For many marketers, much of the early excitement about the Internet came from the prospect of being able to track everything they wanted to know about their customers. This was particularly important during the first Internet Bubble in the late 1990s, when visitors, more than revenue, were key to so many business plans.
This desire to track Internet visitors generated the field now known as "Web Analytics," which refers to storing and analyzing massive log files that track users.
The changes in the Web analytics industry over time are a mirror of how the overall Internet has evolved. And it's time for another spurt of growth.
The industry was founded in 1993 with the advent of WebTrends, an enterprise-based software tool that read through massive server logs at the speed of molasses, often consuming a large piece of IT resources. The need for real-time storing and processing of data fostered applications for cloud computing -- which, in the late 1990s, operated under the auspices of application service providers (ASPs).
The leading tools of the Web analytics industry -- WebSideStory, Visual Sciences, Coremetrics, Omniture -- several years ago became ASP or cloud solutions. Indeed, even Webtrends, the initial market leader with its roots in enterprise software, would survive only by adding a hosted option.
These ASP solutions relied on JavaScript and cookies, an approach threatened by privacy fears in the early 2000s, when the U.S. government adopted a policy to ban the use of cookies on federal Websites. When the policy was instituted, it initially threatened to set a precedent for broader regulation of cookie use on the Web, but most commercial sites adopted public privacy policies to stem this furor, and the Internet continued to grow. This year, the Obama administration has been working to help crumble this cookie ban and allow government sites to begin learning from visitor behavior.
Having survived the early cookie wars, the Web analytics industry was one of the first to face the specter of “free.” In 2005, Google purchased the Urchin analytics package and launched Google Analytics, a free service whose availability prompts questions about the value of various recent industry mergers.
Whether Adobe or IBM have wasted billions or will prove they can survive even when competing with free remains to be seen. Even in this troubled economy, Web analytics has been one of the few areas where high M&A prices continue unabated.
What does this activity in the Web analytics industry mean? Is it, as some believe, a sign of less innovation as the larger firms like Adobe and IBM focus on profits to appease shareholders?
It’s time for Web analytics to evolve again with the Internet, just as it’s done over time. Most companies continue to be mired in counting clicks and views. But it’s time for some new, fresh takes on the process, particularly as Internet users are finally coming to understand that privacy on the Internet is quite limited and guided more by user actions than by regulation.
It will be interesting to see how the Web analytics industry takes the next step in its evolution, reflecting ongoing trends on the Internet.
— David Silversmith is Vice President Information Technology at FirstBook.org, an organization that provides new books to children in need.
Web Analytics makes perfect sense as long as it is applied keeping in mind the ROI /Cost to the Enterprise deploying the solution.All that data out there on consumers,somebodys Gotta use it.
As for Consumers-Do what I do.Clear your Browser cache every day and Use an Anonymizer...
Brian - great points. I'm not sure as I see these are different issues so much as a spectrum.
At one end of the spectrum is data, pure routine analysis. How many people visited. How many have this browser. How many have this screen resolution. This allows for reporting and tactical decisions.
At the other far far end of the spectrum is information - the result of analysis, A/B testing, real studies of what lures people into and off of the site. This information can be transforming - but requires the involvement, participation and support of both the business people/units and Information Technology.
The Amazons and Googles are on that far end of the spectrum - but so few other companies are and the Web Analytics companies have at least some of the blame for this as all too often they are not helping to migrate their customers from that tactical reporting end to the true business information end of the spectrum.
Web analytics (such as Gomez and keynote) offer great insignt into the customer experience on websites, page load and uptimes. This is very valuable for the IT professional who is monitoring uptime and can react to it. Also, Omniture (embeded tags) offers more marketing type of information that shows what links users click and when.
I think this thread may have hit a fork in the road with two different topics going. While I see the value of user information, I wanted to stop on the pure topic of web analytics for a moment longer.
It seems to me that in terms of web analytics--pure marketing evaluation to include abandonment rates and what lures people further into the site (I know there's more, hence my fork in the road comment)--the thought leaders aren't mainstream.
Yahoo has a genius studying how to paint the screen faster and some websites will email me with "Hey, you were about to buy--what happened?", but I don't see the art of constant analysis regarding ease of doing business on the web pervasively across industries.
So, David, do you see that differently? And, if my sense is right, why do you think that is? My hunch is that it seems theoretical when it is everything but that. Further, I think business people may see the value but need to pull IT along and have a hard time capturing the attention of their counterparts.
Receiving data from visitors is certainly not a right of a website - but it is often part of the exchange for free or discounted services.
Most web sites that are free to the consumer/visitor/user are actually paid for by an advertiser or business that can otherwise gain value from the visitor information.
Take car pricing - Kelley Blue Book and Edmunds and other services used to sell books and then CDs with pricing data (and they still do to a lesser extent) but their real business is now selling advertising on their web site. Because of that advertising they can provide the car valuations for free to the consumer. If you take away the data provided by visitors - the value of that advertising drops dramatically.
Even consider Amazon, with visitor information they are able to respond in ways that brick and mortar book stores could never do. A large part of their growth has been based on the ability to anayze visitor behavior and adapt their web site and what they stock, sell and feature.
If we stop making visitor derived data accessible to marketers - many a business plan will change. Imagine paying for Facebook or Google Docs or the many other "FREE" web 2.0 services.
Just because there is an internet that is used does not necessarily mean that the data that is derived from it has to be accessible by marketers. That was not anywhere in the plan when the internet was created. It's a nice afterthought and a nice fringe benefit, but I don't know if anyone deserves that data just because it can be had. And I am not sure it can be had in the way we want it anyway. Perhaps we work just as hard NOT to provide that data as we do TO provide it?
The saturation point may not be the "analytics" software -- which analyzes and data mines...but the paucity of data itself.
Cookies, in and of themselves, often do not say much about the user. Now in a very large portal site, you might only wish to know which widget sells better, or which image gets more clicks. However, as the web decentralizes into myriads of social networks and twitter threads, at the same time, one needs a rich appreciate of the customer.
In a social network -- the market research is the network. You learn about the customer by letting her tell you about herself...not by placing a tracking tag on the customers hide.
Chris, this consolidation certainly has a component tied to the "preverbal profit wall" that Adobe in particular is reaching. Adobe's profits are very much tied to software sales and then sales of software updates. Web Analytics are tied to annual renewals - a far more renewable revenue stream which is what Adob'e financial analysts were most likely attracted too.
It's also interesting to note that the founder of this industry was Webtrends. In 2001 NetIQ bought Webtrends and during their four year ownersthip tenure Webtrends sank from inudstry leader to the vendor of last choice. Times have changed and Adobe is a different company than NetIQ - but the industry experience does not speak well for a non-analytics company running a web analytics company.
I’m not sure consolidation is a particularly good thing in the analytic industry.I think it will stymie innovation and hamper broader metrics.
Both IBM and Adobe seem to believe there’s gold in them there nuggets, and those are fairly large bets they have made.I think what is really happening is more to your observation, David.These companies have hit the preverbal profit wall and are trying to appease shareholders with a new revenue stream.
Regardless, the consumer probably can anticipate another round of assault on their private data.
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