Tuesday, May 19, 2009

Forecasting Change for Web Analytics

This week my forecast for Web analytics will publish on Forrester.com and I’m calling for a change in the climate. We expect dollars spent on fee-based Web analytics software will grow at a compound annual rate of 17% over the next five years. That will bring us to just under $1 billion dollars by the year 2014. A respectable growth rate and not too shabby for a market size, but those in the know will ask why we haven’t hit the $1B mark by this time already? In fact, the 2009 to 2014 forecast isn’t all that dissimilar (in numbers only) from the one we published at JupiterResearch about 5 years ago. So what happened? Did the Web analytics industry stall? Did we collectively take our eye off the ball? The answer to these questions is a definitive no – but significant market conditions over the past 4 years altered the course of Web analytics indefinitely. Here’s what happened:

Promises unfulfilled. At its inception Web analytics came out of the gate on the wings of a lofty promise that reeked of amazing insights and countless online riches. Inflate this promise with some dotcom exuberance and an injection of post bubble Internet veterans. The result was a technology ahead of its time, whereby consumers weren’t ready for it and most marketers couldn’t handle it. Yet, this modern day snake-oil wasn’t a sham – it really worked. The problem was that the complexity and inability to take action on the data largely inhibited success.

Expertise sequestered. It’s been widely documented that Web analytics talent is tough to come by. These days not a week goes by that a client doesn’t pass a job requisition across my desk seeking a talented analytics staffer. But rewind four years and many of the best in Web analytics were working relentlessly to demonstrate the value of Web analytics within their organizations (many still are). Some persevered and perhaps were rewarded for their efforts, but many abandoned client-side frustrations and embarked on journeys as consultants and hired guns. This resulted in a thriving secondary market of highly qualified Web analysts (our last count revealed 91 independent firms providing Web analytics services with an average experience of 4 years per employee). Yet, many corporations were still unconvinced and left without talented in-house analytics staff to dazzle them with metrics.

Incoming tide. It’s said that a high tide raises all boats, but when a technology company wields the power to disrupt a chunk of the entire Internet, expect some lunar-level movement. Yes, I’m speaking of the introduction of Google Analytics to the marketplace. While the initial entry may be have been scoffed at by some, there is no denying the market prowess of GA today. According to numbers kindly shared by WASP for February of this year, Google Analytics holds 70% of the market for all installations of Web analytics. Free tools overall maintain 78% and while there is notable duplicity (sites installed with more than one solution, which Stephane’s data has pinned at 37%) that is a massive portion of the market capitalizing on free software. While it's great that users are adopting Web analytics in this manner, they're not contributing dollars to increase our Forecast.

So where does that leave us? Luckily, the Web analytics industry is brimming with visionaries, advocates and enthusiasts who aren’t giving up easily. Thus, change is imminent:


  • The promise and delivery of Web analytics is adjusting to meet expectations.
  • Expertise is increasingly rewarded and new talent is cultivating.
  • The rising tide is forcing vendors to improve their offerings and broaden their services.

Whether you like it or not – Web analytics is destined to become an integrated marketing service. If you’re unconvinced, simply take a look at your vendor… Either they’re supporting a marketing optimization suite, opening access to their data to other applications or giving away the Web analytics for free.

Web analytics is no longer a point solution – its part of something bigger. For vendors, this means that you should plan on diversifying or instilling your data collection solutions into as many marketing applications as possible. Agencies and consultants should maintain an agnostic approach to Web analytics tools and focus less on which solution and more on applying the right metrics, reporting quality (actionable) information and uniting data from disparate marketing functions (like advertising and site-side information). Organizations should be asking themselves how their Web analytics solution is supporting their entire marketing efforts. Not just in the data that the tools are producing, but in their ability to generate insight and automate marketing processes. Practitioners, it’s your time to shine. As I mentioned, the job market is ripe and your skills and talents are more in need now than ever.

6 comments:

Jacques Warren said...

Very insightful, as always. As an independent consultant, I also must add that GA has had an indirect impact on professional services consulting, with almost all Web/Ad agencies now offering "expert" web analytics services based on GA, since the entry-level competence is quite low with that app.

This has made the consulting market in pure WA way less interesting to many of us, and it's harder now to justify our high-end fees, since so many newcomers would work at any price to build a client portfolio.

I guess not only the vendors are impacted by the GA tide ;-).

bob said...

That resonates so well - it reads like a speech and I suddenly feel a charge of motivation this afternoon!

John Lovett said...

Thanks for the comments.

Jacques - We agree that the impact ripples beyond just the vendors. Let's hope that discerning clients can differentiate between experts and novices. My hunch is that it will be short work for veterans like you to rise above.

Bob - Glad I could motivate, even if just a little.

Cheers,
John

Jacques Warren said...

Hi John,

Oh! I'm not so worried about myself, although I have felt the effect of what I mentioned.

I also noticed some divestment from companies using GA, which translated into abandonning their paid solutions (well, if they didn't find enough value in them...), and some unwillingness to pay for high-level consulting/training for a free application (and the perception that there's is nothing to learn in GA because it's easy).

I guess one of the reasons is there's no CFO complaining about how poorly that expensive app is used.

John Marshall said...

At ClickTracks we found the lack of training to be a major impediment. Vendor supplied training also cannot help but teach people which buttons to push to generate a specific report. It doesn't necessarily help people to think like an analyst.

I'm biased, of course, but I'm hugely proud of what Avinash has created for our non-tool-specific web analytics course:

http://www.marketmotive.com/training/courses-certification/web-analytics/web-analytics-courses.html

BigAl said...

Great post, John and great recent report on the web analytics space.

Any way to get in touch with you? Our company is focused on the Latin American analytics/web marketing space and it'd be great to have a quick chat. -alan