Success and Failure in Web Analytics.

There are many articles and blog posts dedicated to close examination of different web analytics tools, their capabilities, usefulness and price. Since there are many analytical tools with price ranges from very expensive to free, one may think that performance is directly correlated to the price of the software. It may not be the case. The difference between the solutions is not performance or price; it is the intended purpose of use.

Every business present on the internet must have some kind of web analytics. For this reason, many companies entered the field of web analytics software development. Some developed very successful tools, others went out of business. This market segment attracted attention of technology giants like: Google, Adobe, Microsoft and Yahoo. Big companies are usually not the first ones to heavily invest in new technology. Such business waits for smaller entrepreneurs to test the market, and if a technology becomes potentially profitable, just buys out companies with developed and registered software. This is exactly what happened in this case. 

Google acquired Urchin Software Corp in 2005[1]        

Adobe acquired Omniture in 2009 [2]                            

Microsoft acquired DeepMetrix Corp. in 2006 [3]       

Yahoo bought IndexTools in 2008 [4]                               

From 2005 to 2009 most technology giants had a web analytics product and were aggressively entering the market. Today, in 2013 there are only 2 remain afloat; Google Analytics and Adobe’s SiteCatalyst. Both are very powerful information generators, but while SiteCatalyst is sold mostly to large corporation at very inflated prices, Google Analytics is absolutely free.

Google Analytics (GA) and SiteCatalyst(SC) have been compared to each other many times. Instead of describing the features and capabilities of these programs, let’s take a closer look at failed web analytics tools as well as at the current states of both GA and SC.

"You've helped us work towards making an informed decision about building a general Web analytics solution, and despite the end of life plan, the beta was very much a success. It enabled us to confidently determine that we can be of most value to advertisers and publishers by offering a tailored solution that meets more specialized needs." Those already in the beta will be able to continue using the tool until December 31.

"We recommend that you use the coming months to evaluate your Web analytics needs and leverage that information to conduct a search for an alternative Web analytics solution," Microsoft said. The software maker has posted a list of alternatives that includes Google Analytics, Yahoo Web Analytics, and Omniture. [5].This statement from Microsoft was released in 2009, just 3 years after acquisition of DeepMetrix.

Similar statement from Yahoo followed in 2012.

“In line with Yahoo!’s focus on more quickly innovating with our core products and properties, over the coming quarters we are shutting down or transitioning a number of products that did not meaningfully drive revenue or engagement. After carefully reviewing our portfolio, Yahoo! has decided to discontinue Yahoo! Web Analytics services for analytics-only customers as well as the Yahoo! Web Analytics Consultant Network on October 31, to help us speed time-to-market in other areas.” [6]

Both companies are not new to the market of technology and software. Both companies paid cash to quire their respective analytics wings. The question is obvious... Why did Adobe and Google succeeded while Microsoft and Yahoo failed? I guess there is also a question of “What constitutes failure?” In many cases, downsizing could free resources and be a positive change.

Microsoft’s entrance into the market of online analytics was a mistake. Microsoft is great at what is does, and what is does best is operating systems. Spreading into other markets, while competition is only growing in intensity, could be very risky. Web analytics field for Microsoft was a relatively new discipline. Large investments were required to launch the product; the product was supposed to be profitable. With GA - a free solution, Microsoft was at risk of losing the investment. Shutdown of AdCenter Analytics was in fact a very wise decision. Microsoft could concentrate on its core business and find less risky investments for available capital. Therefore, in the case of AdCenter Analytics, Miscrosoft just tested the market, but was not able or willing to capitalize on this opportunity.   

Yahoo’s story is quite different. Yahoo analytics solution was offered at no cost. Google Analytis was the major competitor. Of course “free” is never really free. By offering analytics software at no cost, both Yahoo and Google can increase their brand exposure, attract more customers, increase advertisement revenue, and want is probably the most important – track individual “add word” performance to adjust the fees.

The failure of Yahoo was mostly attributed to overall company performance. It is not a secret that Google over performs Yahoo in any and all categories. In order to increase revenue, Yahoo required anyone who wanted to use analytics to become Yahoo customer, while Google was offering its product with no commitment (unless your site had more than 5Million hits per month). Increasing expenses and diminishing profits eventually pushed Yahoo out of the market.

If analytics is your primary product and service, be ready to invest heavily in development and sales. Adobe’s SiteCatalyst is a profitable product. Although, it’s profitability is due to large investments in product development, sales and operations. Microsoft’s attempt at web analytics clearly shows that product development alone is not a guarantor of success.

On the other hand, Google is using GA as a supplemental tool in its family of products. Free analytical software dramatically increases Google’s customer loyalty and allows the company to have a deeper look into its own operations.

Therefore, if you want like to make web analytics your business, plan to invest heavily into product development, sales and operations. Otherwise, if you want to use web analytics as your own customer loyalty or advertisement tool, make sure your income is generated by other activities, as web analytics, in this case, must be offered at no cost to the customer (unless Google goes out of business).

References:

[1] http://en.wikipedia.org/wiki/Urchin_(software)

[2] http://en.wikipedia.org/wiki/Omniture

[3] http://en.wikipedia.org/wiki/Microsoft_Gatineau

[4] http://marketingland.com/yahoo-web-analytics-to-be-discontinued-14223

[5] http://news.cnet.com/8301-13860_3-10201970-56.html

[6] http://marketingland.com/yahoo-web-analytics-to-be-discontinued-14223

http://www.businesshut.com/web-analytics/microsoft-yahoo-analytics/

http://news.ycombinator.com/item?id=2716575

http://www.davetalks.com/articles/what-price-google-analytics.htm

http://en.wikipedia.org/wiki/List_of_Yahoo!-owned_sites_and_services