Tuesday, November 18, 2008

Web Analytics Afloat, Despite the Falling Economic Tide

Read the papers, check the blogosphere or talk to your peers; the economy is great fodder for discussion these days. There’s a great thread at Web Analytics Demystified that rebukes the notion that Web Analytics technology is recession proof. Most commenter’s agree and there is compelling evidence to indicate that times are getting tougher all around, but I’ll share a few anecdotes about why I believe that Eric is wrong and that Web analytics (and Web technologies in general) are more insulated than he leads us to believe.

For starters, I’ve been viewing the current economic crisis through a comparative lens of what happened when the bubble burst in 2001. One fundamental difference is that in ’01 we entered a technology recession that stunted the growth of a nascent channel that was still in the throws of proving its worth. So many investments were sunk into the digital channel that was predominantly managed by twenty-somethings (spinning in their Aeron Chairs), that a crash - or at least a grounding - in reality was imminent. In 2008 we have entered into an entire economic recession that affects technology as well as all other industries around us. Forrester President and CEO, George Colony comments here as well as makes a few didactic points highlighting the pervasiveness of technology, the burgeoning use of cellular devices and finally “Social Sigma”.

While I won’t argue with layoffs and increased scrutiny for all technology spending, I do believe that the accountability that Web analytics brings to Marketing is irrefutable. This holds true no matter how well ingrained analytics is within an organization. My clients that currently use analytics are stating that they’re getting more responsibilities and attention from the upper ranks of their organizations. While new dollars may not be flowing into these analytics teams, they are relatively in tact and viewed as important sources of information regarding performance of online initiatives. Further, funds that were earmarked for analytics projects, such as upgrading from HBX to SiteCatalyst and acquiring DataWarehouse are still moving forward for the companies that I talk to. This may have something to do with Omniture’s successful third quarter and optimistic outlook for the future. For companies that aren’t yet sold on Web analytics, it’s my hunch that as things get tougher in the economy, the free tools on the marketplace will become attractive. Increased use in capable tools such as Yahoo! Web Analytics and Google Analytics will help many organizations weather the economic storm and may even provide additional business for analytics consultants.

So, here are a few thoughts on why Web analytics is insulated from economic cutbacks and supporting quotes from clients.

Accountability is paramount. Undoubtedly the economy will affect all businesses and the tide of irrational spending on unproven technologies, experimental marketing initiatives and exuberance surrounding non-revenue generating endeavors will lower all boats for some time. However, IT departments, Marketers and Web analysts will be asked to do more with less. To accomplish this feat, reliance on technology will become more prominent. Thus, as we move to a “prove it” mentality, the metrics derived from Web analytics (and testing technologies) will serve as bullets to strengthen arguments and prove why spending/campaigns/initiatives were successful. I do expect that overhead will be trimmed and new hiring is unlikely to occur, but organizations that have Analytics practitioners and investments in Web analytics technologies will increasingly look to these resources for answers.

Two weeks ago 10 percent of my company was let go. But the analytics team is still in tact and we’ll be getting more responsibility.” Web Analytics Manager
We’re short on [Web analytics] staff and our open requisition was just frozen, so it’s a team of two. We are however moving ahead with a product upgrade and key initiatives such as mobile measurement.” VP Online Marketing

eBusiness is becoming all Business. Again going back to 2001, for many organizations, the Web was a garage venture that didn’t merit a seat at the big table. “Those Web Guys” were creating content for a few early adopters that were bold enough to shop online and brazen enough to use the Internet as their main source of information. Fast forward to today and the Web is an undisputable tool for every organization doing business. It is the face of the brand to customers and the first impression companies make on the majority of their visitors. The Web is no longer a choice for businesses; instead it is an imperative. Lack of a Web presence is an instant loss of credibility. And for many brands the conversation taking place off-site is equally important (and potentially more effective) than the one that they’re orchestrating. Measurement technologies provide a method to identify where the conversation takes place and to use that knowledge to impact change. Stalwart brands like the New York Times are using the Web as a bellwether for offline decisions and impacting both top and bottom line revenue as a result.
Our CEO just said in a board meeting that eCommerce is helping drive the turnaround in the overall business…” Vice president, eCommerce, large multichannel retailer (Forrester Report)

Failure on the Web is not an option. It’s not. Failure at this point in time would be catastrophic. However you look at the economic situation, consumers will be seeking more information given tough times and the Web is the primary vehicle for this effort. Failure to have an informative, engaging Web site is grounds for dismissal. Consumers, prospectors and site visitors alike will flee to other Web sites and yours will be left in the dust. The Web is the lowest and most cost effective channel available and businesses should be fortifying their efforts in this area. My evidence shows that while companies are slowing on wholesale Web site redesigns, there is increased activity in optimizing online efforts and eeking out incremental improvements to existing capabilities. In fact, companies that I talk to are actually fortifying their infrastructures to place their Web sites on more secure footing to brace for an economic slump. If companies take away Web analytics from this critical channel, they’re essentially taking away the control tower from the airport. It simply won’t happen. Regardless of whether companies embrace Web analytics, they know enough to realize that it’s a key tool for understanding what’s happening with their brands, their customers and their technology investments.
Companies are spending money to save money” VP EMEA

I do agree with planning for tough economic times by focusing on profits, producing insightful information, and evaluating your personal situation. However, it’s my opinion that Web analytics will weather the economic storm more favorably than many other discretionary tools. Wait – with 88 percent of companies over $50M in annual revenue using analytics – I’d venture to say that Web analytics is beyond discretionary and has reached necessary status. I also believe that Web analytics will grow in 2009, most aggressively in the areas of testing and targeting (where we’ve got a lot of room to grow). Yet, I’ll admit that my information and insight is derived from a small sample of customers and organizations. To that end, we are currently fielding executive surveys that ask these questions of Web site decision makers, so that we have the data collected outside the echo chamber which supports the claims I’m making here. Stay tuned for hard numbers and I’ll keep writing. I’m certain that this topic has some longevity to it. But by all means let me know what you think.


Anonymous said...

Great article John - you hit a lot of solid points there that are relevant in this economy. Nice to see the perspective of someone who has access to the management teams of a variety of companies.

Best, Jodi

John Lovett said...

Thanks Jodi, perhaps I'm the perennial optimist, even despite more news of job cuts by AT&T and Credit Suisse just this week. Don't get me wrong, things are going to get worse.

Yet, I still believe that Web technologies, particularly measurement technologies will remain afloat. Hey, if the CEO of Twitter can allude to monetizing his service in Q1, then we just might all make it through.