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It's a very flawed quality indicator. It should only be used in conjunction with other measurement tools. It's particularly flawed for sites that SEOs and SEMs frequent, because they're more likely to be running the Alexa toolbar or a variant of it (I run Search Status). I know this for a fact, because our Web properties that are SEO focused have a highly skewed Alexa rank that is not consistent with real life data (Google Analytics). In my experience, the further away you get from sites that are frequented by people in our industry, the closer you get to more accurate numbers, but I use the word "accurate" loosely.

for me no value in Alexa and other similar visual traffic services, but when you offer paid service on your site the first Q will be : "What is your Alexa rank?" media buyers still rely on this data

I don't find much value in any one of these (Alexa, Compete, Quant) but using them together may get you an impression of number of visitors (how vague is that!). What I find frustrating, is the varying visitor information you'll get for your own websites with different analytics programs. It's not a perfect science, so the further you get from raw data the more flaws that data has.

These tools are definitely just guides, not absolutes.  They can be easily manipulated. 

Simply search "increase alexa rankings" in google and you will find hundreds of sites telling how to increase your alexa ranking. 

No ranking system is without errors

Alexa is based upon toolbar (including Search Status)
Compete is based upon toolbar (Including Search Status) and some ISP data
Quantcast is based upon installing their code, and some ISP data
RSS in recent data has been shown to have huge discrepancies

You can't tell who the visitors are, and how much influence they have or whether they are looking to spend money on your goods or services. which is probably more important.

The only stats you can rely on are your own.

Alexa is still worth looking at, when you compare data within the network. You can't use it to guess the traffic levels of a site, but you can use it to compare apples with apples. If your Alexa ranking is 10,000 and your competitor's is 20,000 (and you're both in the same industry) then the data is somewhat useful.

interesting point - however i am still not sure.
i used to measure ineedhits v's addme many many years ago and I thought Alexa was a good measure at that stage. Then at one stage both started dropping fast in rank... I think Alexa weighted the SEO industry down quite a bit at that point in time, and continues to do so...
Here is what I mean...

Alexa is what it is. If you have never heard of a site and then you see that it has a traffic rank of 6,000 then you know there is something to it.

Using it to say your site has more traffic because its ranked 85,000 over your friend of 86,000 is pointless.

I still question the need to rank your site against others traffic. In the end you make up your own metrics for what kind of numbers you want and you are working against those. In the end I don't want the traffic of craigslist. I want every person on the net who even for a moment is thinking about buying something similiar to what I am selling so its pointless to compare my traffic  to anysite that isn't that. And that site doesn't exist.

At least until I create it.

i used to be a huge advocate of Alexa, but now I dont respect it at all. More often than not whenever Minti is receiving a traffic surge the Minti Alexa graph is doing down.

Compete seems to be a "little" better.

Until people openly discuss their log files.. I think we are all in the dark

I did a comparison last week on a site that gets 5-6K uniques/day. Site is tagged with both Google Analytics and Quancast tags.

GA, Quancast and server logs were all pretty close (no big surprise).

Compete was way off.

Alexa was waaaaaaaaaayyyyyyyyyy off.

also in regards to Compete I dont trust them either.
For Minti compete says 1.2 pages/unique visitor, this is so far from the real figure that it's laughable.
I agree that we need a solution in thi market, but I dont think any out there at the moment are worth the time.

Marketing forums such as the Warrior Forum don't seem to have been affected by such manual manipulation. One thing that might have changed was the value of a page view compared to a unique visitor.

Compete since it was introduced to the search status plugin has really Skyrocketed, and mine now compares to my Alexa score.

Quantcast actually does measure quite well... but so few sites have the code installed.

Interesting.
Just added warriorforum to the Alexa graph and it does look like they took a hit with ineedhits and addme in the second half of 2004, however they certainly did gain traffic (whether that was visitors or pageviews, or both) after that.
Interesting to see that the last 6 mths it too has really fallen away.

There is a slight hole in your logic, you are only looking at specific sites with no control group



Also it is interesting how closely Amazon and Ebay follow the same path, and seems in decline