An interview with Bill Tancer, whose new book, Click: What Millions of People Are Doing Online and Why It Matters, will be published by Hyperion.

PW: What are millions of people doing online?

BT: There are so many different things that are happening online every day, and the patterns change on a daily basis. There are all sorts of trends that I analyze in Click, one of the first being adult Web sites, which is something that’s very difficult to get at using traditional market research methods. If we look at visits to our category of adult sites—there’s about 20,000 adult sites we put into a category—those sites account for about 10% of all Internet business in any given day. It’s one of the biggest categories, although in fact there are categories that are bigger. One of the things I’ve written about extensively in my column in Time is about social networks and their popularity—as a category, social networks have overtaken adult Web sites in terms of market share of traffic. If you look at the demographics of those two categories the adult sites are losing 18- to 24-year-olds while the social network sites are gaining them.

PW: And why does all this traffic matter?

BT: It depends on what perspective you’re asking the question from. For a business, somebody who sells to consumers, understanding consumer mindset and understanding consumers’ timing of purchases—when they’re interested in specific topics—is incredibly valuable. This type of data gives us insights that we haven’t had before. So an example from a publishing perspective—when I spoke at BEA last May, I talked about looking at a publishers calendar of when they typically bring out books—baseball in March, which seems to make sense, right before the season starts, but if you look at how consumers search on Baseball, the peak is actually the third week in July, right during the All-Star Game. But you can even pick it apart finer than that; I can tell you when interest peaks in fantasy baseball vs. college baseball vs. the World Series. My point is that with a little more data behind your decisions, as a publisher or a bookstore, you can figure out when you should put books in the stores—what topics are going to hit the mark during what time of year.

PW: Your company, Hitwise, is identified as an online competitive intelligence service. What does that entail?

BT: Hitwise monitors and reports on the largest sample of Internet users in the world—a sample of 10 million users specific to the U.S. and 25 million worldwide. I can say, for example, what percent of Internet users in the U.S. went to MySpace this week, or went to Facebook, and I can track that over a period of time. How many people search on “prom dresses” this week vs. last week? We have about 1,500 clients worldwide, all of whom come to us with different reasons for using this data. But if I were to pick some common denominators, one would be to use the data as competitive intelligence—to understand what the competition is doing online, how they’re acquiring traffic, what search terms are driving traffic to their competitors, and using that data to market more effectively. And beyond that there are strategic uses of the data. We have a lot of newspaper and magazine publishers, for example, that use our data to make editorial decisions—what type of news topics are people searching on, how are they searching, how can we refine our coverage to really meet consumer demand for topics, instead of taking a blind stab at what we think consumers are interested in.

PW: Might the activities of Hitwise become perceived as intrusive—Big Brother Is Watching?

BT: Privacy is one of our biggest concerns; we wouldn’t be able to operate as a company without ensuring privacy. The way we do that is through aggregation and anonymization of the data, so our data partners, which are primarily ISPs, strip out all personally identifiable information—any user identification—and just give us a set of data that would make it impossible for us to figure out what individuals are doing online. I think privacy laws will always balance companies and what they’re able to report on in terms of individual Internet use.

PW: Given the reams of data and the amount of online activity , how did you decide what to include in the book?

BT: There was quite a lot to work with, which I guess is a good challenge to have as a writer versus the opposite. And I think there’s opportunity for plenty more on this particular topic. I went through all the stories—and we’ve amassed so many found in the data—and I looked at the ones that really fit my particular topic—like understanding who we are by looking at “fear” searches. We took a very massive set of search-term data and filtered it for only those search terms that contained the term “fear of,” and we identified 1,300 unique fears that people search on. And we could then rank our fears, based on the volume in each specific fear. I chose that particular idea because it was just so illustrative of how we can really understand ourselves through our Internet activity.