a panel “what kind of traffic should I be getting” as an indicator of success of their business.
The problem is, traffic is a “false indicator” of business success, as in it can imply success where they may not be any, at least in the perspective of “are you successful in building a business/making money.” Traffic numbers–for a business, maybe not for your personal branding–don’t mean anything, unless they’re converted into actual dollars somewhere down the line. That means, either converting that traffic into advertising dollars (CPM, CPC, CPA, etc.) or paying customers (ecommerce transactions, subscriptions, purchases).
Yes, traffic can be an indicator of success, and particularly for very large Internet sites you can do some basic math (pageviews multiplied by average CPM divided by 1000) to figure out advertising revenues. But, for smaller sites without dedicated advertising sales and very low, ad-network based CPM, that “average CPM” number is very, very small, and all those hits don’t add up, really, to much at all.
It’s also impossible to compare the traffic generated by a free, online user-generated video sharing site to a software-as-a-service provider who offers both free and premium accounts. There’s no math you can do to figure out how much of that traffic is generating revenue; which is why “recurring customers” is much more important than “user accounts”, “premium accounts” is more important than “number of users,” and why actual dollars are more important than unique visitors. In fact, with some companies, traffic has zero (yes, zero) correlation to business success. For example (this was the case with the Twiistup question) if you’re a professional service provider, there is no conversion of number of visitors to your web site and how many clients you have.
So, if you’re one of those folks pitching me with their brand new startup, who has told me “we have X bazillion unique visitors” and I’ve kinda shrugged, that’s why.
