Web Analytics Can Turn Knowledge into Profits

Companieshave realized for some time that click-through sales from banner ads aren’tgoing to bring them the revenue they need. To survive and thrive, companies needto target their goods and services to users who actually want them. Thattargeting, of course, is impossible until they know the habits of Web sitevisitors, and what they want and don’t want.

Knowledgein this arena is not power, but profit. The search for knowledge of visitors iswhat helped Web analytics become a $425 million industry today.

It’sgrowing, too. Guy Creese, research director for Internet analytics at AberdeenGroup, forecasts growth for the coming year at slightly under 120 percent. Thatfollows a two-fold growth curve for the year just ended.

The moneyis mostly generated from software sales, Creese says. The big, complex packagescan run into the hundreds of thousands of dollars, and take months to set up.“That’s not bad if you’re selling millions of dollars [of merchandise] per day,but if you’re not, you’ll look harder at,” buying a program that expensive,Creese says.

Beforeshelling out big bucks for Web analytics or click-stream analysis packages, ITmanagers want to know if they’ll get a return on the investment. Creese pointsto a case he found out about while doing report research.

A gardeningWeb site was initially told to lay out its site by region: Northeast, WestCoast, Midwest, and so on. After spending lots of time and money building thesite, Creese explains, the company used Web analytics on the site anddiscovered its site was structured completely wrong. The analysis saidcustomers were buying based on themes, such as rose gardeners. The company wasfighting against its own Web design to make sales.

This casedemonstrates how not knowing visitor preferences or patterns, or flying blindas Creese calls it, can impact the bottom line.

So canpicking the wrong analysis tool. Howard Dresner, vice president and researchdirector at GartnerGroup, says “the risk is understanding or not understandingthe limitations [of an analysis tool]. It’s not a panacea. If you’re only doingclick stream, you’re suffering from business intelligence myopia. [Click-streamdata] is valuable, yes, but complete, no. It’s very limited in nature.”

Click-streamanalysis basically analyzes logfiles. Click-stream data can help optimize a Website, but not much more, Dresner says. “If you think you’re going to get somebrilliant insight -- I don’t think you can.” That doesn’t mean that clickstream has no value, only that the value is limited.

Some majorvendors of Web analytics software include WebTrends, Media Metrix, AccrueSoftware, SAS Institute, NetGenesis, E.piphany, and Microsoft. The market is relativelyyoung, but Dresner feels the majority of products from the established vendorsare solid.

There isvariation from product to product, and the old adage that you get what you payfor holds true. The crucial differences in the packages relate to how muchinformation is mined, and the quality of that information.

“The key isidentifying someone,” Dresner says. “By geographic area, socio-economicbracket, etc. Then you can do something with it. With more information, theimpact on the business is greater. For instance, you can do one-to-onemarketing.”

Creese seesan analogy between Web analytics and traditional business information-gatheringtechniques. “What you get is what folks like Wal-Mart get by looking atpoint-of-sale information,” he says.

Dresneragrees. “Look at the stuff that’s done in packaged goods or financial services.When you go into grocery store, they pretty well know what’s going to make youbuy things.”

And that’sthe point after all.

Index:

GartnerGroupInc., Stamford, Conn., www.gartner.com

AberdeenGroup Inc., Boston, www.aberdeen.com