Rene Dechamps Otamendi added the following ...

Hi Ian,

Very interesting post indeed. I agree with you that Web Analytics is getting everywhere, I think that this parallels the Internet which is not an Island anymore.

Getting back to the comment on my post you asked a question to the consultants:
What if in the future there were no web analytics vendors, but web analytics was everywhere? What would the consultant community do then?

Well I think that as Web analytics integrates with other tools and data, us consultants will need to evolve and adapt ourselves to this new reality. At OX2 historically, we have divided the web analytics expertise in 3 tiers: Technical, Product and Business Analysis. How will this new reality affect each of these tiers?

Tier 1 – Technical specialists:
The technical experts are the ones deploying the tools, making sure that everything works, that the tags are correctly in place, that we get the right data, migrations, etc…
These specialists will still be needed in a future where WA is everywhere as technology will still exist no matter if you call it Web Analytics, (e)Business Insights or whatever.

Tier 2 – Product specialists:
The product specialists are the ones that know the products in detail and know where to look to bring the data that is needed. It’s funny to see how our product specialists sometimes get very excited about this little nuance or that new feature…
As for the previous tier, these specialists will also be needed because product will continue to exist; they might get more complex because they integrate other stuff as MVT, CMS, ad serving or whatever. This also means that their importance will grow as they will need to be more and more specialized to follow-up the growing complexity of the tools. When I speak about complexity I don’t mean that doing the same thing will be more complicated in the future, but that what will be needed in the future will be more complicated stuff like more complicated correlations, segmentations, etc…

Tier 3 – Business analysts:
The business analysts are the ones asking questions and providing insights to their customers. They might not know every little detail of a tool or how to install it as from our division of roles they have other people to support them on these issues. They need to be very strong in business, numbers and most of all common sense! At OX2 the best representation of this type of analysts is my dear wife Aurélie. She’s the one that really brings insights to our customers with her workshops and analysis. These are the specialists that help customers setting-up KPIs and define the dashboards that will allow them to assess in the long term the success of their initiatives.
Another type of service Aurélie loves to provide to many of our customers what we call ‘Quarterly Opportunity Documents’. What she does is that she plays with the data in search for new insights that are not addressed in the defined dashboards and provides thus business insights that are opportunities to grow the business and this not only related to the web channel as nowadays Web Analytics can bring you insights on many other things than pure web (operations, financial, HR, etc.).
These specialists will still be needed in the future but instead of speaking just to the web and/or marketing departments they will directly speak with the CXOs, their opinion will be valued by the board of corporations. This means that their expertise will merge with the BI.

So again, I agree with you Ian that speaking about Web Analytics will make no sense in the future (or in the present for certain companies) and we are going more and more to integrated approaches to Analytics.

Getting back to your post, your statement which says that Web Analytics will be free, I don’t know if I agree completely. It’s clear that the trend is going towards a commodity and thus software prices will go down, but I don’t see why companies would give this completely free. Also, tools as GA will be free, but the expertise will remain expensive in view of the lack of specialists in the field. If someone like Accenture has entered this market is not to sell licences of WA tools, imho what they want is to enter the services arena and provide high level of expertise to their clients as they do for other things. Even if it’s integrated in a larger project, my guess is that the analytical services will still be invoiced to the customer one way or the other.

Regarding the software vendors, do you really see Omniture taking the ‘free’ path? I personally doubt it.

Let’s imagine for a second that yes, WA services are given free of charge along with projects by companies as Accenture and then agencies. The analytics proposed will be only related to the sold project. This still leaves something out of the picture. What about a global analysis? Companies will still need to have global dashboards that will present information coming from various systems in order to become really accountable. Who is going to help companies in this? I think that Avinash’s and Eric’s rules (90/10 & 10/20/70) will still apply somehow in the future, even if the technology becomes cheaper (or free).

Aurélie and I are very much inspired for example by the writings of Kaplan & Norton. I strongly suggest the reading of their book ‘Strategy Maps‘ as for us it shows the future of Web Analytics and presents towards what should the consultants of this field focus in the future. If you have this January’s Harvard Business Review, read their new paper that has just been published “Mastering the Management System“, you can also buy it online for 6,50$ and it’s really worth every penny.

Why should you read it besides the fact that I tell you so? Kaplan & Norton created the notion of Balanced Scorecards in the 90s and this notion evolved towards Strategy maps. In their latest article that I mention they go further as they also mention Tom Davenport and his book ‘Competing on Analytics’. It’s the merge of these two thoughts that makes the article so exciting. We all wonder about WA vs BI in our little Industry and this article manages to make the nexus between these two worlds. Food for thought?

Cheers from cold Brussels,

René

John Lovett added the following ...

Great post Ian. Your thought provoking piece paints a very interesting picture of a software industry that looks to web analytics as the “brains” of the operation, if only in a value add sort of way. Yet, amid your vision, I see total chaos. While it’s already evident that Web applications and software offerings (e.g., ad servers, CMS, CRM, Site Search, etc) provide advanced analytics, these data come at a cost to the organization. They foster an ecosystem of data silos and disparate data sources that add confusion and potentially misguided information to the chaos. Allow me to expound…

Stick to What You’re Good At

While I don’t disagree that the functionality of the tools will significantly evolve and the vendor deck will be shuffled, Web analytics vendors will survive. You mention Unica and Lyris as examples of companies that are integrating analytics into their offerings. Yet, I’ll point out that both of these examples are the result of acquisitions. Further, your own project, Gatineau is a descendant of DeepMetrix, Google owes Urchin for its origins, and albeit hard to spot, as you keenly observed, Yahoo! leverages Keylime. To steal Eric’s words, “Analytics is Hard” and I can only imagine that creating an analytics tool is even harder. For this reason, vendors that I talk to about embedding analytics within their applications, see more value in delivering on their core competencies and allowing the analytics vendors to do their thing. Meanwhile, many are offering “light” analytics or “reporting” within their tools. The objective is to provide easily attainable, actionable information so that line of business owners can optimize campaigns and inform their tactical decisions. Emphasis here on short-term; application analytics do not undermine the power or strategic value of enterprise analytics solutions. Thus, the momentum behind open API’s and integration is to use application analytics when applicable, and maintain a centralized data source for comprehensive analysis. Surely acquisitions and technology conglomeration along the lines of Lyris, Omniture and others will continue, but I doubt that application technology development teams will be reallocated to bake analytics into their offerings.

Allow the Inmates to Run the Asylum?

Additionally, in your vision of the post-analytics world, the inmates are essentially running the asylum. Today’s web analytics tools maintain autonomy because they […well most] are not wed to specific applications. The ability to measure visitor behavior and the effects of ad serving, (…or site search, or commerce platforms, or CRM tools, or insert technology here…), using an independent tool provides checks and balances on the effectiveness and ROI of independent technologies. In an environment where analytics are baked into each of the products, who’s to say that the numbers are legit? While I don’t doubt the integrity of tool providers, we all know that presentation and interpretation are open for debate. At a time when the industry is challenged to bring standardization to definitions and measurement tactics, the deconstructed measurement paradigm would further fragment commonalities. However, the realities are that new independent measurement firms are proliferating as quickly as new media itself. Widgets, video, RIA’s and mobile measurement technologies abound and young companies are finding clever ways to quantify interaction. An integrated analytics solution would stifle this creativity and potentially simplify data collection, depth and quality – a scenario that no data-driven organization would stand for it.

Back to the Free Lunch?

I must say that I love the curling analogy and am personally guilty of becoming completely engrossed by the sport, only to forget about it for 23 months until the next winter Olympics. But a free-for-all web analytics technology that merely serves as a “value add” feature within another tool diminishes what we’ve all been working towards. I envision the role of the web analyst migrating towards a strategic function that is fueled by data and valued throughout an organization on its own merit. The free tool is a benefit to our industry, but what really comes for free? Tools that serve to support a larger function beyond analytical insight will no doubt prosper, but there is tremendous value in harnessing information within an enterprise tool to provide a holistic view.

So in closing, we both agree that things are getting interesting for web analytics. Yet, we’ll have to agree to disagree about the direction in which things are headed.

John Lovett
JupiterResearch

Debbie Pascoe added the following ...

Ian, very interesting post, and it appears you must have seen the news yesterday

One over-arching theme through all of the posts is that web analytics is part of a much bigger picture, and I couldn’t agree more. While this thread has to do with where web analytics as an industry is headed, there is also the topic of where web analytics as a discipline is headed. I recently wrote about this if you’re interested:

Top Four Characteristics of the Optimal Web Team
http://weblog.maxamine.com/2008/02/13/top-four-characteristics-of-the-optimal-web-team/

As far is new entrants getting in on the act, the market reality is that online marketing activities are one facet of all marketing activities. The marketing budget is now split among traditional outlets - print, TV, promotions, etc - and online outlets - owned web properties, banner ads, keyword buys. To optimize the channels, the effectiveness of each must be measured. In the online world, that means

1. Is the site headed the right direction (strategy)?
2. Is it correctly implemented (are the tags where they belong, are they transmitting the correct data, have site quality and compliance issues that can infect the data been eliminated)?
3. What variations of key pages are optimal for the best results?

Regardless of where the industry goes, web analytics “tools” will still be used. For the data they produce to have any meaning, site owners will have to know that the implementation is functioning properly. And for organizations to capitalize on their web investments, the fragmentation that currently exists in organizational structures will have to change.

Yes, I agree that things are just starting to get really interesting.

Debbie Pascoe
formerly “Maxamine”

Trace Johnson added the following ...

I love the closing commentary of John Lovett, “but there is tremendous value in harnessing information within an enterprise tool to provide a holistic view.”

While there is money to be made from advertising, I have seen web analytics actually drive change in business models. To see web analytics soul source of revenue in advertising is a poor assessment of the value analytics tools.

I agree that there will be consolidation across the industry, but the internet is evolving at a pace far beyond the ability of web analytics as a stand alone solution. I do see standardization of APIs for analytics platforms in the near future. When you factor in all the measurement utilities available for Flash, Ajax, video, and god only knows what other features in the future, it doesn’t make sense for Omniture, Google, Microsoft or any of the the large players to keep acquiring the “metric du jour companies”. I see Omniture taking a Facebook model in the very near future, offering open access integration for stand alone features. It solidifies their position in the marketplace even further while allowing for a more robust development environment which they aren’t responsible for managing.

Matt added the following ...

Very interesting. We agree with the fact that web analytics will be mostly free and as John Lovett notices, there will be an emphasis on making the data easily available to the users. This is what we are working on with Piwik
1 - plugins architecture: add/remove/build your own features
2 - open APIs: get all the data using very simple yet powerful APIs http://dev.piwik.org/trac/wiki/API

Matthias Bettag added the following ...

Hi @all,

even though I’d be very happy from my buyers-perspective to select between free tools, all of them providing high-end outcome, I don’t think a tool only will cover all WA requirements.

René already named one important reason which I actually have to evaluate a solution for in order to meet my companies requirement:

“What about a global analysis? Companies will still need to have global dashboards that will present information coming from various systems in order to become really accountable.”

To establish such a solution some level of consultancy will still be necessary very likely. Either for setting up such kind of “global dashboards” on the concerning platforms (which maybe have to be consolidated first, which may start another project…) as well as to establish a good strategy about analyzing the reports/dashboards in order to find best practices for continuous improvements. I actually don’t think that those poeple who have the budgets for E-marketing and websites will all become WA experts in the next five years. Neither that most companies will have this Know-How internally.

I would actually already be satisfied if e.g. the “Hippos” would always take into account the need of a good WA strategy as the probably most important part of a websites life-cycle.

Maybe the following analogy is not perfectly matching, but I think of this a little like about WYSIWIG-Editors for HTML which came up in the 90s. These tools allowed almost anyone to build (even dynamic) websites without any knowledge of coding or interfaces. Seems nice on first sight: Someone can set up a website without consultancy and without developers. But this person will have big trouble at latest when improvements (e.g. SEO and Accessibility, just to name these two which can lead to a total re-development) or relaunches are necessary.
by this, a (free) tool which was first helping to set up a website cheap and fast raised future costs for maintenance and caused incompatibilities for improvements.

I would definitely appreciate cheaper or even free tools (who won’t? ;-), but they are almost worthless when not used in the right way.
So maybe the sentence “There will be no Web Analytics vendors, but Web Analytics will be everywhere.” will turn out as “There will be no pure Web Analytics vendors any more, but Web Analytics consultancy will be needed everywhere.”.

Matthias Bettag
Bayer Schering Pharma

Dave added the following ...

Hi Ian,

Interesting article - which I completely disagree with. Analytics as a stand-alone product isn’t going anywhere in a hurry.

The main point of your argument; Analytics companies will integrate their services into an all-encompassing CMS / AdServer offering is true - they move towards offering their own integrated solutions here - but it is a massive leap to go from there to this means that the market for selling Analytics as a stand-alone product will disappear - and within 3 years is unrealistic.

So many companies are locked into certain CMS/AdServing platforms for a plethora of reasons. Many have their own custom built solutions. This is a fact of life that will not change any time soon.

To say that WebTrends/Omniture would lock themselves out of this market or that the market would disappear is unrealistic.

To think that within 5 years Analytics will be essentially free is also extremely unrealistic.

Just my take on it.

Regards,
Dave
(no relationship with any analytics provider)

Mark Patron added the following ...

Hi Ian, great post. Marketers been here before. The same thing happened in the direct mail data market. Twenty years ago data suppliers built expensive profiling tools and quickly found the real money was not in clever reporting but in using profiling to sell more data. Rapidly profiling became free as long as you bought the data. The same applies to using web analytics to drive better segmentation and targeting. Advertisers are much happier to pay for more segmented and targeted emails, banners, webpages etc. that make them more money. Advertisers will increasingly view the analytics as the key to unlock the door. Another relevant and related analogy is that web analytics then becomes the online equivalent of the offline marketing database, which is paid for directly or indirectly to underpin targeted marketing campaigns
Mark Patron
RedEye

Blaine Mathieu added the following ...

To Ian and everyone who replied, I think this has been a great discussion. Complete disclosure: I am the SVP of Product and Marketing at Lyris, one of the companies Ian mentions in his initial posting.

I was very interested to read the analysis/prediction that there will be no stand-alone WA vendors because WA will be everywhere and it will be free. I fully agree with these predictions although I believe that the timeframe for this happening will likely be sooner than is predicted. In fact, that future is already here.

On November 15, Lyris launched Lyris HQ, an integrated online marketing suite that includes email marketing, deliverability monitoring, PPC management, web CMS, and a WA tool. Lyris HQ is priced on a seat-based model so purchasing a single seat provides complete and unlimited functionality of all parts of the application (with the exception of email which has additional volume-based charges at higher volume levels).

The effective result of this is that WA is now fully integrated (“everywhere”) and for someone who owns a seat of Lyris HQ for email, or PPC, etc., the WA component is effectively “free” because there is no additional charge for it. None.

I thought it was important to point this out to the group since, at least for Lyris HQ, the future outlined in this posting is now. As players in the space with more traditional products and pricing models get disrupted out of the market, I imagine that this will become an accelerating trend overall. Regards,

Blaine Mathieu
SVP Product & Marketing
Lyris Inc.

Anil Batra added the following ...

Great Post Ian. However I partly disagree with both the predictions

1. In three years there will be no Web Analytics vendor, but Web Analytics will be everywhere - I completely agree that Web Analytics will be everywhere in next few years. This is already happening, as you mentioned and provide several examples. However, I disagree that there will be no Web Analytics Vendor. Microsoft, Google, Oracle, Atlas, Doubleclick etc. will (or already do) provide web analytics as an add on to their products but there will still be a need for one web analytics product you can rely on to make strategic decisions. Can you imagine having 15 different web analytics solutions that all give you different numbers? There will still be a place for deeper and strategic web analytics tool. I agree that the functionality of web analytics tool will change and they will continue adding more products. They might not be known as web analytics vendor but web analytics will be a core product that they will provide. They will be providing more than web analytics and they are already moving in that direction.

(Side note: I also agree that Omniture will buy an ad serving company, I made the same prediction last year. I also predicted that Oracle will get into Web Analytics, because I believed that web analytics will become essential part of marketing automation, Online advertising, CRM etc. and Oracle won’t want to be left behind. And actually about 10 days after making the prediction they did buy a company that has web analytics product).

2. In five year, all Web Analytics will be Free – There is no free lunch, we all know that. As John Levitt commented, most the tools that provide web analytics as an add-on product provide very light analytics and reporting. Their web analytics offering is to support or enhance the value of their product and offering, so that they can keep up with competition. There will still be a place for deeper and strategic web analytics and that will come for a price. Web Analytics maybe subsidized if you buy other products from a company like Omniture but it won’t be free (bundle discount).

A lot things can change in less than 5 year, Omniture can start using the web analytics data collected on the sites to create an online advertising network (they have pixels everywhere, they can buy an ad serving company, use touchclarity and offermetics to deliverer right ad to the right person at the right time) and then I can see they provide free web analytics tool if you let them aggregate user behavior and do targeted advertising. (My suspicion is that Google will be doing that soon too).

Anil Batra
Director of Analytics and Strategy, ZeroDash1
http://webanalysis.blogspot.com

Eric Peterson added the following ...

Ian,

Fantastic post and thanks for publishing this here at our new web analytics blog! While your theses are mighty tempting, I’m going to disagree with you as well for two reasons:

1) For 10 years everyone has been saying that web analytics was not a stand-alone business — that it was going to be subsumed into CRM, business intelligence, etc. — but that really hasn’t happened, has it? The major CRM players haven’t even sniffed at pure web analytics and the only companies even vaguely known for BI tools, Microsoft and Oracle, have made little more than puny investments (relatively speaking) to date.

Perhaps the reason that this vision has not manifest is, um, because it’s wrong. I mean, don’t we all basically agree that talk about a “360 degree view of the customer” is basically hyperbole and not at all grounded in reality? Every time I try to justify web analytics being consumed into something larger — regardless of what that “something larger” actually is — I feel like I’m trying to smash a square peg into a small, round hole.

This is not to say that Gatineau and Google Analytics are any less valuable, but I sort of doubt you and Avinash are going to set the standard on this one. I also doubt that Omniture is going to acquire anything in the near future that will make web analytics “a minor part” of their business. With the possible exception of their TouchClarity acquisition and the Search Center product, I think ** everything ** they have bought ** is ** web analytics.

I mean, you’ve heard me stamp my feet and say that analytics without testing is barely analytics, right? All Omniture is doing so far is putting all the necessary pieces of the puzzle together to be a really, really good web analytics provider. Call it “marketing optimization” if you like, but I think that the nice folks in Orme are and will continue to be known for tag-based measurement for quite some time. Even if they do continue to make acquisitions, I suspect the companies they acquire will be successively smaller and thusly even less likely to bring about the transformation you describe.

2) While I’ll have a better sense later this week after delivering the keynote address at Coremetrics client event in Ft. Worth, I think it’s too soon to count WebTrends, Unica and Coremetrics out. My suspicion is that both companies will take advantage of the changes going on at Omniture and work aggressively to grab some of the WebSideStory business once a sunset plan for HBX platform is announced.

Assuming they’re successful, and assuming Omniture continues to be a web analytics vendor, I struggle with your “all web analytics will be free” prediction. Here I agree with John, Anil, and others who have said that there is too much value in independent web analytics to give it away as part of something larger. Maybe it’s because of the audience I talk to, or maybe it’s because I talk to a lot of GA “customers” who really aren’t doing web analytics (but think they are for whatever reason) but I firmly believe that you get what you pay for.

Maybe the ** best ** evidence is found in your own comments about analytics being embedded in all these different systems; don’t you agree that many of these metrics go un- or under-used? If email, advertising, search, affiliate marketing, etc. all have measurement embedded, but when companies near universally leverage Omniture/WebTrends/Coremetrics/Unica/etc., what does this say about embedded analytics?

Not to pick on Blaine, but it would be interesting to chat with a handful of Lyris HQ customers and see how they’re using the ClickTracks product. I personally haven’t had those conversations but conference season is nearly upon us so perhaps we can all test the waters and see what we learn. Again, there is a BIG DIFFERENCE between “having” and “using” when it comes to web analytics.

I think that the reason that web analytics persists as a unique discipline, one that we pay for, and forgive me if you’ve heard this one before: web analytics is hard. As long as our little craft is one that most companies fail to appreciate the full value of, thusly going massively under-utilized within the Enterprise (much less the SMB space) someone, somewhere will make sure that companies have the opportunity to pay smart people to deliver technology capable of uncovering profound insights about their online business.

Regardless of what happens you get a gold star and a big thank you for publishing the first really “in your face” controversial post here and making us all seriously consider what the future might hold. For that I thank you again!

Eric T. Peterson
CEO, Web Analytics Demystified, Inc.
http://www.webanalyticsdemystified.com

ian added the following ...

Thanks all for your great comments - you make some great points, and it’s entirely possible (in fact, likely) that those of you who disagree with me will be vindicated - but fun to put the prediction out there, nonetheless. Many points have been raised (too many to respond to individually - sorry), but below I’ve tried to pick out a couple of the main ones for a response:

Independence
A couple of folks made the point that Enterprise vendors offer an independent view of the data that you couldn’t get from, e.g., Microsoft or Google. That is true, but neither of my predictions assume that “independent” vendors are going away - merely that Web Analytics will become only a part of what those businesses offer, and that eventually they’ll offer it for free as an enabler for other more lucrative and durable revenue streams. Omniture (and probably WebTrends and CoreMetrics) aren’t going anywhere but in future I see these businesses as looking more like agencies (who also jealously guard their independence) than software vendors.

A second aspect of this point is that the current independent vendors offer the best chance of being able to unite various disparate data sources; but from talking to real users of Web Analytics, this just isn’t true, unfortunately; the effort involved is just too great, and in some cases the actual data is just not available, or is only available through one specific WA vendor/data supplier relationship (i.e. if you’re using marketing delivery system X, you have to use WA vendor Y, because only X and Y have sorted out the data-exchange necessary to make their systems work together). This kind of relationship essentially destroys the independence of the Web Analytics vendor.

Free means poor
Again, I’m not predicting that the current free tools will take over the world and put the paid vendors out of business. There is some pretty sophisticated software being given away for free these days (one example that comes to mind is Google’s search engine, or ours, come to that); as long as an alternate monetization path exists (which I believe it does with Web Analytics), free software can be good

Web Analytics is hard!
Oh, I do very much agree with this point. The idea behind it is that free software encourages businesses to ‘dabble’ in Web Analytics and not really commit to it, and therefore not really get anything out of it. But in the future I’m envisioning, businesses will be playing plenty to get access to Web Analytics functionality, either by signing up to a larger suite of services, or by buying a lot of media, or by engaging a consultancy on a major project; it’s just that they won’t be paying for the Web Analytics itself. But they’ll be plenty committed to the process, and a big part of their spend will be on experts to help them with Web Analytics. I suppose you could put this as moving from the 90/10 rule that Avinash Kaushik espouses to a 100/0 rule.

Thanks again, though, to all those who’ve commented. It’s great to have this kind of debate about the future of our industry.

Cheers,
Ian

Jaume Clotet added the following ...

Hi Ian,

Great Discussion on your last post

I would like to go over one point “There will be no Web Analytics vendors, but Web Analytics will be everywhere.”

I am trying to imagine all the WA information you cannot associate to another tool (PPC, CRM,…), simply because you do not use those others tools. I think in those companies that never will use a marketing tool because they gives internal company services, or those who use only one Marketing tool but not the others (PPC only by example)… for all those WA is still needed in a separate form, or not?

Jaume

Steve Jackson added the following ...

Hi Ian;

In five years, all Web Analytics software will be free.

I wish. Visual Site for free? Cool. I mean it’s a nice thought but I don’t think it will ever happen.

You might be right that companies might package it as part of larger offerings but they will have a cost to bear from vendors for sure.

There will be no Web Analytics vendors, but Web Analytics will be everywhere.

I get your point but do think that 5 years is a bit too short a time. Jim Stern said a couple of years ago that web analytics would not be around in 5 years. Of course he’s right - web analytics has changed considerably since then, but it hasn’t died and we’re still in the eudcation phase. I would bet in 3 years time we’ll still be saying the same thing.

I am working with large companies now who still have no idea about Analytics. They have heard of BI and have CRM but not dabbled with WA.

What I would bet we have coming is change in the way companies do business. This change is down to the Internet’s opportunity. I am seeing more and more large scale programs being launched around this change to adapt to the new ways of doing business than I’ve ever seen before. I mean i’m seeing programs where big investments are being made (9 figure sums). Our challenge as web analytics practitioners is make sure that Analytics (multi-channel analytics) is added into the mix as part of these wider change programs.

It was interesting to hear your opinion on web analytics as a business model.

In Microsoft visible changes are going on now to take advantage of their Internet opportunity.

There is also however a massive threat to the business model Microsoft currently have. If your OS software business dries up due to some kind of massive ASP we all log onto (with a light client - which is not out of the realms of possibility in the next 5-10 years) then MS needs something to replace that very big chunk of business.

Utility computing (large clusters of connected computing power like how google and amazon work) is a big threat to MS (probably the biggest they’ve ever had) but not if you develop the same kind of business model currently offered by the Web Analytics vendors.

If a company could pay €25 per employee per month to use all available MS software simply by logging in to an ASP (like salesforce works now for instance) I’d bet on companies outsourcing IT and software rather than keeping it in house. However I also think that would mean an explosion in business for MS, especially by partnering with the utility companies. One company told me they switched everyone to MACs because of the IT/Software labour costs involved with running PCs on windows. This scenario isn’t likely to hurt Microsoft while all costs remain in house, but as soon as they become freely and cheaply available via ASP MS could have problems.

Yes there would be privacy problems and all sorts of issues to overcome but I can see a time when Microsoft has a few hundred big Utility server companies as clients whom in turn make all your software products available for a monthly/quarterly fee (and probably paying MS some part for the privalege).

What has all this got to do with Web analytics?

Everything.

Can companies like Microsoft continue to give away what is essentially software for free? Yes, if they manage to build a business model around it like advertising like MS have done, but most companies are not in a position to compete with Google in that space. I don’t see anyone other than MS coming close to Google for a long while yet in competing for online advertising revenues.

So does that mean that other companies could build business models around analytics meaning they could give it away for free? I doubt it. Unless they are a utility company.

Charlie Ballard added the following ...

Terrific post, and something I’ve been thinking about deeply over the past five years I’ve been managing interactive online campaigns for two different agencies.

In three years, there will be no Web Analytics vendors at all.

This claim is nicely bold, but obviously not true. The problem lies in the definition of “Web Analytics”. If by Web Analytics you mean “software that is limited solely to tracking page views and related site events” then yes, you’re probably right. But to me Web Analytics must involve some kind of actions resulting from the analysis, and as we’ve been seeing all along, these tools are only going to become more advanced in their automated optimization capabilities:

* Omniture SearchCenter now optimizes Paid Search campaigns based on users’ target CPAs or ROASs at the keyword level. (Though strangely it still excludes Natural Search results from its tracking and rule sets.)

* TouchClarity optimizes your landing pages — and consecutive steps through the site — based on ongoing analysis of visitor segments.

* Many behaviorally-targeted ad networks allow for the serving of banner ads to only those properties in their network which prove to drive a high number of visitors to your site, or to your conversion success page.

What we *haven’t* seen yet, however — among all this momentum toward campaign-to-site-to-conversion automation — is full suite integration, where an Omniture can explain to me which of my awareness-focused banner ads run on which properties not only got me the most clicks, but also increased the number of Paid Searches I got, getting me the highest possible ROAS at the “metacampaign” level — i.e., across all my tactics (Paid Search, Natural Search, Rich Media, Email, etc.).

Until one player out there figures out some strategic offering which can play nice with all the other vendors and integrate their data into one centralized eCRM management solution — with the ability to optimize all campaigns in realtime to maximize the dependent results of each — I don’t see WA vendors losing even an ounce of their power.

The Future of Web Analytics, Demystified » Blog Archive » Some con-Fusion about web analytics implementations added the following ...

[…] aside for a moment Ian’s bold prediction, let’s assume that vendors like Omniture, WebTrends, Coremetrics, etc. continue to provide […]

Lies, Damned Lies... added the following ...

Way to go, Dennis: Yahoo! acquires IndexTools…

Well, it’s turning out to be quite the week for Web Analytics industry news. First we had Coremetrics’s $60m cash injection; now we have the news that Yahoo! has agreed to buy IndexTools. Let me start out by sending my…

Emetrics London 2008: Marketing Optimization Summit - Onetomarket Blog added the following ...

[…] binnen afzienbare tijd zou sterven en dat alle tools gratis zouden zijn in de blogpost “Web analytics is dead, long live web analytics!“. Hoewel Ian natuurlijk wat stof wilde doen opwaaien, bedoelde hij te zeggen dat web […]

Defining the Five Aspects of Web Analytics « Web Optimization Blog added the following ...

[…] A really interesting conversation, begun by Ian Thomas from Microsoft, predicts that in five years, there will be no Web Analytics vendors, but Web Analytics will be everywhere. […]