How did it all start ?

Wednesday, February 13, 2013

How did it all start ?

Figured it is only appropriate to write (and learn) about the history of web analytics for the last blog of the session. In addition, it would be interesting to find out whatever happened to the firms that had pioneered this industry; spoiler alert, most of them are no longer with us.

Origins

The first idea around creating web analytics, the accumulation and analysis of traffic and visitor behavior, came to fruition around 1992 (1). During this period this was a capability needed by administrators that wanted to get transparency into activity on their sites to ensure site was actually functional and it was up and available.

Probably, shortly after marketing firms started to look for ways that this information could be utilized to reach customers in a more efficient way. And it seems like this was the moment when the responsibility for web analytics moved from the technology division to the marketing teams.

Where are they now ?

In the beginning, 2 different schools of web analytics emerged, front runner to the birth of 2 types of analytics vendors (2); software retailers similar to WebTrends (still in business as an independent company!) and NetGenesis (which hasbeen acquired by SPSS in 2001) and ASPs (Application Service Providers) including Urchin (acquiredby Google in 2005) , Unica (now part ofIBM), CoreMetrics (anotherIBM target) and WebSideStory (boughtby Omniture which was later acquired by Adobe) which offered browser tag based approach. The “in-house” approach used installed application on a local hardware and meant to review data gathered in the web-logs. The other approach, Application Service Providers, tried to utilize the hosted solutions to view throughput and other relevant information. (3)

In the mid 90’s introduction of affiliate concept spurred an era of predictive web analytics shops and the first the company to came up with this idea was a small two year old company called Amazon (4) and popularized mainly by on hobby sites. At any time, a site could have a bar on top of their site with banners that connectedtheir affiliates. Usually, these sites (or affiliates) would have some common attribute with the other affiliates. As these relationships got more sophisticated, affiliate concept started to include sophisticated software which enabled the site to order links based on the visitor volume they got form their affiliate sites, basically incentivize affiliates to include links on their sites to swap visitors. Near these banner bars was usually a link to an external analytics service, where affiliates and site visitors could see how many unique visits the site received per day. (5)

Increasing amount of websites utilizing this sort of affiliate program drove the explosion in external web-analytics start-ups, and subscription driven services slowly started become more prominent. In the beginning, these subscription based offerings primarily targeted large enterprises, but over time started to target smaller entities and personal websites as they became more available and affordable with the emergence of e-commerce.

Following the dot com bubble burst, early 2000s, the web analytics industry entered an era of consolidation that even continues today and very evident a few paragraphs ago.

The Dilemma

I think the main question at this point is, whether such a rapid consolidation of a new field like web analysis raises the question of less innovation down the road. Obviously, in a very short period of time the huge technology companies Google, Adobe and IBM acquired almost all small, agile start-ups that had started the analytics paradigm. However, the obvious counter argument is these corporations have the means, both intellectual and capital, to fund costly software initiatives which could very well spurs growth and innovation. Only time will tell.

Meanwhile, Microsoft with 66 billion in equity (6) is nowhere to be seen in this market since 2009. I think it is not unfair to categorize this as an “historical” surrender and an interesting side note.

What is next ?

Finally, as the field matures, the new frontier and sure to be an historical milestone one day is the web ethics, that raises the question of the data should be collected and used. One thing is for certain, as the debate around ethics on the web, the utilization of cookies, tags and storing data increases, the analytics area will be impacted. It is going to be fascinating to see where the web analytics go next.