Free to Be...You and Me

It just keeps getting better. Today, Dennis Mortensen of IndexTools announced that Yahoo! will be offering the Web analytics services for FREE. There’s an agreement that will go out to existing partners and clients regarding the change in service level, but they will have exclusive access while Yahoo! prepares for the next rollout.

For those of you who recall 1970’s pop culture, one of my favorite Free to Be…You and Me skits involved the voices of Marlo Thomas and Mel Brooks as two bald babies trying to figure out their identities. Well, it didn’t take long for the babies to figure out who they were and apparently “Yahoo! Tools” didn’t spend much time deliberating either. The new alliance will threaten Google Analytics’ substantial market share as the current free tool on the market – AND – challenge commercial analytics offerings from larger vendors such as Omniture, WebTrends and Coremetrics.

I am truly excited to be engulfed in JupiterResearch’s 2008 Web Analytics Constellation report. IndexTools agreed to participate in this year’s review back in February, providing me the opportunity to assess the marketplace of free and commercial analytics tools on a level playing field. The completed study is scheduled to publish this summer and will include an evaluation of the following vendors: Coremetrics, Google Analytics, IndexTools, Lyris HQ ClickTracks, Nedstat, Omniture, Unica, WebTrends and WebAbacus.

This is an exciting time for Web analytics and I welcome your comments or questions about the direction of our evolving marketplace.

Yahoo! Analytics

I received a short note in my inbox this morning from Dennis Mortensen, COO of IndexTools. We spoke last week about the solution capabilities, flexibility and future direction of the product, but he must have been grinning all the while. Today he provided a link to his blog announcing that IndexTools would be acquired by Yahoo! Just a small tidbit of juicy information, I’d say.

The financials of the deal were not disclosed, but the bigger question burning up the analytics blogosphere is; What does this acquisition mean to the Web analytics world? First, the IndexTools solution is a robust analytics platform that has been build from the ground up for flexibility and sheer analysis horsepower. Dennis describes the beauty of the tool by stating that it offers less canned analysis, which in turn requires analysts to think more about their data, facilitating discovery. Many argue that IndexTools v9.0 rivals Omniture’s SiteCatalyst at a fraction of the cost. And speculation abounds regarding how Yahoo! will bring this tool to market. My guess is that Y! will devise a “Freemium” solution, where some functionality is offered to small and mid-sized businesses at no cost and incremental services (like the v10.0 Rubix visualization tool) will be available at a premium.

Competition
News of this pending deal will undoubtedly attract the attention of free analytics providers, Google Analytics and Microsoft’s AdCenter. But rather than attempting to undercut their market share by providing yet another free tool for widespread usage, Y!’s Michael Wexler, unofficially states that they’re approaching the market from a different angle. The goal, he describes, is to enable users of Yahoo! products, (development, advertiser, shopping, and end user products) to analyze usage data in a comprehensive way to derive optimal use. He goes on to compliment Google Analytics’ success as a basic tool, but criticizes that it’s not designed for people that “really want to understand their data, nor is it aimed at the variety of ways people can work with Google (it ignores all that API stuff, for example).” Wexler views IndexTools as “the foundational start to understanding not just marketing and its impact on site behavior, but how to understand you online site usage to achieve your goals…”

Ahh, look out Omniture, eh? Despite the indication that Y! is not going after the free market, if this solution is available to any part of the market for free, it will undercut the market share of Google Analytics and MS AdCenter. However, it will not displace the need for enterprise solutions like Omniture, Coremetrics and WebTrends. These companies are building out their marketing optimization platforms, with a key focus on integration. Without buying into the vendor hype about “optimization”, the industry leaders have demonstrated that Web analytics can reside at the center of data analysis for marketing functions. Y! statements from Wexler (although unofficial), make it sound like they may be eyeing the integration component, if only for it’s own services. Other vendors in the marketplace will be forced to keep up in a Web analytics feature arms race or be absorbed and rolled into larger enterprise marketing solutions. But, we’re already seeing this with tools like ClickTracks as integrated solutions within Lyris’ entire marketing suite. And Unica has taken a similar approach by integrating NetInsight analytics with its other enterprise marketing products. The Web analytics industry is evolving, but that does not spell the demise of stand-alone enterprise analytics.

Market Impact
Despite my respect for Eric Peterson, I’m inclined to disagree with his take on the pending acquisition. I do not believe that this will be a “permanent game changer” for Web analytics. Disruptive, yes – but permanently altering no. [For the sake of brevity I’m purposefully ignoring the MS/Yahoo! option.] In the free tool scenario, there’s no historic precedent (with the exception of some general open source examples: e.g., apache, MYSQL, etc) that free tools will displace commercial vendor analytics solutions. If anything, free tools will continue to be utilized concurrently with commercial alternatives for trend verification and specialized uses. Yahoo’s Wexler even confirmed this with his statement about using IndexTools to gain greater perspective on Yahoo! products. There’s nothing to indicate that a Fortune 1000 enterprise would abandon their paid vendor analytics relationship for free tools on the marketplace. If Y! decides not to make the IndexTools solution available for free, then they will certainly make a run at the larger players in the market. But competition is good for all of us and it won’t be anything we haven’t seen before.

I do believe that the availability of free or “Freemium” tools places pressure on existing analytics companies to raise the bar on functionality, usability and actionability of their data. While the free tools will help to spread the ubiquity of analytics data, the ability to correlate, analyze and take action on it will continue to be a driving factor. Here, I agree with Eric that the GAAC (Google's consultant network) will serve to perform this analysis and provides a stellar prospect list for Yahoo! Analytics, but IndexTools already works with over 200 agencies globally to analyze data and take action on it. If anything, the increase of free tools will amplify the opportunity for the prosperous analytics consulting industry and provide plenty of work for all.

In the end, I believe that the impact of this acquisition on the analytics industry will play out as follows:

~ Greater awareness and utilization of web analytics worldwide
~ Higher expectations placed on enterprise players to innovate and deliver
~ Further expansion of ancillary marketing tools as core capabilities offered by existing enterprise analytics vendors

These are exciting times for the Web analytics industry. Lots of changes…lots of controversy…and lots to talk about. My sincere congratulations go out to Dennis and his team at IndexTools, as well as to the beneficiaries at Yahoo!. I believe that this acquisition is a testament to the capabilities of the IndexTools solution and I for one am extremely excited to see how this one plays out.

Wasting No Time

The url’s have been redirected and the names have been changed. It’s official. Omniture completed its acquisition of Visual Sciences yesterday in just under three months – record time by anyone’s watch.

Here are some notable changes:

• Omniture Discover OnPremise will utilize the Visual Sciences Platform 5 technology and page tags from VS can populate SiteCatalyst data, which will appear in the integrated interface. Omniture will maintain its legacy Omniture Discover (hosted) segmentation solution.

• Omniture’s Search Center now appears under the header of Site Search and Content, where they wasted no time in incorporating Visual Sciences’ Publish Web Content Management Solution.

• The popular HBX Analytics solution will be rebranded as Omniture SiteCatalyst HBX. Although HBX should be placed on an endangered species list, because the product will likely be phased out. Omniture states that HBX, “will continue to be supported until the key features have been integrated into Omniture SiteCatalyst”. HBX has had a long ride, from Hitbox to WebSideStory’s HBX, to Visual Sciences’ HBX and now Omniture. It looks like it’s finally time to retire the jersey and move on.

Visual Sciences customers are being well cared for as Omniture will launch a Customer Welcome Program on January 22 which will include training and information to ease the transition.

Several senior management executives from Visual Sciences were appointed to lead the Discover OnPremise, HBX Migration, and Omniture Site Search & Publish product lines. Also announced was the departure of Visual Sciences CEO, Jim MacIntyre, who will pursue other interests after assisting in the transition and integration period.

Microsoft Seeking FAST Entry to Enterprise Search

The Redmond-based software giant offered to buy FAST Search & Transfer at a 42 percent premium above their current share price, for a total of $1.2 billion. The move is a validation of FAST’s technology and will propel Microsoft’s foray into enterprise search. Initial integration efforts will likely start with the MOSS 2007 (Microsoft Office SharePoint Server) group because the acquisition will fortify SharePoint’s fledgling search offering, by injecting FAST’s enterprise-class search capabilities, but don’t expect rapid results.

SharePoint’s inside the firewall content management and business collaboration capabilities will be greatly enhanced by FAST’s ability to search disparate databases to aid in information retrieval. These capabilities benefit a substantial portion of FAST’s current customer base, which is comprised of publishing companies such as Comtex News Network, MediaNews Group, NewsBank, Reed Business, and the Washington Post among others, where FAST has established its credibility for searching copious data sources. However, the long-term goldmine for Microsoft may be in the business intelligence capabilities inherent to the FAST solution, which could be incorporated into the SharePoint platform.

Additionally, Microsoft’s acquisition strategy may be an attempt to fend off Google’s growing reign in consumer search markets and entry into enterprise search. Although FAST’s business-to-consumer client base is proportionately smaller, they help companies such as BestBuy and AutoTrader to facilitate product search and discovery. The acquisition would expose FAST to a larger global market and potentially open the technology to new consumer-facing applications.

Yet, one potential downside is that FAST may be stifled by the 800 pound gorilla that is Microsoft and find that their development and small company mentality is well…not so fast anymore. The deal is expected to close sometime in the second quarter and integration could lag well behind that establishing a timeline that easily extends 12 to 18 months.

The Web Analytics World is Shrinking

The web analytics market just got a whole lot smaller with the news of Omniture’s intention to acquire Visual Sciences for $394 million. It was no secret that Visual Sciences was up for sale, yet speculators believed that a software goliath without a pre-existing analytics solution would enter the market with a quick pick-up of Visual Sciences. The convergence of these technologies will not happen overnight and integration may prove to be the lynchpin of this relationship.

Omniture’s acquisition strategy includes geographic expansion (Instadia), strategic technology additions (Touch Clarity and Offermatica) and domestic consolidation for financial leverage. This newest deal certainly strengthens the fulcrum for financial leverage and succeeds in enhancing the technology additions through the unique capabilities Visual Sciences brings to web analytics.

Considering Omniture’s expanding feature set of strategic technologies and its “Business Optimization” messaging, I question whether Omniture will become the marquee platform for digital marketers. Their analytics horsepower and growing internal capabilities notwithstanding, the burgeoning Genesis Network is seeding its alliances throughout the digital marketing technology landscape. As this evolving ecosystem takes shape, it will be interesting to witness conflicting forces of buy-in/rejection on the client side and dismissal/competition from vendors. Buckle up and stay tuned, because this will get interesting.

Omniture Acquires Offermatica

Thus Begins the Multivariate Testing Market Consolidation Phase

Web analytics provider Omniture announced today its plans to acquire multivariate testing company, Offermatica for $65 million in capital stock. The move comes as no surprise as the multivariate testing market grows in popularity and continues to demonstrate value in its ability to quantifiably deliver optimization. Omniture is poised for the acquisition and strategically building out their product set. Today’s news follows Omniture’s acquisition of Touch Clarity back in March of this year for its behavioral targeting capabilities. Omniture customers will now have the strength of a leading multivariate testing platform in its quiver of services.

Jupiter research shows that multivariate testing adoption is on the rise as 29% of executives recently said that they plan to deploy or upgrade their testing solutions within the next 12 months. This will add to the 20% of companies that currently use a multivariate testing application.

The importance of testing is so pronounced that folding this feature into a larger application like web analytics makes perfect sense. With only a few vendors providing multivariate testing to begin with, (i.e., Optimost, Sitespect, Widemile and Google Optimizer, to name a few), I expect that the market will continue to collapse and commoditize based on features. Yet, services will emerge as an essential component of an actionable testing strategy.