Alexa is an Amazon company, that among other services, provides traffic details and rankings for web sites. Everyone references Alexa’s traffic rankings. I use it regularly to get a glimpse into how much traffic (and the traffic growth) of a particular startup. Likewise, many tech journalists/bloggers/pundits use Alexa rankings to analyze how much traffic one site is getting versus another and if the site is growing or decreasing in popularity. I’ve also read on many SEO discussion boards that prospective advertisers will look at your Alexa ranking to determine how much your ad space is worth. I’ve also spoken with investors who include an Alexa traffic check in their initial look at a startup. So, clearly, if you run a web-based company, that Alexa ranking is an important number. It will likely have a direct influence on your business.

There has been much debate over how accurate Alexa’s rankings are. To understand how accurate (or inaccurate) Alexa’s data is, you need to understand how their system collects traffic data. It’s really quite simple. Alexa offers a toolbar for IE that offers up a Google search box, Alexa site info, popup blocking, and page highlighting among other features. More importantly, it records every single URL the browser visits and sends that information to Alexa. The important thing to understand here is that Alexa’s traffic data is based solely on the traffic of users who run IE and have the Alexa toolbar. For some more specifics about how and what Alexa calculates, go here.

Up until this point, you might be thinking…hmmm this Alexa sounds pretty reasonable! Rishi, why do you call it a “myth”?

Alexa states that they compute “traffic rankings by analyzing the Web usage of millions of Alexa Toolbar users.” Millions huh? Seriously, have you ever seen anyone that runs the Alexa toolbar. I sure haven’t. Google or Yahoo toolbar, sure. But never Alexa. My hunch is that it’s more like hundreds of thousands, not millions, of users. Possibly millions have downloaded it and had it installed at some point, but not all are currently running it. Check out this post from a couple years back on SEOChat. The author concludes that “that the Alexa sample size was 180,000.” Since Alexa does not post any demographic data, all of this is 100% speculation. However, the point is that the toolbar’s user base represents a very, very small percent of the Web-browsing population. And what kind of people do you think have the Alexa toolbar installed? I’m thinking it’s more Joe InternetProfessional and less Joe Teenager and even less Joe Noob. Evidence of this is that MySpace is currently ranked #5 and Google is #2. According to every other data point I’ve seen, MySpace pageviews far exceed Google. My guess is that your typical MySpace user is a lot less likely to be running the Alexa toolbar than the typical Google user. If efforts were taken to make this userbase statistically random (like a Gallup does) then the traffic data would be a lot more reliable. But as it stands today, one could not expect the pool to be random and thus the traffic data just isn’t that reliable.

Another huge problem with Alexa rankings is that it easy to manipulate. The traffic rank of ItsRishi.com is a patheticaly low 3,741,850. According to Alexa, my reach per million users for the past 3 months has been 0.1. That means that 1 in every 10 million Web users visit my site on a daily basis. Is that accurate? Who knows. Even Alexa states that traffic data beyond the top 100k is not statistically significant. Fair enough. As an experiment, I will be improving my traffic rank over the next few weeks. How? It’s simple. I installed the toolbar on my IE browser and from now on will use IE whenever I am working on ItsRishi.com. What this means is that I’ll probably end up with a few hits on average per day. If I don’t see enough of an improvement in a couple weeks, I’ll recruit some IP addresses - oops, I mean friends - to also install Alexa toolbar on IE and use it while visiting ItsRishi.com. My hope is to crack the top 100k. I’ve read many stories from webmasters who have done this very same practice with great success.

While I will be doing this for ItsRishi.com purely to satisfy my curiosity, you can bet that many companies are using such techniques to magnify their Alexa rank. The higher your rank - especially if your rank is rapidly climbing - the more people are interested in your company. That’s just a fact. Whenever I hear about a startup for the first time, I usually do a quick check of their Alexa rank to get an idea of their popularity. If the rank looks promising, I assume the site is hot and I take a deeper look. As I’ve explained, this assumption is faulty, but there really is no better (public) way of determining a site’s popularity. So while the Alexa number may not be accurate, it is a number. It’s not really much different than when Forrester publishes a report saying that an industry is X billion dollars. When you want a number, any number is better than no number. I guess the lesson here is to be careful of how much meaning you try to extract from the Alexa data.

If you’re trying to compare two companies in the same industry, the best suggestion is to find a metric that’s more pertinent to that industry. For example, an owner of a online retailer comments: “There is one competitor in particular that I watch..He is a member of Bizrate, so I can count the number of customers that take his survery each month, and compare it to the number that take our survey.” In his space, the number of Bizrate survey submissions is a much more accurate metric for him because its a nice apples-apples comparison since you can assume that at his store and his competitor’s store, the % of customers who complete the survey is about the same.

You can follow my Alexa progress here.