A discussion in my forum has prompted this newsletter as I think it is important for any online entrepreneur to understand how Alexa ratings work in order that they can understand why they may not be that important to the success of their online business. Too many people make the mistake of concentrating entirely on improving their Alexa ratings but at the end of the day, these rankings are just numbers – they won’t put money in the bank.
Alexa is a company owned by the Amazon group and it aims to rank every single website on the Internet in terms of how much traffic it is receiving.
Quite simply, the lower your Alexa ranking, the more traffic your website gets. The ideal scenario would be to have an Alexa ranking of ‘1’. This would mean, in theory, that your website receives more traffic than any other website in the world. Currently this position is held by Yahoo.com and as you would expect, other top sites include Microsoft, Google and eBay.
It is generally considered that a website with an Alexa rating of 100,000 or less is receiving a reasonable level of traffic but Alexa can be wildly misleading and very easily manipulated.
To understand why the rankings are misleading, you need to understand how Alexa gathers the data that it uses to create the rankings in the first place. This is really very simple – Alexa has a free toolbar that you can download and install within your Internet browser and this reports back to Alexa with the details of every single website that you visit.
Alexa can then use this information to see how many users are visiting a particular website. Then, because not every Internet user has the Alexa toolbar installed, Alexa will multiply the number of visitors by a specific margin to estimate the total number of visitors that a site may typically receive. The important word in the last sentence is ‘estimate’.
Let’s assume that the above multiplication margin is ten – that means that for each Alexa toolbar user that visits a specific web page, Alexa assumes that another nine non-toolbar users will also visit the same page. This means that if 100 toolbar users visit a specific web page on a given day, Alexa will take this as meaning that a total of 1000 people visited the same page in that 24 hour period.
This is where the figures can get distorted. If you have a website that attracts a higher than average number of Alexa toolbar users, then you are going to gain a lower Alexa rating because Alexa doesn’t make any allowance for the fact that their toolbar users visit certain types of site more often. A typical example of this is Internet marketing sites. Most Internet entrepreneurs will have the Alexa toolbar installed because they like to see the Alexa rankings for sites as they visit them (the toolbar shows you this information as soon as you visit a site). But this means that if your website attracts a lot of Internet marketing-type visitors, then your Alexa rating will be inflated above what it should be.
Here is a true-life example:
There was a popular Internet marketing site for sale last year and it had an Alexa rating of about 19,000. I figured it must be getting heavy traffic but when I discussed the matter with the owner/seller, I found that it was only receiving 6000 unique visitors a month! The reason that the Alexa rating was so low was because the majority of these visitors had the Alexa toolbar installed and therefore the calculations were being thrown out massively.
It is also possible to purchase software that will generate false hits to your site using the Alexa technology so that Alexa is fooled into believing that more people are visiting your site. This pushes your Alexa ranking down.
At the end of the day though, what is the point of having a low Alexa rating if you are not making any sales? Sure it is nice to be able to say that your site is in the top 20,000 websites in the world but if the site isn’t earning you an income, this ranking means very little (assuming that it was your intention for the site to earn you an income of course). Personally, I would much rather have a high Alexa ranking but a good income than a low ranking and minimal income.
Of course, there are benefits to the Alexa service and it can be worthwhile installing their toolbar. The toolbar will give you an indication of how busy a particular site is and in turn, how popular it is. This can be helpful when making a decision as to whether to make an online purchase for example. It is also handy for checking out your competitors 🙂
Just don’t get too hung up on Alexa as a measure of how well your business is doing. The real statistics that you should be watching are actual traffic numbers, conversion rates (ie. how many visitors actually buy something) and overall sales. These are the figures that will help you put cash in the bank and improve and grow your business.
If you are interested in finding out more about Alexa and if you wish to install their toolbar, you can do so at http://www.alexa.com
Copyright 2004 Richard Grady