Knowing the strengths and weaknesses of your website through analytics monitoring and customer tracking may help to develop a sound Online Marketing strategy, but not knowing your competitors strategy would limit your growth.

Lack of information about the competitors also explains why some companies in an industry excel and achieve hegemony while others, sometimes with far superior resources, struggle to survive. Gathering of critical information about the competitors is termed as Competitive intelligence.

Competitive Intelligence assumes greater importance for Internet based businesses because of the ease of gathering such information, in this medium. Hence the Online Marketers need to be one up on the competition by incorporating this knowledge in their Online Marketing plans.

In this issue we will discuss the importance of Competitive Intelligence, the best practices to gather such information and the interpretation of such information, thereof. We will attempt to highlight how the in-depth knowledge of the entire business ecosystem has become indispensable, and also how Competitive Intelligence can be used for developing a more robust Online Marketing strategy.

Gathering of Competitive Intelligence is the practice of looking outside of your organization to get a broader view of your industry landscape, and obtaining external information which can be applied to promote your own website. Competitive data helps to provide an insight into the competitors' sites through data on demographic profile of their visitors, the sources of traffic, performance of their keywords and more.

In recent years, competitive intelligence (CI) has undergone a ground-swell of interest. This interest is part fueled by easy availability of information and a surge in the proliferation of commercial databases, both free and paid.

A couple of years ago gathering, analyzing and implementing strategies based on web metrics of your own website was sufficient to give you a dominant position in the market. The study of the entire ecosystem was not mandated and the game plan could be formulated in isolation, discounting the external factors. With increase in the level of competition and the evolution of online marketing, competitive intelligence has gained precedence and online marketers have started to look at the broader picture. The idea, that businesses are no more islands shielded from external factors, has started to sink in.

The most appropriate application of Competitive Intelligence data is in understanding what is happening on the lead generation side (visitor’s acquisition), post site visit analysis, detailed search analysis and in identifying new prospects for marketing relationships.

The importance of Competitive Intelligence can be illustrated by an example. Consider a web based business which, after spending thousands of dollars on a search engine optimization campaign, achieved a 24% increase in traffic over a period of 8 months. As an absolute figure this would have been fantastic, however, when compared with increase in the traffic on those keywords that increased by 40% for the same period, the achievement dwarfs.

Therefore, an optimization strategy deduced from web analytic tools and other aspects of the website, would fail to optimize the overall business landscape. Stepping away from your silo by tapping into competitive intelligence would give you a holistic picture.

Competitive intelligence essentially involves data collection, interpretation of data to derive information and analysis of the information to deduce intelligence. Collecting raw data is by far the easiest part of competitive intelligence. Interpretation of this data into information, information that can be acted upon, is where the main challenge lies. Erroneous interpretation would lead to clouded opinion and result in faulty judgments. Therefore, the process of converting data and information into useful insight is crucial for any organization. Armed with it, online marketers would be able to make informed business decisions. Without competitive intelligence you would be optimizing and measuring metrics with blindfolds. In order to understand it better, lets take an example of the 'mp3 player' industry segment.

The blue line depicts the volume of searches on 'mp3 player' and the green line represents the market share of visits to a major online retailers. Particularly noting the period between September and December (the holiday season),it is observed that the search volume for 'mp3 player' witnessed a spike. The share of visits for the online retailer did go up but was comparatively lower than rest of the year. Had the online retailer not compared his metric with that of the market, everything would have appeared to be normal. Today's online market is highly volatile and dynamic and what you don't know could potentially hurt your business.

However, the analysis can be meaningful only if the data obtained is reliable.

Competitive intelligence mandates a data gathering system for collecting data, a process to verify the credibility of data, analysis of data collected and formulation of action plans based on this information. Online marketers, in this regards, enjoy an advantage over their offline peers, since they can get data pertaining to their competitors' marketing activities with much ease as compared to their offline counterparts. Internet is a ready source of data and is available at various levels of accuracy and details. Some data are more realistic than others but should always be treated as 'estimates' (since it is outside the purview of this newsletter, we will be discussing about accuracy of data in our forthcoming newsletter). Absolute facts and figures are hard to come by (except for primary research), however there are some credible sources of raw data and intelligence. Listed below are some firms that can be used to obtain data (both free and paid) required for competitive intelligence analysis.

• Hitwise.

• ComScore.

• Nielsen//NetRatings.

• AdGooroo.

• Archive.org.

• Quantcast.

• Compete.

• Alexa.

Analysts spend a significant amount of their time providing the 'ecosystem' context to the data obtained and thus provide a 360° view to decision makers. However, comprehending the following phenomenon would enable you to develop an in-depth understanding of the competitive vista.

Visits by industry segment: Inspecting and examining the industry segmentation based on the share of visits would help you in identifying the big players and the level of competition likely to be faced. It is the first and rudimentary step in studying competitive landscape and plotting the future course of action.

Share of search engine traffic: It is estimated that 80% of traffic for a particular website comes from search engines. Knowing your share of traffic as against your competitors would play a critical role in search engine optimization. It would aid you in establishing if the increase in traffic is an industry wide phenomena or otherwise and whether your optimization efforts are helping you to beat competition.

Upstream/Downstream traffic analysis: By looking at the reports produced by the web analytic tools, you would observe that in more than 50% of the cases, the referring url section is blank. This bit of information is an important piece of the jigsaw puzzle. Third party data vendors could very well help you bridge this information gap to a certain extent, if not completely. Knowledge of the referring sources, for your as well as your competitors websites, would help you in expanding the horizon and exploiting sources for business growth. Similarly, the know-how of where visitors go after leaving the website would help gauge the reasons that might be triggering the exodus and thus help in plugging the loopholes.

Traffic segregated by Media mix or market segmentation:Segmenting the core streams of traffic (the media mix) would produce another vital piece of the jigsaw puzzle. This vital portion of information can be used for comparison, and thus help identify the scope for improvement and avenues for further exploration. Knowing the major sources of traffic for your competitors would enable you to delve into those sources and derive goodies for yourself.

Traffic by consumer profile:Consumers can be profiled based on age, demography, interest, income, lifestyle and many other parameters. Using this information in tandem with their browsing behaviors would allow you to understand the internet behavior of the segment of population you are targeting. Again, comparing this data with that of your competitors would allow you to pinpoint untapped segments or segments that are more profitable than others.

Share of power key phrases: Category keywords like mp3 players, DVDs, digital cameras, etc. are characterized by high volume of impressions. 'Category' keywords are viewed as 'entry points' into the process of consideration. Knowing your share of market for such keywords with respect to your competitors would help you understand the prevailing market conditions and enable you to reach the customers early.

We have a lot of data at our disposal and sometimes it is to tempting to go on an overdrive. Conscious efforts should be made to avoid this from eating into your resources on a large scale. Also, comparison of parameters like conversion rate, page view, etc. should be bypassed as organizations have radically different business strategies and these parameters would vary accordingly. There are various other ways (maybe better than what is already mentioned) to classify and judge raw data, and should not be limited in scope and context.

This deliberation would be incomplete, without sharing with you a quote which is the essence of this entire discussion. “If you are ignorant of both your enemy and yourself, then you are a fool and certain to be defeated in every battle. In you know yourself, but not your enemy, for every battle won, you will suffer a loss. If you know your enemy and yourself, you will win every battle.” (Sun Tzu, a Chinese military strategist).