One of the most attractive features of marketing and selling on the Internet is the ability to accurately measure performance. This includes monitoring website traffic, search engine referrals, email newsletter clicks, and the like. When e-business programs are measured and analyzed, and appropriate changes are made in response to the findings, online business programs can flourish. Over the past 12 months many of our clients have ramped up their e-business efforts and now use sophisticated analytics packages in pursuit of optimizing online investments.
What is Web Analytics?
Broadly speaking, Web analytics solutions provide data on website activity: number of visitors, length of stay, how they got there, what they do on the site (i.e., where they click and how long they stay), how they exit a site, etc. The importance of this information is straightforward: visitor behavior provides insight into what’s working and what isn’t on a website, and the information can be used to make changes to optimize the user experience and improve site performance.
For organizations that have only recently begun to Internet-enable their companies, simple statistics like the average number of site visitors per day and time spent on site can be adequate. However, once more complex interactive programs are pursued, sophisticated analytics are necessary to understand user behavior at a detailed level, such as:
- Traffic origin
- Campaign origin and performance (search engine marketing, email marketing, online advertising)
- Page-specific activity by section/link
- Entry paths and exit paths
- Conversion performance
- Behavioral patterns by customer segment
- Performance by marketing program
The amount of detail that can be captured and analyzed is virtually limitless; meaningful data, however, will depend on an organization’s unique needs and will differ significantly between B2C and B2B companies (e.g., tracking online sales versus online lead generation).
Using Web Analytics
The common thread for organizations conducting online business is that Web analytics solutions allow them to develop a true understanding of user behavior and then make changes and investments based on fact-based reasoning, as opposed to well-intentioned but often incorrect assumptions. This result of applying Web analytics can be something as simple as slightly moving a “buy now” or “download white paper” button on a Web page, but it can have dramatic effects on clickthroughs and performance.
The acquisition of a Web analytics package alone, however, doesn’t guarantee improved online performance. You (or someone inside the organization) needs to learn how to use the system, interpret its results, and take action on the information.
The Solutions Marketplace
An entire software and solutions industry has developed around “Web analytics”. This marketplace has been around for about a decade but has blossomed over the past few years in response to the resurgence of Internet business. According to JupiterResearch, the U.S. Web analytics sector is currently a $500 million market and will grow at an average rate of 20% per year through 2010. And most large companies—those with revenue of $1 billion or more—spend more than $50,000 annually on Web analytics.
As with many software segments, the market can be generally segmented into three categories: entry level, mid-range, and enterprise. Pricing ranges from free to several hundred thousand dollars, and according to MarketingSherpa there are about 80 vendors offering 100 products. Many vendors offer packages aimed at different levels of customers and budgets, or allow customers to scale and add features to their existing packages.
Entry level packages allow organizations to gather basic information about website activity.
WebLog Expert one such product, costs $74.95, and provides statistics such as general information (number of hits), activity by time (hour, week, month), user behavior (page access, entry and exit page), source of user, and browser type. WebLog also offers a free, scaled-down version of its software that lacks some of the features, customization, and reporting functions of the full version.
Mid-range solutions facilitate greater understanding of website user behavior and online marketing campaigns through more sophisticated reporting tools and capabilities.
The Optimizer and Pro products by Clicktracks are good examples of mid-range solutions. Optimizer is priced at $1,995 (or $99/month) and Pro starts at $3,495 (or $179/month).
The products include all of the basic, entry level analytics functionality and a variety of additional bells and whistles. For example, Optimizer provides customized campaign tracking capability, page-level keyword performance, and it integrates with email marketing packages. Whereas most entry level solutions are single licenses, Optimizer comes with three. The Pro product adds multiple Web server support, detailed ROI analysis capabilities, and tracks cookies across sessions. It comes with unlimited licenses.
Urchin is a another good example of a solution in this category. The product is made available for free with some hosting packages (such as Verio) and its version 5.0 software costs $895 to purchase. and also provides basic website traffic statistics. Urchin, which was recently acquired by Google, claims its software is used by more than a million customers.
Enterprise analytics solutions allow companies to do everything imaginable with website traffic data, including integrate and/or run real-time analysis with data from other systems. They also do a good job of providing this potentially cumbersome information in user-friendly “dashboard” formats that can be easily understood by the non-technical system user.
Leaders in this segment include WebTrends, WebSideStory, Omniture, and Coremetrics, among others. These companies offer robust software, professional services, and extensive training. They maintain close relationships with other leading technology and marketing companies (e.g., Salesforce.com, Responsys, DoubleClick) and are continuously investing in their capabilities in order to stay relevant.
A recent InfoWorld analysis of this segment found that “the applications deliver equally usable browser interfaces but vary in the types of reports they generate and in their capability of integrating with enterprise data and third-party tools.” The big players’ offerings are complex and require a significant investment of time to clearly understand, but suffice to say they are comprehensive and constantly evolving.
The enterprise version of Coremetrics’ offering, for example, includes the availability of the following tools:
- LIVEview–view site traffic data through a browser, by customer segment
- Cross-Platform Marketing Analytics–view data from disparate marketing systems throughout the organization in one location
- Merchandising–organizes and presents information by product or product mix
- Content Analysis–can learn about behavioral patterns, such as content usage, and conversion
- On-Site Search–understand user search preferences
- Scenario Analysis–visualize user movement throughout the site
- Profile Mining–identify customers by value
- Marketing—Behavioral email marketing, search engine marketing, and cross-selling marketing.
The cost of a Coremetrics enterprise solution varies greatly depending on the functionality, but an ASP version will be at least several thousand dollars per month.
Selecting a Web analytics package can be overwhelming given the number of choices available. In addition to taking into account standard software selection criteria—unique organizational usage and system requirements, staff capabilities, budget, who owns the system internally, strength of vendor, etc.—there are also some points for special consideration for SMBs:
- Owned vs. ASP vs. Partnering. Do you want to own a system, rent it, or access it through an Internet consulting partner? Each approach has its pros and cons. Using Web analytics is more art form than science, so if maintaining internal support staff is not possible, an ASP or partnering solution is probably the way to go.
- Features & Functionality. This marketplace is in full growth mode and vendors are aggressively adding a slew of bells and whistles to offerings. Figure out what’s relevant to your organization’s online activities versus what’s bound to be left untouched. Given the wide range of product costs, getting comfortable with a lower-end solution before purchasing a more sophisticated one can sometimes be the right move.
- Know the Terrain. This technology—like the Internet itself—remains relatively new and is constantly evolving, so it’s prone to generate inaccurate data. That it might not be generating perfectly precise data isn’t critical; what’s important is that volumes of valuable data can be gathered for analysis to benefit the organization.
The Web analytics marketplace is thriving now that most sizable organizations are well beyond “phase one” of their Internet-enablement strategies and using their websites for meaningful business activity. So developing a more detailed understanding of how visitors interact with a company website and optimizing the experience based on actual behavioral data is a natural evolution in online business.
Employing a Web analytics solution can be accomplished in baby steps or sizable leaps; the right decision depends on an organization’s unique needs, philosophy, and comfort with change. Implementing a high-end solution is a significant undertaking while employing a lower-end solution can be fairly painless while at the same time yielding valuable information.
No matter the course chosen, incorporating Web analytics into an organization’s e-business operation is no longer an option. Understanding how users interact with websites and interactive marketing campaigns is a no-brainer, and the foundation for optimizing Internet investments.