We use Urchin for our traffic reports. Urchin is one of many software packages that interpret raw log files. I'm also going to review Google Analytics but there are a lot of other systems out there too. Check out this blog post for a list of others.
So, let's see how many hits I'm getting--WOW! I'm getting upwards of 30,000 hits a day! Too bad hits is such a useless form of measure. See, a "hit" is any request for any file from my website. When someone goes to Newfangled.com they request not only the home page, but also all the files needed to make the page. Every graphic is a hit. So one page request creates dozens of hits. Let's look at a a better way to evaluate my traffic.
Sessions are a much more accurate means of measuring. One session is counted whenever an individual visits the site. A session could be one page or it include visits to every page. Tracking sessions is a much more helpful way to view my activity than "hits."
Another helpful perspective is individual page views. Because sessions can include just one page or dozens, my session numbers alone won't give me a full picture. By comparing the ratio of sessions to total page views I begin to get a good baseline for overall site activity. Urchin's summary report averages these numbers.
But are these numbers any good? How do I know if my site's doing well?
There really isn't a direct answer to this question. I can use sites like Alexa.com to compare my traffic to competitors. But what's more important than how my site competes, is how it compares to itself over time. This is where the real insight is--which can help me improve my site.