The Alexa rank is measured according to the amount of users who’ve visited a website with the Alexa toolbar installed.

In this post, I’ll examine the importance of the Alexa Rank as it relates to site monetization while briefly discussing some of the weaknesses involved in using Alexa ranking as a reliable traffic measure for any website.

What is the Alexa Rank?
Put simply, the Alexa Rank is a ranking system which bases its ranking schem on the level of traffic each website receives from the number of people who visit a website with the Alexa toolbar installed.

Alexa’s definition of the Alexa Traffic Rank:
The traffic rank is based on three months of aggregated historical traffic data from millions of Alexa Toolbar users and is a combined measure of page views and users(reach). As a first step, Alexa computes the reach and number of page views for all sites on the Web on a daily basis.
The main Alexa traffic rank is based on the geometric mean of these two quantities averaged over time (so that the rank of a site reflects both the number of users who visit that site as well as the number of pages on the site viewed by those users).

Why would you want to increase your Alexa rank?
Webmasters, advertisers and ad networks use your blog’s Alexa rank as a gauge to determine the worth of a link on your website. If you depend on link or site selling as a form of monetization you’ll definitely want to increase your Alexa rank, because it’ll increase your bargaining power when it comes to ad pricing.

ReviewMe, Text Link Ads and Sponsored Reviews are just three of the networks which base your ad selling strength on Alexa Ranks.

Problems with the Alexa Rank
Alexa ranking is heavily skewed towards websites which have a large webmaster/tech audience. This is because webmasters or web savvy audiences are much more likely to have the Alexa toolbar installed than websites whose visitors are unaware of Alexa.

As such, many have indicated that Alexa is a vastly inaccurate method of measuring a website’s reach, traffic and potential. I don’t disagree. Alexa is a silly way to measure web traffic but unfortunately, in an imperfect world Alexa is still heavily used by webmasters and ad networks when measuring the value of advertising on your website.

I understand the defects of Alexa’s ranking system and I’m not going to go into more detail about it here. What’s primarily important to me is that the Alexa Rank has become a central element in site monetization strategies.

I’m not concerned with the utility and value of Alexa but it’s perceived importance in the eyes of potential advertisers.