Web analytics market thrives despite threats

UK companies are increasingly seeing the strategic importance of web analytics, prompting continued growth in revenues for leading analytics vendors despite the recession. That’s one of the findings of a new report from digital marketing and advisory company, Econsultancy.

According to Econsultancy’s 2010 Web Analytics Buyer’s Guide, the UK market grew by 9% in 2009 on the previous year, to £85m. The growth rate was lower than 2008, when the web analytics sector in the UK increased by 12%. Despite this, Econsultancy remains upbeat: "Although last year’s growth was down on the 12% growth rate of 2008, it is encouraging to see the market still thriving through a period of recession and in spite of the pressure on company budgets."

The report estimates that UK turnover for vendors rose by 5% on the year, to £42m, whilst the remaining £43m of web analytics spend was attributed to internal staff and third-party consultancy services. The $1.8bn acquisition of web analytics vendor Omniture by Adobe last year is cited in the report as a further illustration of the increased importance of web analytics to UK companies. Econsultancy research director, Linus Gregoriadis says: "2009 was a very big year for the web analytics industry, with the recession forcing companies to become more efficient and to take measurement more seriously. The acquisition of Omniture by Adobe announced in September last year also put the spotlight on this sector, and underlined the strategic importance of digital measurement."

The 2010 guide also highlights significant trends in the sector, including the ongoing threat that paid-for analytics vendors like Coremetrics and Nielsen are facing from free tools such as Google Analytics and Yahoo Analytics. Gregoriadis argues: "The increased use of free analytics tools offered by the likes of Google and Yahoo has forced vendors to raise their game, and in some cases diversify by offering related tools such as multivariate testing."

Empowering business decisions

A second report from Econsultancy, Online Measurement and Strategy, highlights a shift in the number of businesses spending more on analysts than analytics software and licences. The company describes the trend as positive for the industry, and says it reflects the recognition of analytical data interpretation as a way to empower business decisions. Gregoriadis comments: "Companies using web analytics tools are typically getting more from the technology because they have realised that they need to invest in analysts who can translate the data into something useful for their businesses."

The report reveals that in 2009, 42% of total web analytics spend was directed towards internal staff, up from 36% the previous year. In the same period, spend on technology dropped by 7% to 38%. According to Econsultancy, the trend has accelerated as a result of free tools from both Google and Yahoo, with vendors offering paid-for technology to small and medium sized businesses worst affected. Vendors targeting products towards enterprise-level companies are proving more resilient.

Several further trends within the UK web analytics market are also identified by Econsultancy, and are expected to continue in the year ahead. The recession for instance, has added focus to web analytics as companies look to secure greater levels of ROI, through website optimisation and improved conversion rates. In addition, as the number of vendors diminishes through consolidation more will seek greater levels of differentiation between their competitors.

One important trend cited in the report however, is the continued explosion of web access through a mobile device. The increased take up of smartphones and other wireless devices has grown substantially over the past two years. Econsultancy points to figures from market research company IDC, which recently revealed there were more than 450m mobile internet users in 2009.

The use of mobile internet access in the UK pushes Econsultancy to recommend that "a coherent mobile analytics solution needs to have the capability to track the web usage of every phone available on the market." Managing reliable metrics from the mobile internet sector is a challenge that needs to be overcome, since a majority of mobile phones do not support web page tags with JavaScript, used by ‘traditional’ analytics solutions, or cookies, which are used to enable reliable tracking data.

The Econsultancy report reveals: "When implementing traditional web analytics solutions, marketers may find that the software dramatically undervalues the amount of traffic coming through the mobile channel. The increasing uptake of smartphones such as the Apple iPhone, BlackBerry Storm, and HTC Hero, which do support these technologies, will improve penetration. However, “Mobile analytics must be incorporated into overall measurement strategy, and integrated into traditional web analytics solutions, in order to avoid forming the silos that have hampered marketers in the past."

"In order to increase the accuracy for measuring for the mobile channel, it may be better for companies to invest in mobile-specific solutions," says the report.