Snappily named internet company WebSideStory started out providing counters to porn sites. Every time the counter was downloaded, it increased in number, showing how many people had visited that page. This idea was developed and a small, 1 pixel gif image with a piece of Javascript could be added to the page, allowing WebSideStory to extract loads of data remotely and process it into something more manageable for their customers. Adding Javascript to a page is still used to collect analytics data although there are now various other methods and combinations of methods.
The two main methods of collecting data, logfile analysis and page tagging, both have their faults and if not managed correctly can lead to inaccuracies in the data. The effort and cost involved in setting up and running data collecting systems is generally a factor in choosing the most suitable system. Debate was fierce in the late nineties about which method was best and the deciding factor in that battle was economics.
WebTrends became the sexy web analytic package of 1995 by taking information from logfiles and using pretty graphs and charts to display the information in a more business friendly way. It was an idea copied by many, and by the year 2000 web analytics had become a major industry. Three main players, all of whom used web logs, looked like dominating the market for the foreseeable future; WebTrends, Accrue and NetGenesis. Companies using page tagging, such as WebSideStory and Coremetrics, looked resigned to serving the lower end of the market.
Then something unexpected happened. In 2001, recession hit. The market for web analytics decreased and bigger companies such as NetGenesis and Accrue were hardest hit. CEO's couldn't see the value in spending large amounts of money on expensive web analytics packages and many smaller companies either went out of business or were bought up by other companies. The companies who generally fared best were ones providing analytics using page tagging. Firms who were cutting back due to the recession were happier paying an ongoing fee than a large one-off for their software.
By 2005 the main players in the market had become Coremetrics, Omniture, Webtrends and WebSideStory. Then in 2005 Google entered the maturing market and shook it up, big time. Google purchased web analytics company Urchin and shortly after, released Google Analytics as a free service. The software was not without its faults but it brought web analytics to many companies who could not previously afford them or simply didn't want to pay. It is not as powerful as many alternatives but it is easy to use, intuitive and most importantly, free. The lack of certain functions mean it may not be suitable for top-end websites but it has been immensely popular from the most basic websites to the sites of blue chip companies.
In 2006, Microsoft entered the market with Microsoft Gatineau after buying DeepMetrix Corporation. This product has been criticised for its $5 sign up fee and is still in beta status. It has not really made any big waves in the market, yet.
In 2006 WebSideStory merged with Visual Sciences and was purchased in 2007 by Omniture, leaving only three major analytics forces plus Google and Microsoft in the mix.
So what does the future hold? Big news in the world of analytics recently has been Yahoo's entry into the marketplace with their purchase of IndexTools.
Yahoo have announced that IndexTools will, like Google Analytics, be available at no cost. The big difference between the two services being that IndexTools is a more complex platform with functionality usually found on more expensive tools such as Omniture and WebTrends. Can these products really compete with IndexTools using their current business model?It is possible that in these reportedly lean economic times, history could repeat itself with companies deserting Omniture, WebTrends and the rest in favour of something similar but cheaper. In fact, something free.
The reaction from Google and the other big companies will be interesting to witness. Google has continually added functionality to GA in the last few years and it's possible we'll see big upgrades sometime in the future to compete with IndexTools.
The possible future takeover of Yahoo by Microsoft will obviously play a large part in Microsoft's future strategy in this area too. It's difficult to imagine Microsoft not getting involved in a big way, either through their Gatineau project or taking over Yahoo.
One thing is for certain, the analytics landscape is continually evolving and it looks like the big boys are taking over. It's going to be very difficult for companies to survive by charging the amounts they currently do without finding something extra to give their clients. With Google, Yahoo and Microsoft all providing their analytics packages at no cost ot the user, it could be a rough ride ahead for some companies if the economy continues to slow down.
