Perhaps one of the best business innovations brought on by the Internet is its ability to provide nearly instantaneous feedback on marketing campaigns.
For example, once a campaign is launched, a company can measure the impact on its Web site by doing further research on the products being marketed and the people buying them. Gift catalog merchant ABC Distributing Inc. sends out millions of catalogs each month, and it uses the Internet to get fast feedback from test mailings.
“One of the biggest benefits for ABC is detecting as quickly as possible the results of sending out test catalogs,” says Daniel Gudema, Web site manager for the North Miami Beach firm. “We can monitor the browsing level of the online catalog on an hour-by-hour basis, and then use that to determine within two or three days whether to send the test catalog out for a major run.”
But getting detailed feedback of this sort requires accurate measurements of a Web site’s traffic, an area known as “Web analytics.”
“The Web analytics market is relatively crowded with 36 major suppliers, and the number is growing,” says Guy Creese, analyst for the Boston based Aberdeen Group. He adds there are a number of dirty little secrets that these companies don’t tell you, which means you should be careful when selecting products.
ABC Distributing tracks the activities in real time on its Web site (abcdistributing.com) by means of an ASP service called HitBox, provided by WebSideStory Inc. (Websidestory.com).
“Originally we were quoted a price of $4,000 to $5,000 dollars a month for the service,” says Gudema. “But now we’ve gone up to 20 million to 30 million page views per month on the Web site, and at that level it’s $7,000 to $9,000 per month.”
Even at this price, the service is well worth it, according to Gudema. “Anyone in the company can log in from the office or from home and know exactly what’s going on,” he says. “It’s brought a lot of accountability.”
GMAC Insurance Online notes that Web analytics is important for other reasons. The company has just signed a contract with Coremetrics Inc. (www.coremetrics.com), an ASP whose base service costs $250,000 per year, which includes some consulting.
“Strategically, we believe that this kind of tool gives our customers a better online experience, by enabling us to provide them with the services and products they want,” says president Mitch White. “For example, if 50% of our customers were going to the billing screen, and it took them three clicks, we could serve that screen up in just one click.”
Another reason to use analytics is to get quick marketing feedback. “A real life example is that a competitor of ours did a giveaway of a $10 gift certificate to Amazon.com,” says White. “The campaign was a big success based on the click-through, because they gave away a lot of gift certificates, but unfortunately they sold only one policy.”
Good real time analytics, even though expensive, can nip disasters like that in the bud. In fact, since Web-site development and maintenance can easily cost millions of dollars per year, a strong case can be made for spending an extra $250,000 to $300,000 per year for Web analytics.
Companies put off by the price tag can opt for some simple, homegrown ways to analyze their Web site’s traffic.
Web servers generate “Web log files” that record visits to most sites. A company can obtain generalized analytics figures in terms of “Web site hits” or “page views” just from the size of these log files.
Several companies, such as WebTrends Corp. (www.Webtrends.com) and Accrue Software Inc. (www.accrue.com), have become market leaders in Web analytics by providing software products that analyze these log files.
Server Data or Browser Data
Browser-side data analysis is a newer method, and appears to be more effective in providing marketing or business data. As a further wrinkle, one company, Elytics Corp. (www.elytics.com), is launching a product that processes and merges both server-side and browser-side data.
But at the end of the day, a Web analytics system has to do more than just count page hits.
For example, if a user visits your site on Monday and Tuesday to do the Web equivalent of window-shopping, and then makes a purchase on Thursday, the analytics software has to encapsulate all three visits into a single experience leading to a sale. Determining this from either server-side or browser-side alone is extremely difficult.
In fact, Gudema has analyzed a number of Web analytics products, and found none that provide functionality in all four of the areas that he requires: “One [area] is the volume of traffic through the Web site; one is a system that tracks and monitors the health of the servers, and how heavily they’re loaded; one is the detailed behavior analysis of people who make purchases; and the fourth is E-mail management.”
Gudema requires multiple products to handle all these areas.
If there’s one issue that’s a potential showstopper in the area of Web marketing, it has to be privacy. That presents an extra challenge to marketing executives. Analytics services have to provide enough data to satisfy the marketing aims of their clients, but not so much that they invade the privacy of their clients’ customers.
The problem is that there’s a lot of data floating around — the user’s behavior at the Web site, credit card data, purchases, demographics, and, depending on the technology, information about other Web sites a visitor has been to. A malicious vendor could combine all this information and get a detailed personal profile of each Web site visitor.
It doesn’t help that a lot of Web analytics data is stored on the servers at an ASP. That means that businesses are relying upon the security of the ASP’s firewalls to protect their customers’ data.
Even with literally dozens of Web analytics on the market, and more being introduced every week, the technological questions are still at an early stage of being solved. But Web site developers and providers will have to make sure that the privacy issues don’t get overlooked as they race to improve the technology.