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…

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.

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.

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

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

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

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