Web Analytics in Awkward Phase; Forrester Asks Humiliating Questions About Its Changing Body
In a report covering web analytics from 2008 to the present day and forecasting the industry's future into 2014, tech research firm Forrester said this area is in an adolescent phase, working through critical changes and preparing for significant growth.
"Forrester forecasts that US businesses will spend $953 million dollars on Web analytics software in 2014, with an average compound annual growth rate of 17%," the report reads. "Growth will emerge from unexpected places as the value proposition of Web analytics technology oscillates for sophisticated analytics users and becomes more welcoming for new entrants. Ultimately, Web analytics will become part of a broader array of integrated services supporting marketers."
Currently, around three quarters of all businesses are using or trying web analytics software or services; many of these companies are using free technologies. However, three key areas of misunderstanding are preventing companies from using their web metrics to tweak ROI. Forrester found that both the analytics tools as well as the data being generated were being underused, that staff were not taking action on analytics data, and that the increase in complexity of industry challenges outstrips the growth of the industry itself.
This assessment is undoubtedly bleak, but researchers also identified a few growth factors in the world of web analytics. First, interactive marketing budgets are growing overall. Second, online media is by far the dominant channel. And any money spent on online marketing requires that someone, somewhere be held accountable, that metrics be identified and measures, and that processes be optimized. Forrester also offers the prediction that, given the availability and affordability of web analytics data, a secondary market will spring up to offer services showing companies opportunities for using said data, thus bridging the "action chasm" between knowledge and execution.
In looking at spending, Forrester sees a move away from licensed software and toward hosted web analytics solutions. Service fees will continue to generate revenue for the industry even during turbulent economies; web traffic certainly isn't slowing down, and neither is the need for capturing accurate data about that traffic. They also see this as a vibrant market for agencies and consultancies. Also, new entrants seeking web analytics for sites with moderate traffic will account for most of the growth in this area.
Finally, because of the availability of versatile, free analytics tools, vendors in this industry are (or need to think about) shifting from "a point solution to an underlying service embedded within broader marketing applications," wrote Forrester rep Jon Symons in an email this morning.
"The transformation will only have a positive effect as customer intelligence data will be shared more widely across organizations. Significant challenges remain however, including the need for human analysis of mountains of data, the ability to develop metrics that can tie to larger business objectives, and the necessity to integrate marketing and IT organizations in order to achieve true data integration."
The executive summary is on the Forrester site, and the full report is available for purchase there.
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It's not Forrester. It's Forster with his new Movie. I hope you dont forget the world premier on june third in Zurich. The new Clip from Marc Forster for the SWISS Airline.
Greetz from Germany
I see this report as quite positive actually. The fact that 3/4 of businesses are using analytics is encouraging. By 2014 this number should be at least 95%.
So what if the tools they are using are free? As Forrester properly describes, web analytics is still in its infancy. It makes sense that people will try out free tools, because the fact is in 99% of businesses starting out with analytics, a free tool like Google Analytics provides all that they need and more.
It is only when an organization matures with its web analytics culture that paid versions such as Omniture and Webtrends are useful, providing advanced functionality free tools do not have.
Your thoughts?
Regards,
Omar
I think the concern about the "increase in complexity of industry challenges" is an important point.
There's enormous fragmentation in marketing: all the Web 2.0 engagement features, disparate social networks and social media channels, email marketing, search marketing, post-click marketing, increasingly elaborate marketing automation systems for nurturing people across individual visits or events, etc.
It's overwhelming.
For marketers, you could say it's too much of a good thing. Any one piece that someone focuses on can deliver tangible results -- and they really need the analytics to track and report on it. And then, once that particular tactic is going well, they jump to the next opportunity and again need analytics for that.
But while individual marketers can battle the tide of overwhelming digital innovation by prioritizing a handful of tactics at any given time, the analytics vendors who are trying to serve a broad spectrum of customers seem have to pretty much climb the whole mountain.
The upside is that they're unlikely to be bored for the years ahead.
As the author of this report, I can attest that the outlook is quite positive indeed. The challenges I describe in the report are not new – in fact they’ve been around since the inception of data collection and analysis. While the industry has experienced some setbacks from an overall financial growth perspective, it is thriving.
@Omar, you are correct in that free tools will lead to greater adoption and more sophisticated users. Most vendors agree that free tools have helped elevate the practice of Web analytics everywhere.
@Scott, things will continue to get more and more complex as we progress. Media like Twitter, which is all the rage today will burgeon and then stabilize, just like widgets, Facebook and many other medium before. Yet, there will always be another medium filling the void. Web analysts and measurement will constantly be playing catch-up. Swimming in a sea of data should be deemed as table stakes. However, swimming requires knowledge of the goal in sight and the ability to get there. Many will be thrown into the pool and thus the data will overwhelm them.
Overall the outlook for Web analytics – like for most adolescents – is that the future ahead is bright indeed.
Cheers,
John Lovett
PS> feel free to write me directly for more info on the report: jlovett at forrester.com
Jolie,
Great post. Thank you.
John has shared some great insights into the industry and as he points out in his subsequent comment there are a lot of positives that the web analytics industry has going for it. To his point “swimming requires knowledge of the goal in sight and the ability to get there” and we, at Webtrends, believe there natural evolution that our industry has embarked on which invokes introspection and ultimately a common vernacular and set of standards that will benefit the customers of the data. Learning to swim is about having all the right support and training to enjoy being in the pool and for me its exciting to see proof of progress in support and training in a couple of highly visible areas:
1)Active discussion surrounding digital marketing maturity models
2)The proliferation of data access in ways that make sense for customers (APIs, new applications, etc.)
Thanks again for covering John and team’s work and it is exciting to see the dialogue here on RRW.
Jascha Kaykas-Wolff
vp marketing Webtrends
@kaykas
John,
Thanks for the excellent article. I agree these are times of momentous change in the area of customer engagement. The opportunity is immense specifically for companies with significant contract customer base. The traditional paradigms of segmentation, market sectors, competitor impact etc. need to all be reviewed through the web 2.0 lenses. It soon becomes evident that your size of each customer segment is ONE! ie. every customer has a unique digital signature and knowing this is power in the hands of customer facing staff.
There will be many ways to achieve this nirvana, the challenge will be not to get distracted by the newest fancy widget that comes out, but to stay focused on what can deliver value for the business and demonstrate the ROI as you go along.
Best, Raj
Jolie - thanks to you for the excerpt. I have always been a fan of RRW, keep them coming. Best, Raj.
Thank you really a beautiful design engrossing
Nice overview and outlook.
Paid of free, analytics tools need to involve more services. Very good coverage on this research. Thank you very much!