The Site Overlay/Next Click Analysis is an important analysis that can be carried out to understand how the users are using the site navigation to find their way around from the landing page. This Next Click /Site Overlay analysis is very essential to understand how easy or hard it is for users on you site to reach the final goal : in case of a ecommerce site it can be the checkout page, in case of a content site it can be a lead submission page or registration page. It's not as important in case of blogs, but still can play an important role in helping to decide where to place the links to other posts.
The concept behind the next click analysis is very simple indeed. Here you try to find which navigational links are used most by the users. This is generally calculated as a percentage of clicks on each of the links present on a page. To give you an example, say there are three links A, B, C on your landing page(where users come in to your site after clicking a link in a search engine ). Now the user can choose to navigate to other pages of your site using the links A, B or C or can choose to leave your page. So suppose there were 100 page views for the landing page. Out of these 100 page views, 50 page views(clicks) go through to link A, 20 page views (clicks) go through to link B , 10 page views(clicks) go through to link C and the other 20 page views(clicks) choose to leave your webpage. Then for that particular page the next click/site overlay analysis will look something like below:
Link A = 50/100 = 50%
Link B =20/100 = 20%
Link C = 10/100 = 10%
Exits = 20/100 = 20%
What this little analysis shows you is that for the particular landing page the next click happens 50% of the time for link A , 20% for Link B, 10 % for Link C and 20% happen to leave the page. It's important to understand that we are only analyzing the effectiveness of the links on a particular page to carry users further on in your site. The effectiveness may vary depending on the page, the content , etc.
For example for a typical ecommerce site, the global navigation(navigation provided near the header and footer of the site which remains same throughout the site) has the highest clicks since they remain consistent across the site and helps the user to navigate across categories with ease. This analysis will help large websites to optimize their navigation to suit the users (based on the season , you can add links to the Halloween, Christmas pages in the global navigation so that users can easily navigate to these pages. ) The most important part to analyze is the shopping cart section to check whether the users are having trouble navigating to the checkout page, other wise your much expected increase in revenue would go down the drain should the users abandon the shopping cart due to poorly placed links.
Google Analytics has a cool out of the box feature called "site overlay", which helps to do the next click analysis without having to do anything on your end. Checkout the image :