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According to Alexa.com, "Traffic ranking is based on three months of combined historical traffic data from millions of Alexa Toolbar users and data obtained from various other traffic data sources, and is a composite measure of page views and users (reach)".
This is to say that ranking is calculated using an exclusive methodology that combines the estimated average of unique visitors each day with the site and the estimated number of page views over the past 3 months. Alexa mines data from millions of users on the web that use the toolbar provided by the company.
Here are the main things you can do with data from Alexa Rank:
Self-Analysis: If you are a blogger or website owner, it is important to know your site's Alexa Rank because it gives you a clear idea of â€‹â€‹how popular your website is on the Internet. You can use data to strategize on the best ways to increase your site's traffic or at the most strategic steps to outperform competitors.
Competitive Analysis: Alexa can function as a competitive intelligence tool. That means with data, you can do a competitive analysis to find out the level of competitive website traffic that is interesting.
Marketing Analysis: If you are an advertiser, Alexa Rank gives you an idea of â€‹â€‹how popular a website is, so you know whether to target your ad on the site and how much it costs. In fact, the Alexa Ranking is actually one of the factors that advertisers consider to determine the marketing potential of targeted websites.