The days of companies measuring their website’s performance with an HTML hit counter have been over for some time. Businesses have not only realised the benefits of mining their site traffic, but are beginning to plug the mountains of data into CRM packages and business intelligence tools to fully gauge the effectiveness of their online presence.
That translates into strong revenues for the emerging web analytics software and services industry. And for those at the top of that pile, business is very good indeed. Omniture counts HSBC, Royal Mail, Lastminute.com, French Connection and Burberry among its customers, and posted revenue growth of 117% and organic growth of 60% in the first quarter of this year to hit revenues of $63.2 million.
The trick over the past five years has been to take web analytics out of the control of IT and empower marketers, says CEO and co-founder Josh James.
“It might have started out as web analytics, but it’s not web analytics any more. It’s about business optimisation,” he explains. “We want to allow the marketers to market. They shouldn’t be thinking about technology, customer IDs and marrying up data. We’re trying to automate the whole process.”
Many of Omniture’s customers are not just monitoring their traffic, but reacting to it using advanced techniques like A/B and multivariate testing: analysing campaigns by measuring conversions against different versions of the site and various product offers.
“Imagine if when you walked into a grocery store the grocer rearranged the aisles so that the first one you go to has all the items you usually buy, and between each of those items are the ones that you would likely buy based on the data they have about you and everyone else [who’s visited],” James explains.
He offers Dell as an example: “Dell has four or five components on the webpage they can show, which change based on what you’ve done before. They found that when they gave a personalised experience, revenue increased 27% [against a generic site]. It doesn’t take 50 smart people in a room to figure it out.”
The arrival of free analytics offerings, such as Google Analytics and Yahoo’s IndexTools, haven’t appeared to spook the paid-for analytics companies, despite claims from the likes of IndexTools COO Dennis Mortensen that his software “offers 80% of the functionality of Omniture for free”.
Instead, James regards the free players as raising awareness of what analytics can do, “and that’s good for us”.
“Those guys are good for the long end of the tail – that’s where they focused their business. They are less sophisticated tools that just don’t scale up to big sites – they’re not enterprise-class solutions, and they certainly don’t offer enterprise-class sales and service.
“[But] we’ve always been proponents of the view that ‘if you’re not using anything, you should be using something’. Folks that don’t have the size of business to justify spending 20K or 100K on a product can use a free product that gives them some insight.”
James also challenges the independence of the free services, describing a “massive conflict of interest” for the big networks “who are trying to get your dollars to report on the efficacy of those dollars”.
Nonetheless, the arrival of the free offerings seems to be speeding up the integration of analytics with CRM and business intelligence tools, as the paid-for companies scurry to further differentiate themselves. Omniture’s acquisition strategy is a good pointer: last year the company went on a shopping spree, buying up behavioural targeting specialist Touch Clarity, A/B and multivariate testing company Offermatica and real-time analytics provider Visual Sciences.
“We are absolutely anticipating more acquisitions,” James says, admitting that “Omniture has 15 people on our acquisitions team responsible just for thinking about the processes associated with integration, and they’re not even the ones doing the heavy lifting.”
One prediction that will have marketers rubbing their hands with glee is the integration of online analytics with the offline version – and eventually the ability to track prospects from the web to the bricks-and-mortar store.
The evolution of analytics from anonymous usage statistics to the tracking of individuals raises privacy concerns. James says that, while Omniture pays attention to the issue and employs a chief privacy officer, “we’re not worried about it”.
“Where you get into trouble is when you start tracking someone across a lot of different sites and [then] share that information. Our business is based on what a customer does at one website, not 10. We only care what you did at, say, Marks & Spencer, and that data doesn’t get shared. In fact, we don’t even know, since the way it’s stored and managed is customer specific.”
But web analytics still has growing pains in other areas. According to James, uptake is still far from universal: it is limited to “small pockets”, and “no one has really tied the whole thing together”.
He predicts that a “couple of dozen” key retailers will start offering personalised experiences “every bit as good as Amazon” within two to three years. “And when that happens, I think everyone will come online with it.”
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