WHAT ARE THEY DOING ONLINE?
Benchmarking competitive performance is an established business practice.
Understanding who one’s competitors are and tracking one’s performance vis-à-vis these players
is vital to the financial health of every corporation. Benchmarking lets companies track new
entrants into the market and track surges or dips in performance of established players. As such,
benchmarking oneself against competitors is a robust method to ensure a long-term, sustainable,
and substantial competitive advantage (Porter, 1998).
Maintaining a strong presence over the Internet has become an indispensable aspect of
conducting business in today’s global economy (Hoffman, Novak and Chatterjee, 1995). By
reducing the barriers to entry, the Internet has made it possible for companies to compete online,
regardless of firm size. At the same time, competition for traffic is intense on the Web. Traffic
on the Web exhibits a “winner-take-all” nature with only a few large players garnering high
levels of traffic while most languish with low levels of consumer interest (Adamic and
Huberman 2000, Huberman 2003). Therefore, understanding one’s relative position in the
marketplace takes on a greater sense of urgency.
Benchmarking in the online environment poses unique challenges. Unlike the physical
environment where physical cues (e.g. size of buildings, traffic in a physical store, working
hours, and size of parking lot) help one understand the size of competition, online one is left
guessing about the extent and nature of competition.
Managers who are interested in assessing the traffic to a particular site and benchmarking
it against key competitors run into many difficulties. First, analysis of the traffic to one’s own
web sites may provide some insight into the competitive picture. However, this analysis does
not provide a comparative perspective. Second, measuring traffic on the Internet and selling