Alexa started out as a project to archive the Internet; to keep a history of the then nascent World Wide Web as it developed. While that certainly was an interesting concept, it probably never would have paid the bills. Remnants of that project still exist: Alexa has a "Way back machine" that lets you see older versions of some pages on some sites. You can see some of my old pages there, for an example.
Alexa now also offers a search engine (Google powered, of course). Their added value is to offer additional site ranking and related site information that Goggle doesn't provide. Alexa compiles that part of its data from users of its Alexa Toolbar. Unlike Google's Page Rank, which is a simple 1 to 10 scale, Alexa ranks position: first most popular and on up, presently seeming to end somewhere close to the four million mark.
The lower the ranking, the more popular the site. It's also true that the lower rankings are much more accurate. However, Alexa ranking is strongly skewed by another factor: users of the toolbar are more apt to be interested in site traffic, which means that users are heavily weighted with webmasters and other people involved with web design and advertising. That could explain why sites that sell Internet advertising to other sites get higher positions than you might otherwise expect. TrafficMarketplace (link dead) has been in the top 100 regularly, but its Google Page Rank is only a 5. Contrast that with my site: well above 100,000 for Alexa, but a Google 6. Incidentally, Alexa doesn't rank itself, but Google shows it as an impressive 8.
Trying to improve
Alexa is trying to expand the use of its toolbar (and thus the accuracy of its statistics). They do pack a lot of useful information in, and it is perfectly compatible with the Google Toolbar; you can have both installed in your browser. Recently they have added a pop-up blocker to attract more users. However, the relatively low rate of usage, and its availability only on Windows, means that Alexa rankings, particularly at the low end, aren't accurate. Looking at Google Page Rank in conjunction with the Alexa rank is a reasonable double check, but it's probably good to keep in mind that you need to approach these figures with a healthy dash of skepticism. Still, the information can be helpful: a site claiming high usage that doesn't rank well in Alexa probably is lying to you.
Why not Google?
You really have to wonder why Google doesn't provide this kind of ranking. It's very useful and interesting, and obviously Google is in a far better position to extract more accurate data. Unfortunately, Google only provides its very rough Page Rank number, which is not useful for distinguishing between sites of similar popularity. I have little doubt that if Google were to do this, Alexa would be out of business very quickly. However, at least so far, Google seems to want to keep that sort of information unavailable. It may be that they have intentions of marketing it. Whatever the reason, Alexa is providing a useful service. Help their accuracy by installing their Alexa Toolbar if you can.
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