FEATURE19 June 2009

Analysing the state of analytics


Andrew Hood takes us through the key findings of a new report into the state of the UK web analytics market – highlighting the need for more human resources to unearth the insights in the mass of behavioural data.

It almost feels self-indulgent to analyse the analytics industry, but in a lot of ways the complexity of the online sector demands it – with constantly evolving technology set against many practical barriers to interpreting and actioning the data.

Analytics as an industry is heavily reliant on technology and people: tools to capture and process the data, and people to do the analysis and evaluate how to make improvements on the back of that insight.

In many ways the pace of change in these two areas is quite different. The technology gets more sophisticated all the time, and the scope of data available is becoming mind-blowing. But that only exacerbates the challenge in continuing to improve the sector as a whole.

Disrupted consolidation

Software markets have a tendency to consolidate and become commoditised as they mature, and the analytics sector is no different. In the space of a year Omniture has increased its market share for paid-for tools from 27% to 42%, and other players appear to be struggling to compete.

But the more interesting disruptive force in the analytics market is still coming from the impact of free technology. Google Analytics, which was launched in 2005 as the first comprehensive free web analytics tool, has now reached 80% penetration. This has undoubtedly fuelled general consolidation in the industry, with the main vendors racing to the high end as the value falls out of the bottom of the market.

“The scope of data available is becoming mind-blowing. But that only exacerbates the challenge in continuing to improve the sector as a whole.”

While we’ve seen feature races between the paid-for vendors before, now the challenge is almost as strong from the free end of the market. Yahoo Web Analytics (another free tool) is aiming to capture the higher end of the free market, if there is such a thing, by opening up enterprise web analytics functionality to existing Yahoo advertising customers for free.

Free lunch?

Set against this rapid change and the intense competition to become the standard tool-set for the market, there remain some subtle but fundamental differences between the paid and free tools.

Free tools don’t provide access to data at the lowest level (i.e. visitor/customer), which means explicit matching up with other sources (e.g. a CRM or procurement system) becomes impossible. For businesses looking to integrate insight across online/offline channels, direct ownership of the raw data via a paid tool becomes very attractive.

There’s some evidence that using free tools leads to a more ad hoc approach to analysis, with Google Analytics users being half as likely to make frequent changes as a result of insights. This may indicate a lack of structured commitment when there is no explicit investment associated.

Scarce resource

All the technology in the world is of little use, however, if the analysis never sees the light of day as changes, action and improved performance.

The headline figures show that it’s still a mixed bag here. Only one in five companies have an internal strategy that ties data collection and analysis to business objectives, and only a quarter believe that analytics definitely provides actionable insights. This is limited progress since last year.

Looking at the barriers, the obstacles are predominantly resource and coordination related: not enough budget, not enough analysts and not enough strategy. An important trend is a slow but steady migration of budgets from technology to people (whether internal or external), which demonstrates that steps are being taken to redress the balance.

“Only a quarter believe that analytics definitely provides actionable insights. This is limited progress since last year.”

Untapped potential

One of the more striking conclusions of the research is just how little has changed in the space of a year, particularly the barriers to success. People and process are still the key factors in closing the gap between the potential and the real benefits, but there are clearly challenges in recruiting and coordinating that resource to make it happen.

The current economic climate is applying some urgency and focus to this, with the biggest increase in priorities this year focused around proving and improving return on investment as marketing budgets come under pressure. But the opportunities to really optimise are still largely unexplored in a lot of organisations, hamstrung by a lot of the surrounding complexities.

While the proportion of companies with no analysts has remained high, those with existing analyst teams are clearly looking to expand, which only emphasises the practical benefits felt when organisations dedicate human resources to making the most of data.


15 years ago

I think an issue is the poor definition of what employers regard to be analysts. Unfortunately many seem to think that proficiency in Excel is really what its all about. Analysts - really good analysts - are few and far between, a point that Andrew makes, but this is not helped by weak demand-pull from clients, nor from the weak supply push of tertiary institutions. They're so busy producing accountants and business grads they've neglected the burgeoning mountain of business information and the shortage of analysts to make sense of it. Shame on them. But in the middle, the existing crew of great analysts need to sing and dance a lot louder about the real value that being clever with good software can genuinely add to organisations. The analysts' story is one seldom well told. Hell. We're CSI. We're Numb3rs. We're all those hero shows - every single day.

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15 years ago

Duncan - I totally agree. We need to do more to focus attention upon the work we do, our skills/tools and the results that come.

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