Monday, October 29, 2007

A view of the web analytics market

Is it the end of recreation for competition and innovation?

This week buzz was all about Omniture acquisition of Visual Sciences. This gives us a pretty good indication of where the market is heading: consolidation, less competition at the high-end level, but also a potential for more maturity. At the same time, Google Analytics is pushing from the base and adding new features that will make entry-level competition slowly disappear. Is it the end of competition and innovation? I don't think so. Innovations still abound and there are plenty of space for new ideas: think about TapeFailure, RobotReplay, ClickTale, CrazyEgg and others that are interesting innovations in search of a bigger role (yes, maybe eventually absorbed by the bigger players). Coremetrics, WebTrends and ClickTracks and others remain very good solutions for some companies.

End-to-end view

My take is also that monitoring will eventually be much closer to web analytics (the Keynote, AlertSite and Gomez of this world) and end-to-end monitoring of the user experience will play a bigger role. It's obvious that a degraded web performance or poorly performing enterprise systems have a direct impact on conversion and outcomes on the frontline. Unless I'm mistaken, this is not measured by any of the ASP-based solutions.

Qualitative data

From another angle, qualitative data such as surveys, polls, content ratings will also naturally merge with web analytics platforms. We already see it with OpinionLab being integrated to SiteCatalyst through the Omniture Genesis integration platform.

Commodization of the core tools

Wikipedia says of the word "commodization" it "is a process that transforms the market for a unique, branded product into a market based on undifferentiated price competition" and continue saying "a performance oversupply- which means that the market is performance saturated and any differentiation, even when being offered, is more than what the market demands". Considering most companies are barely using the core web analytics component of their solution, let alone more advanced features, it is very difficult to pick a vendor solely based on their core web analytics capabilities (data collection, reporting, ease of analysis, segmentation). The "web analytics 1.0" aspect is being commoditized.

While the tools appear to become a commodity, the job isn't any easier. Analysts skills are scarce, implementations are often botched, and actionable insights end up competing with other business priorities. Knowing something should be improved is one thing, having the resources (budget, people, time) to do something about it is a different story.

Actors of business optimization

We're not only witnessing the evolution of the web analytics industry. Through online process analysis and optimization, we are actors of the transformations that are changing the way business is being conducted online, and off line.
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