Web analytics is a boring-sounding phrase, something you imagine the IT department should deal with. In fact, it is a key part of online marketing, since its primary concern is with measuring how well a website is doing its job.
It is still something of a Cinderella industry, with companies reluctant to commit serious money. But with the formation this month of the Web Analytics Association (WAA), an international trade body, things are moving up a gear.
Jim Sterne, an American, is the man behind the WAA. He is also the chief executive of Web analytics specialist Targeting.com, and the author of several books on online marketing, including Proven Methods for Measuring Website Success, and What Makes People Click.
While attending the UK launch of the WAA this week, Sterne spoke to me about Web analytics.
Robert Dwek: How would you sum up Web analytics?
Jim Sterne: Human brains need to classify things. We do it all the time, instantaneously, as part of our instinct for survival. Web analytics uses that instinct to sell more.
Measuring things is boring, but the sexy part is when you measure behaviour and try to serve up dynamic online content to take advantage of your new knowledge. For instance, should I offer customers a “two-for-one” offer or a “buy-one-get-one-free”? It’s exactly the same economics, but which phrasing do people respond to?
Unfortunately, the definition of Web analytics started out as being “log file analysis”! The marketing person would turn to IT and say: “What is happening on our website?” The IT guy didn’t know and could only offer the log files data, which was a foreign language to marketers.
I slightly regret that the name “Web analytics” still sounds skewed towards IT, because really it is about measuring whether your online business is working. Obviously a lot depends on how you define “working”: whether it’s corporate goals, individual departmental goals and so on. The definition is always going to be political.
RD: How has this field evolved so far?
JS: It’s been a series of ups and downs. When it first appeared, everybody was interested, but then the internet bubble burst. Interest returned when people saw they could use Web analytics for measuring return on investment.
Unfortunately, people ran out and bought Web analytics tools thinking they would be a panacea. Companies didn’t sort the good information from the bad, or work out how to use the data to make good business decisions. Instead they were shell-shocked when they saw 473 different reports. In fact, Web analytics is just like a database: you have to know what you’re looking for; you must ask the right questions in order to get useful answers. The good news is we’re now entering this more advanced era.
RD: Is there one single thing you consider of overriding importance in Web analytics?
JS: There is no silver bullet, no magic box. Of course, the technology is crucial. The database has to be set up and populated with good clean data, with everyone agreeing on the definitions. Remember, this is not information about clicks or page-views but about human behaviour. To say: “My website has 2 million visitors on any given Thursday” is interesting but not useful. You need to know what they’re doing there.
RD: My impression is that despite enthusiastic promotion by people like yourself, most companies have so far been reluctant to invest heavily in Web analytics.
JS: Web analytics vendors are growing by leaps and bounds. There’s lots of activity, lots of purchase of Web analytics services by the likes of Yahoo! and Google. But I don’t think we’ve reached a tipping-point yet because the appreciation of what Web analytics can do has not climbed high enough up the corporate chain of command. Chief marketing officers are now waking up to it, but chief financial officers and chief executives are lagging behind.
This is still a small industry. Jupiter Research has predicted that by 2008 or 2009 it still won’t be a $1bn industry. But as more Web analytics success stories appear, the growth will come.
RD: Why have you set up your trade association?
JS: This is still a very unnoticed business area. It tends to be a skill-set within more general online marketing agencies. As a result, Web analytics specialists don’t have enough opportunity to mix with their peers. So a big part of the WAA is to provide a forum for interaction.
Another important area will be to develop certification, so we can start to provide rankings, in terms of companies, cities or something else. This will give clients a snapshot of the industry.
RD: How big is the WAA and is it split into country-specific groupings?
JS: No, this is a fully international association. Our start-up membership is 150 but we expect that number to grow quickly. There has been a great deal of interest from the UK, as well as from elsewhere in Europe, and the Pacific Rim. We have an international committee to ensure this is not a US-centric organisation.