A website is pointless if no one goes to it. In the discussion that follows, we will focus on visitors arriving via online advertising, but Integrated Path Analysis works just as well for native search listings, affiliate programs or simple link exchanges.

Ad presentation
The most important number we need to understand the start of the visitor's path is cost-per-visitor (CPV), or cost-per-click (CPC). If you are buying pay-per-click ads, this is presented to you in your account reports. If you are paying for impressions, then you need to calculate this from the total spend and the number of visitors generated.

For the purposes of Integrated Path Analysis, we are not concerned with the number of ad impressions or the clickthrough rate (CTR). Those factors are important for assessing and improving the performance of the ads, but that is not the point of Integrated Path Analysis.

We are concerned with the critical decisions that move someone toward purchase. The first critical decision a potential customer makes is whether to click on our ad (or not). For our purposes, we're not very interested in the number of people who clicked, but simply in how much we paid for each click.

Landing pages
Visitors move from ad to landing page. If you have not provided different entry pages specifically designed for different ads, you will probably be using the homepage as your generic landing page.

Almost all visitors decide whether to leave or enter your site based on their assessment of the landing page. They use this page to discover the content of the site, and to assess the navigation system and other functional elements to see how it works. In this they are trying to decide if what they are looking for is contained within the site, and whether they will be able to find it without too much effort.

The critical thing about landing pages is that it costs money to show them to people. This is the cost-per-click we determined in the ad presentation section above. If people get to a landing page and then bounce (or leave), it still costs money. This "bounce cost" has to be recovered later from sales.

In other words, our customers subsidize our bouncers. This subsidy is factored into our analysis at this point by determination of the cost-per-reader. A reader is a visitor who enters the site, rather than bouncing. Cost-per-reader is determined by combining the CPC with the clickthrough rate for our landing pages, thus:

In the above example, we are paying $2.50 per click in our advertising, and 35 percent of people who click the ad leave without going beyond the landing page. The net result is that it costs $3.85 to get someone to read the site.

In other words, this is what we are paying to commence our sales pitch.