Every company is watching the web to see what their competitors are doing. That's a good start, says Brandy Thomas, CEO of web metrics consultant Cyveillance. The problem is that most companies are doing it wrong.

"Traditional measurements don't tell you how you're doing on the Internet. You're not measured by profitability. You're not even measured by revenue anymore. You're measured by strange things like click-throughs and eyeballs," Thomas says. Keeping an eye on the competition is important, but you have to know how to do it. "It's not that people don't know that the competition exists. If they understood exactly what it is, they could more effectively react to what's happening out there," he says. Do you want to keep an eye on what's happening in your online marketplace? Here's how to do it right.

Define Your Goals

Before you can reach your business goals you must articulate them, Thomas says. Many companies try to measure their success versus other online ventures by using site metrics like traffic. But they may not be measuring the numbers that really affect their bottom lines. "We try to understand what problems potential clients are trying to solve or what opportunities they're trying to exploit," Thomas says. "If clients can articulate those goals, then we can worry more about what metrics they need to capture to understand how they're doing against that particular problem." See related articles on keeping track of the competition: VP EBusiness SAS Institute CEO of Andromedia CEO of Autobytel "We take a lot of time trying to understand what drives them as a business. Is it their goal to get more traffic to their site? Is it their goal to sell more goods over their site? Is it their goal to get more people to see their site? Is it their goal to control their distribution channels?" Once you've figured out what you want your business to do, you can use web metrics to objectively measure how you're doing against your competition. If it's your goal to get traffic, you may want to judge your traffic versus another site's traffic. If it's to compete with other companies on pricing, you'll need sales information instead.

Your company only has so much time, money and energy. When you're drawing a bead on your competition, try to go after those competitors that are really affecting your business. Thomas says Disney's response to cyber claim jumpers who steal content or use Disney- related words to draw traffic to non-Disney sites is a good example. "Disney is a well-known brand on the Internet. Pornographers have found a way to leverage Disney's brand better than Disney has in several different respects. They use Disney in their metatags. They use Disney logos. They go after the same people that Disney does to get traffic to their sites," he says.

"Disney is such a big company that they can't possibly attempt to shut down every pornographic site that uses them. Disney's mistake is they don't know how to find the sites that are hurting them the most." Thomas advises companies to use site metrics to find the companies that are hurting them most in the marketplace and then go after them. "Companies need to focus their resources on the biggest bang for the buck. If Disney does not find every porn site using their logo and find out which ones are getting the most traffic, then what they are focusing on is a pure guess. That's a big mistake for them. That's not economical. It does not make business sense," Thomas says.

Managing Your Fans

Many companies have made the mistake of viewing the web with an old- media mindset. Don't assume you can control every company that sells your product or every individual that puts up web content about your company. Instead, worry about creating a good public perception online.

"How does the Internet perceive you? That's done through managing your fans. It's done through managing your partners, your suppliers, your vendors. It's done through managing what's happening on your competitors' sites about you. It's how people formulate an impression about you on the Internet," he says. "Companies that think they are going to build, maintain, and grow their brands on the Internet by themselves are deluded. You have fans, you have vendors, you have suppliers, you have competitors. Everyone is out there, and they're working for you or they're working against you," Thomas says. If your company can find a way to convince those people to help spread your brand, you will succeed. Turn them off and you'll fail.

The net is so big and new that companies often don't know how to start building a business strategy. Site metrics can be a useful tool - or it can be a distraction from your bottom line. Keep an eye on online activities that really affect your business and you'll have hard information backing up any decisions you make.