Market Trends - Web Analytics: History and Future
The Web analytics market has gone through two stages and is entering its third:
1995 2000: Rapid Market Growth
The Web analytics market began in the mid-90s, several years after the invention of the Mosaic browser (January 1993). At that time, companies such as WebTrends and WebSideStory sprang up to perform clickstream analysis. WebTrends favored using Web logs to do the task and offered software; WebSideStory went with browser tags and delivered the solution as a service.
This strong correlation between data collection method and business model (software/Web logs, ASP/browser tags) continued throughout the 90s and was the subject of fierce debates as to which was better. It was also a time of heady growth. In 1999, the Web analytics market was $141 million, and growing at 200%; in 2000, it reached $400 million. By the end of the decade, three companies were emerging as the Web analytics triumvirate: Accrue, NetGenesis, and WebTrends. In contrast to these enterprise-class software providers, ASPs such as Coremetrics and WebSideStory looked as if they would be relegated to serving small- and medium-sized businesses.
2001 2003: Market Consolidation and Product Standardization
However, as the recession hit, these dynamics went topsy turvy. Rather than growing at 200%, the Web analytics market shrank by 7% in 2001, dropping to $342 million. Revenue increases at the small vendors offset the large drops in revenue occurring at companies such as Accrue and NetGenesis.
Business Intelligence (BI) vendors such as Ascential Software, Business Objects, and Informatica, that had offered Web analytics solutions as a way to tap into a hot market, suddenly began de-emphasizing or sunsetting their solutions. The approximately 60 suppliers in the sector shrank down to around 35 within the next several years. Audientia, Netusability, Plurimus, Primary Knowledge, Word of Net and YourCompass all went out of business; Enviz, I/PRO, Keylime Software, NetAcumen, NetGenesis, Troba, WebCriteria, and WebTrends were all acquired; digiMine and WhiteCross Systems got out of the sector.
European Web analytics vendors Clickstream Technologies, Intellitracker Limited, Lumio, Mtracking Technologies, Nedstat, Site Intelligence, WebAbacus -- began to emerge, but concentrated on selling within Europe, and did not expand into the U.S.
The debate about data collection methods cooled off; the two major methods began to coexist, with browser tagging being the most popular. In addition, the ASP solution was suddenly attractive from a financial point-of-view. Companies could do pay as you go and classify it as an operating expense, thereby avoiding large hardware investments turning up on the balance sheet. Also, ASP solutions became more flexible, offering custom reporting and the ability to send their online data to corporations so they could do their own analysis of behind the firewall.
Finally, in 2003, all of the major vendors began working to reach feature parity. Features that had been unique to a specific vendor A/B reporting (WebCriteria), for example had become ubiquitous within the market by early 2004.
2004 2007: Becoming Part of a Process Ecosystem
As of 2004, the major ASPs Coremetrics, Omniture, WebSideStory, and WebTrends now have the marketing buzz, and software-centric companies such as Datanautics and NetGenesis are struggling to be heard.
Sales are picking up; but rather than feature debates, many sales are now hinging around vertical expertise, best practices, and how well the Web analytics solution integrates with other systems. Enterprises are asking how a Web analytics system helps foster an online presence (i.e., how does it integrate with content management, search, categorization, personalization, e-mail marketing systems), or how can it participate in multi-channel analysis.
A previously technology-centric market is becoming a process-centric market. In short, it's becoming more mature.
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