A few weeks back we published a white paper with our client BPA Worldwide on the use of Flash Local Shared Objects in web analytics practices. The paper, titled “Flash LSOs: Is Your Privacy at Risk?” is available for download at BPA Worldwide and does require a tiny bit of information (name, company, email.) We wrote the paper with BPA Worldwide because we are seeing a resurgence in the use of Flash LSO as a back-up mechanism for browser cookies and frankly I personally worry about the practice.

Cookie deletion is what it is, and nothing anyone has done in the past five years has seemed to do anything to lessen (or worsen) the rate at which consumers clear cookie and history files. And yes, cookie deletion has a confounding effect on a variety of metrics web analytics professionals consider important, we’ve covered this more or less ad nasuem, although I certainly wonder how comScore’s recent reversal on the value of cookies will play out across combined web analytics + audience measurement efforts.

My concern is that companies are increasingly using cookies to over-ride consumer preferences regarding cookie deletion. Documented by Soltani, et al. in their paper “Flash Cookies and Privacy”, companies are actively using Flash LSO, which are much more difficult to block and delete than their browser-based counterparts, to essentially “reset” browser cookie values and thusly “remember” information that consumers are either implicitly or explicitly asking the web browser to forget.

If you’re doing this, or even considering this, I would encourage you to download the white paper as we provide what I believe to be sound guidance regarding the use of Flash LSO in a measurement practice.  You might also want to check out this post over at the Adobe web site which details how Adobe Flash 10.1 will begin to support the “private browsing” feature in most browsers. While I don’t blame Adobe particularly for how companies are using LSO in digital measurement practices, this update is an excellent response from the company and shows their commitment to consumer privacy.

As always your thoughts and feedback are welcome.

My own personal highlights include:

• Totally free copies of Web Analytics Demystified, The Big Book of Key Performance Indicators, and the KPI book’s companion worksheets. I made the decision to start giving my books away for one reason and one reason only: to continue to do everything humanly possible to educate as many future web analytics professionals as possible. The response today was good (see image below!)
• Totally revamped mini-site for The Analysis Exchange, including the ability for everyone to start to create their member profiles. The Analysis Exchange has exceeded every single expectation that I had going in, thanks to many people’s efforts. If you’re interested in helping the Analysis Exchange or learning more about the effort please visits http://www.analysis-exchange.com
• Partially revamped mini-site for Web Analytics Wednesday, with more features and updates coming in Q2. Web Analytics Wednesday has become such an automated delight, and with SiteSpect and Coremetrics renewing their sponsorship in 2010 we hope to do even more this coming year!
• All new look and feel for my, Aurelie, and John’s blogs, and the addition of our new Emerging Technology blog. So much of our traffic is driven by the blogs, and so many of our clients find us based on our writing here, we wanted to ensure that reading our blogs was as distraction free as possible. The Emerging Technology blog is something we think of as “TechCrunch for Web Analytics” and we hope you’ll check that out.
• We have also worked to clarify what the Web Analytics Demystified web analytics consulting business and Senior Partners do, when we’re not supporting the community at large. Perhaps a small point, but one that pays the bills, so if you need help getting your web analytics strategy defined, please give us a call.

One thing about my last point, our consulting business and giving us a call. On past sites there were dozens of calls to action and conversion points I was trying to get people to and through. On this site there is one: getting YOU to reach out to US. It may sound glib, but we are able to do more for people who simply email, call, Skype, or Twitter us than most folks can imagine, and often times our help comes without any kind of fee.

Put another way, if you need our professional help, we’ll help you and hopefully you’ll be satisfied with what we ask you to pay. But if you need our guidance, suggestions, or honest opinion, we’ll help you without ever bringing up fees or asking for money. Like the book giveaway, Web Analytics Wednesday, and The Analysis Exchange we have found that simply answering questions without expectation of compensation is often times better than getting paid.

In closing I am totally delighted with the traffic we had to the site today thanks to Twitter, the #measure channel, and the book offer. Based on my Omniture Insights reporting we were completely off the charts in Europe and this AM in the U.S. We’d love your help spreading the word about the book! If you can, tell people to click through on http://bit.ly/demystified-books or simply to check out the new web site.

As always I welcome your comments, critique, and feedback. Especially if you have nice things to say about the new site, of want to help me identify bugs (since not all of you use Chrome on the Mac … LOL!)

I admit, I wondered that too in a way, having made a slightly different transition myself years ago. It’s not easy to come away from a situation where you provide advice but are tasked with, honestly, doing very little real work. During my own tenure at JupiterResearch years ago I ensured my own connection to practical web analytics by writing my second and third books. But John had been an analyst for nearly 10 years … and so wondering how he’d hit the ground was a reasonable question.

Wonder no more.

While John has already contributed greatly to the businesses bottom line and helped out with one of our largest new retail clients, he absolutely floored me this morning when he published his post Defining a Web Analytics Strategy: A Manifesto. I asked him to elaborate on some comments he made at Emetrics where he essentially poo-pooed the use of so called “Web Analytics Maturity Models”, describing the almost religious zeal some people seem to have when talking about models and declaring himself as a “Model Atheist.”

Having written the original Web Analytics Maturity Model back in 2005, I have had first-hand experience with their failure to produce anything more than a generalized awareness that most companies simply don’t “get” web analytics, something that we more or less all know already. But honestly I was surprised when John took this position on the subject because, well, in my experience those that don’t do, teach, and models are a classic teaching tool.

I had assumed that as an analyst John was a teacher, not a do-er like I have been for years now in my capacity as a practice leader, consultant, and web analyst. Man was I wrong …

John’s “Manifesto” is perhaps the most lucid yet succinct explanation I have ever read detailing the steps required to make web analytics work for your business (as opposed to the other way around.) I almost asked him to edit the post for fear that he was opening our kimono too much, but if Social Media has taught us anything it has taught us that transparency is king. The fact that he managed to encapsulate what others have been trying to explain with long-winded speeches, tangential arguments, and downright rude behavior is a huge plus.

Some of you may read John’s manifesto and think “Gee, this seems to point to the need for outside consultants” which is a fair criticism. But before you react consider two things:

1. Consultants (like us) have a tendency to, you know, recommend consulting. Everyone’s perspective arises from their own personal biases, regardless of how many times they declare the contrary. We are consultants, consultants who want to feed their children. Forgive us our bias and we will forgive you yours …
2. Consultants in the Enterprise are like death and taxes, we are more or less inevitable. Often times an outside perspective is exactly what the business needs to actually start to act upon the message that otherwise great employees have been stating for years. Other times the business simply stops listening to their employees and won’t make a move until McKinsey, Bain, or Demystified come in and charge big money for insights that were already there. Either way, ours is the second (or is it third) oldest profession and it must be for a reason …

I would challenge you, dear reader, to spend some time reading John’s post and considering what he has to say. Think about how you could apply his ten insights to your business regardless of whether you turn to consultants for advice or not. Listen to your business partners needs, put away your models and roll up your sleeves, transcend mediocrity, establish your own waterfall and embrace change!

When I said “web analytics is hard” I meant it, I really, really did. But I wasn’t trying to box anyone in or establish myself as some kind of amazingly wonderful “guru”, I was simply telling you all the truth based on my dozen years of experience in the sector. Yes, getting started can be easy; yes, making Google Analytics do stuff can be easy; and yes, you can do an awful lot in an hour a day if you simply apply yourself to the task … but the problem is that within any business of size, complexity, or nuance — which is to say all businesses everywhere — the act of getting from raw data to valuable business insights that you can repeatedly take action upon is apparently so freaking difficult that almost nobody does it.

How is that “easy?”

You all know I love a good debate so if you disagree with my comments here please let me know. If, however, you have something to add to John’s manifesto, I would encourage you to comment on his blog post directly.

Happy Holidays, everyone.

Wow. Wow. Wow. I am at a total loss for words when it comes to the response from the web analytics community regarding our soft-launch for The Analysis Exchange on Tuesday.  We’ve had over 250 people, largely from within the measurement community, sign up to participate and have seen the nicest emails imaginable. Clearly this is an idea that’s time has come, and clearly the lack of training opportunities in the sector was a “raw nerve” for many people.

But don’t take my word for it. The following are excerpts from emails we received over the past few days. These speak for themselves and only serve to reiterate the need for the Exchange. The first email is from Bryce in Georgia:

“I really want to do web analytics as a profession but am having a hard time breaking into the field.  There’s not exactly anywhere to ‘get a degree’ doing this kind of thing and even with my business and accounting background, and decade of web development freelancing, my experience does not seem to be impressing any potential employers.

It would be awesome to get some real experience under the guide of professionals.  I’ve been reading Avinash’s books, following several analytics blogs and I’ve set up numerous GA sites with funnels, goals, and KPI’s that are being tracked.  The fact that we’ll be helping out non-profits and outreaches at the same time is super.

Please pick me, :)”

“I was reading Eric Peterson’s blog entry about the Analysis Exchange and I would like to be a mentor and help contribute to the success of a company by empowering them with the awesomeness of web analytics.”

“I am very grateful for a “student” opportunity you might generate for and with me as you defined in your clear video today.  Through WAW, your email kindnesses, and more, you have taught me “what I don’t know,” and what I do offer is a proven data smog to actionable wealth of knowledge capital “philosophy,” and an “attitude of gratitude of How May I Help You?”  These are far more than just nice words to me.”

“This a great initiative!!  Being an active student of web analytics, I encountered the same catch 22 when attempting to break into this industry.  I have signed up and look forward to participating!!”

“Just been through the site after receiving the email and seeing the twitter alerts and I wanted to firstly pass on my congrats for initiating such a cool idea, it’s long overdue and will be greatly needed if we are to push the industry forward, as I responded a while back on twitter – resource (and quality resource in particular) remains the biggest weakness in the industry, so anything that helps improve that is only good in my eyes.I have no idea how you intend to select mentors, but as a leading practitioner in the UK for over 10 years on both the client and vendor side if I can help in this capacity I’d be delighted to put my name forward, I promise not to be offended if you decide not to use me initially!

The application of web analytics, either in analysis or how to make it an integral part of a business is something I have done much work on over the last 2-3 years, so I’d like to think I have a lot to offer anyone new to the industry that’s trying to work out how to start pushing things forward

Anyone, good luck with exchange and hope I can help in any way.”

Finally, and this is the email that put a grin on my face for the entire day Tuesday, from Zach:

“I think this program sounds wonderful and wanted to be as early as possible in dedicating myself to this program.  I am a student of analytics -  I have taken courses at the University of British Columbia in Web Anlaytics, I’ve studied and will be taking the exam for Google Analytics certification soon, and I belong to the Web Analytics Association.  Unfortunately, I have little “real” world  application using web analytics tools and making sound recommendations using these tools.

I do have a career of experience as an advertising consultant so I am not a “traditional” student.  I hope I can apply some of the experience I have and use it to develop myself and a new career in web analytics.

I am excited to be involved in this great opportunity – I feel like it was created just for me.”

Furthermore Zach reminded me that he is one of the thousands of people I have been fortunate enough to offer some small amount of advice to over my years:

“I took your advice you offered me some time ago to take the UBC classes and it was good advice, but they really lack real world application – especially for hands on learners like me.  I’ve actually approached some Non-Profit organizations and boards that are willing to let me “practice”  and If I could gain the experience of a mentor to work with that would be great.  I know you will be sending out additional information in the coming year (right around the corner) but I am anxious to get started!”

Zach’s point is an excellent one — I have long been telling people who ask me “how do I get real-world experience” for years to reach out to their church, their kids school, their local animal hospital, or local charities.  While this is good advice (sorry) it is also somewhat unpractical I suspect and falls into the category of things that are easy for me to say and hard for people to actually do.

The Analysis Exchange solves that problem. We will bring the mentors, we will bring the businesses, and we will provide the system. Our sincere hope is that by lowering the barriers as much as humanly possible we will be able to create the maximum number of opportunities for everyone — mentors, students, and causes.

The email keeps coming in so I will leave you with two thoughts:

1. We’d love your help spreading the word about The Analysis Exchange! If you have a blog, a Twitter account, or just a bunch of like-minded friends in Facebook, please share the news about this effort by asking people to retweet this URL: http://bit.ly/analysis-exchange
2. We’d love to hear from you! If you’re excited about the effort and want to pitch in or just share your thoughts please feel free to email us at exchange@webanalyticsdemystified.com or leave your comments below

Thanks again to everyone who has signed up and reached out so far. Just like Web Analytics Wednesday and the Web Analytics Forum, if we all work together amazing things can happen.

Those of you who have been following my work know that I have spent a great deal of time working to create solutions for the sector. As a matter of record I was the first to create an online community for web analytics professionals and explicitly point out the need for dedicated analysis resources back in 2004, and the first to publish a web analytics maturity model and change how web analytics practitioners interact with their local community back in 2005. I’ve also written a few books, a few blog posts, and have logged a few miles in the air working with some amazing companies to improve their own use of web analytics.

I offer the preceding paragraph not to brag but rather to establish my credentials as part of setting the stage for what the rest of this post is about. Like many in web analytics — Jim Sterne, Avinash Kaushik, and Bryan Eisenberg all come to mind — I have worked tirelessly at times to evolve and improve the landscape around us. And with the following announcement I hope to have lightning strike a fourth time …

But I digress.

One of the key questions I asked in Twitter was “how did you get started [in web analytics?]” Unsurprisingly each and every respondent gave some variation on “miraculously, and without premeditation.” While people’s responses highlighted the enthusiasm we have in the sector, it also highlighted what I see as the single most significant long-term problem we face in web analytics.

We haven’t created an entry path into the system.

As a community of vendors, consultants, practitioners, evangelists, authors, bloggers, Tweeters, socializers, and thought-leaders, we have failed nearly 100% at creating a way for talented, motivated, and educated individuals who are “not us” to gain the real-world experience required to actually participate meaningfully in this wonderful thing that we have all created.

Before the comments about the Web Analytics Association UBC classes or the new certification pour in consider this: The UBC course offers little or no practical experience with real data and real-world business problems, and the certification is designed, as stated, “for individuals having at least three years of experience in the sector.” Both are incredibly valuable, but they are not the type of training the average global citizen wishing to apply their curiosity, their precision, and their individual talents to the study of web data need to actually get a good job coming from outside the sector.

And while I have little doubt people have landed jobs based on completion of the UBC course given the resource constraints we face today, as a former hiring manager and consultant to nearly a dozen companies who are constantly looking for experienced web analysts, I can assure you that book-based education is not the first requirement being looked for. Requirement number one is always, and always will be, direct, hands-on experience using digitally collected data to tell a meaningful story about the business.

Today I am incredibly happy to announce my, my partners, and some very nice people’s solution to this problem. At 6:30 PM Eastern time at the Web Analytics Wednesday event in Cambridge, Massachusetts my partner John Lovett shared the details of our newest community effort, The Analysis Exchange.

What is The Analysis Exchange?

The Analysis Exchange is exactly what it sounds like — an exchange of information and analytical outputs — and is functionally a three-partner exchange:

• At one corner we have small businesses, nonprofits, and non-governmental organizations who rarely if ever make any substantial use of the web analytic data most are actively collecting thanks to the amazing wonderfulness of Google Analytics;
• In the next corner we have motivated and intelligent individuals, our students, who are looking for hands-on experience with web analytics systems and data they can put on their resume during when looking for work or looking to advance in their jobs;
• And at the apex of the pyramid we have our existing community of analytics experts, many of whom have already demonstrated their willingness to contribute to the larger community via Web Analytics Wednesday, the WAA, and other selfless efforts

The Analysis Exchange will bridge the introductions between these three parties using an extremely elegant work-flow. Projects will be scoped to deliver results in weeks, effort from businesses and mentors is designed to be minimal, and we’re working on an entire back-end system to seamlessly connect the dots. And have I already mentioned that it will do so without any money changing hands?

Yeah, The Analysis Exchange is totally, completely, 100 percent free.

John, Aurelie, and I decided early on, despite the fact that we are all consultants who are just as motivated by revenue as any of our peers, that the right model for The Analysis Exchange would be the most frictionless strategy possible. Given our initial target market of nonprofits and non-governmental organizations, most of whom our advisers from the sector warned were somewhat slow to invest in technology and services, “free” offered the least amount of friction possible.

Businesses bring data and questions, mentors bring focus and experience, and students bring a passion to learn. Businesses get analysis and insights, students gain experience for their resume, and mentors have a chance to shape the next wave of digital analysis resources … resources the mentor’s organizations are frequently looking to hire.

More importantly, our mentors will be teaching students and businesses how to produce true analytical insights, not how to make Google Analytics generate reports. Our world is already incredibly data rich, but the best of us are willing to admit that we are still also incredibly information poor. Students will be taught how to actually create analysis — a written document specifically addressing stated business needs — and therein lies the true, long-term value to our community.

Too many reports, not enough insights. This has been the theme of countless posts, a half-dozen great books, and nearly every one of the hundred consulting engagements I have done in the past three years. The Analysis Exchange is a concerted effort to slay the report monkeys and teach the “analysts” of the future to actually produce ANALYSIS!

A few things you might want to know about The Analysis Exchange (in addition to the FAQ we have up on the official web site):

• Initially we will be limiting organizational participants to nonprofit and non-governmental entities. We are doing this because we believe this approach simultaneously provides the greatest benefit back beyond the web analytics community and provides a reasonable initial scope for our efforts. Plus, we’ve partnered with NTEN: the Nonprofit Technology Network who are an amazing organization of their own;
• Initially we will be hand-selecting mentors wishing to participate in the program. Because we are taking a cautious approach towards the Exchange’s roll-out in an effort to learn as much as possible about the effort as it unfolds, we are going to limit mentor opportunities somewhat. Please do write us if you’re interested in participating, and please don’t be hurt if we put you off … at least for a month or two;
• With the previous caution in mind, we are definitely open to help from the outside! If you have experience with this type of effort or just have a passion for helping other people please let us know. Just like with Web Analytics Wednesday, we know that when The Analysis Exchange gets cranking we will need lots and lots of help;

Because this post is beginning to approach the length at which I typically tune out myself I will stop here and point readers to three resources to learn more about The Analysis Exchange:

1. We have a basic, informational web site at http://www.analysis-exchange.com that has a nice video explaining the Exchange model in a little greater detail;
2. You can email us directly at exchange@webanalyticsdemystified.com for more information or to let us know if you’re willing to help with Exchange efforts;
3. You can follow Exchange efforts in Twitter by following @analysisxchange

As you can probably detect from the post I’m pretty excited about this effort. Like I did when I co-founded Web Analytics Wednesday, I have some amazing partners on this project. And like I did when I founded the Yahoo! group, I believe this effort will satisfy an incredible pent-up demand. Hopefully you will take the time to share information about The Analysis Exchange with your own network, and as always I welcome your thoughts, comments, and insights.

Learn more at http://www.analysis-exchange.com

John has long blogged over at Analytics Evolution but he’s already set up shop here at http://john.webanalyticsdemystified.com.  As you can see he’s pretty excited about joining our team as well, and you can read the official press release on our web site.

At Web Analytics Demystified I have worked for the past two years and Aurelie and I have worked this year to build a truly great and well-differentiated consulting firm. Lots and lots of companies do implementations, reporting, and the basic block-and-tackle work that is the foundation of our industry. But when I left Visual Sciences I wanted to fill a completely different need. In the past two years we have, I believe, successfully done that.

We count among our clients some of the best companies doing business online, some of the greatest technology firms in measurement today, and some of the nicest people working in web analytics today. Based on the early news from our trusted clients and partners John will only accelerate our growth and allow Web Analytics Demystified to focus on more strategic and more valuable engagements across the globe. Plus, since John is a total and complete Rock Star like Aurelie, I have a new partner that I know I can trust with the kinds of clients we work with here at Web Analytics Demystified.

We will have more great announcements from the firm in the coming weeks but I will leave you with these few things:

• If you’re a Web Analytics Demystified client in any kind of retainer, you have immediate and automatic access to both John and Aurelie. Contact me directly for more information;
• If you’d like to talk to John about his practice at Web Analytics Demystified you can email him at john@webanalyticsdemystified.com;
• If you’d like to know more about this announcement and how Web Analytics Demystified can help your business, please give me a call at (503) 282-2601;
• If you’re in Boston and want to congratulate John and buy the man a drink, please join us at Web Analytics Wednesday in Cambridge on TUESDAY, DECEMBER 15TH (sponsored by our friends at Unica and SiteSpect and hosted by Judah Phillips)

I hope everyone reading this blog will join me in welcoming John to the team and take the time to read his “Hello World” post titled “Let the Wild Rumpus Start”.  Oh, and feel free to spread the word!

Just in case you’ve been living under a rock for the past month and haven’t already heard about “Intelligence” have a quick watch of the following video pulled from the Google Analytics blog:

Pretty awesome, huh? What’s more, now that I’ve had a few weeks to play with the feature and think about it in the context of my published views on the Coming Revolution in Web Analytics, I think that “Intelligence” is one of the most important advances in web analytics since the JavaScript page tag.

While Google is certainly not the first vendor to apply some level of statistical and mathematical rigor to web analytics data, an honor that would likely go to Technology Leaders for their Dynamic Alert product or Yahoo for their use of confidence intervals when exposing demographic data in Yahoo Web Analytics, in my humble opinion Google has done the best possible job making statistical analysis of web analytics data accessible, useful, and valuable.

Some things I really like:

• An approachable way to determine confidence intervals via their “Alert Sensitivity” slider. While the implementation doesn’t necessarily impart the level of detail some folks would like, the slider mitigates the prevalent concern that “people won’t understand confidence intervals.”
• Great visual cues for alerts, especially when statistically relevant changes are not obvious based on traffic patterns. Sometimes traffic patterns just look like hills and valleys, even when something important is happening — for example, the next figure shows two alerts at the lowest threshold setting on September 16th that, upon exploration, turned out to be great news (that I might have missed otherwise.)

• Good visual cues regarding the statistical relevance of the insight being communicated. This is tough since Google is trying to present moderately complex information regarding the underlying calculations and how much emphasis you should be putting on the insight. By showing a relative scale for “significance” I think Google has more or less nailed it.

• Google Analytics finally starts communicating about web analytics data in terms of “expectations” instead of absolutes. All of us (present company included) have a tendency to get wrapped up in whole numbers, hard counts, and complete data sets. But we also know that Internet-based data collection just isn’t that accurate, and so any push to get us to start thinking in terms of predicted ranges and estimates is a step in the right direction. For example, I love knowing that on a given day Google Analytics “expects” between 311 and 388 people to come to my site from the UK!

• Lots more, including the ability to pivot the views and look from a “metric-centric” and “dimension-centric” perspective, the ability to aggregate on day, week, and month, and the ability to add your own custom alerts based on changes in traffic patterns. Perhaps ironically this last functionality (”Custom Alerts”) is how we’ve all historically thought about “Intelligence” in reporting, and while useful seems somewhat weak compared to Google’s stats-based implementation.

While awesome in it’s first instantiation there are some obvious things that the Great GOOG could improve in the feature. Some ideas include:

• More dimensions and metrics, although I believe both Nick and Avinash have commented that they are already working on adding intelligence to other data collected.
• Some way to expose confidence intervals and p-values would be useful (perhaps as a mouse-over) so that the increasing number of analysts with experience in statistics could have that data in their back pocket when they went to present results.
• Email alerts for the automatically generated insights, for example when “Intelligence” determines that five or more alerts have been generated it would be cool to get an email/SMS/Tweet/Wave notification.
• The ability to generate alerts against defined segments, so that I could see the same analysis for different audiences that I’m tracking.

Mostly ticky-tack stuff, but again I’m pretty damn impressed with their freshman effort. I suppose I shouldn’t be surprised since evangelist Avinash has been talking about the need for statistics in web analytics for an awfully long time, but given that so many in our industry have balked at bringing more mathematical rigor to our work (including said evangelist, oh well) it’s encouraging to see Google move in this direction.

What do you think? Are you using “Intelligence”? Is it helping you make better decisions? Do you like the implementation as much as I do? I’d love to hear your thoughts and comments.

When I think about these changes, I find myself coming to the undeniable conclusion that our industry is undergoing a radical transformation. More companies than ever are paying attention to digital measurement, and despite my disbelief in Forrester’s numbers, an increasing number of these companies are forging a smart, focused digital measurement strategy. At the X Change, at Emetrics, and at Web Analytics Wednesday events around the world there is more and more evidence that this wonderful sector I call “home” is really starting to grow up.

And we’re just getting started.

If you pay close attention to the marketing you see from Omniture, WebTrends, Unica, Coremetrics, and the other “for fee” vendors you’ve surely noticed a dramatic change recently. Nobody is talking about web analytics anymore; the entire focus has become one of systems integration, multichannel data analysis, and cross-channel analytics.

All the sudden web analytics is starting to sound like, gasp, business and customer intelligence.

Eek.

Since it’s late and since this post will be over-shadowed by the hype around Google Analytics releasing more “stuff” on Tuesday I’ll cut right to the chase: I believe that we are (finally) on the cusp of a profound revolution in web analytics and that the availability of third-generation web analytics technologies will finally get digital measurement the seat at the table we’ve been fighting to get for years.

Statistics, people … statistics and modeling, predictive analytics based on web data, true forecasting, and true analytical competition for the online channel. Yahoo’s use of confidence intervals when presenting demographic data and the application of statistical models in Google’s new “Analytics Intelligence” feature are just the beginning. As an industry it’s time to stop fearing math and embrace analytical sciences that have been around for longer than many of us have been alive. It’s time to stop grousing about how bad the data is and actually do something about it.

Do I have your attention? Good.

Thanks to the generosity of the kind folks at SAS I have a nicely formatted white paper that is now available for download titled “The Coming Revolution in Web Analytics.” Just so you can see if you might be interested here is the Executive Summary from the document:

“Forrester Research estimates the market for web analytics will be roughly US $431 million in the U.S. in 2009, growing at a rate of 17% between now and 2014.  Gartner reports that the global market for analytics applications, performance management, and business intelligence solutions was US $8.7 billion in 2008—roughly 20 times the global investment in web analytics.  Among their three top corporate initiatives, most companies are focusing their efforts online, expanding their digital efforts Internet to increase the organization’s presence in the least expensive, fastest growing channel.

Today, a majority of companies are dramatically under-invested in analyzing data flowing from digital channels.  Even when business managers have committed money to measurement technology, they usually fail to apply commensurate resources and effort to make the technology work for their business.  Instead, most organizations focus too much on generating reports and too little on producing true insights and recommendations, opting for what is easy, not for what is valuable to the business.

Web Analytics Demystified believes this situation is exacerbated by the inherent limitations found in first- and second-generation digital measurement and optimization solutions.  Provided by a host of companies primarily focused on short-term gains in the digital realm, not long-term opportunities for the whole business and their customers.  Historically these companies worked to differentiate themselves from traditional business and customer intelligence, focusing on the needs of digital marketers.  Unfortunately, as the need for whole business analysis increases, many of these vendors are playing catch-up and forced to bolt-on data collection and processing technology as an afterthought.

The current state of digital analytics is untenable over time, and Web Analytics Demystified believes that companies that persist in treating online and offline as “separate and different” will begin to cede ground to competitors who are willing to invest in the creation and use of a strategic, whole-business data asset.  These organizations are using third-generation digital analytics tools to effectively blur the lines between online and offline data—tools that bridge the gap between historical direct marketing and market research techniques and Internet generated data, affording their users unprecedented visibility into insights and opportunities.

This white paper describes the impending revolution in digital analytics, one that has the potential to change both the web analytics and business intelligence fields forever.  We make the case for a new approach towards customer intelligence that leverages all available data, not just that data which is most convenient given the available tools.  We make this case not because we believe there is anything wrong with today’s tools when used appropriately, but because we believe digital analytics should take a greater role in business decision making in the future.”

Since I pride myself on the quality of my readership I sincerely hope that each of you will download this document and  take the time to read it. More importantly I’d love you to share it with your co-workers, friends, and followers on Twitter. I believe we are at a critical juncture in our practice’s history where the skills that have served us all along are not going to serve us for much longer, but I am always willing to admit that I’m wrong and more than anything I love a spirited debate.

Are you ready for the revolution?

It still leaves me scratching my head about the deal since the synergies are less obvious to me than they clearly are to Adobe and Omniture’s management and shareholders, but hey, with the sheer number of changes occurring in the industry right now who knows what might actually work. Hell, based on what I’m hearing about the Google Analytics announcement next Tuesday, it’s going to look like a great time to be focusing on something other than competing with Google Analytics …

I’m going to get to spend time with many of their largest customers next week so I suspect I’ll hear a great deal more about how this sale is being met by HBX customers, Visual Sciences customers, and those folks who have a tremendous amount invested in the SiteCatalyst line of products. If you’re an Omniture customer going to Emetrics next week and have an opinion you’d like to share please reach out to me directly and we’ll arrange some time to chat.

Again, congratulations to Josh James and all of the OMTR shareholders on what is increasingly looking like a great deal for all involved.

I really did enjoy the Forrester report, primarily because the author (John Lovett) managed to surface totally new data.  When he first told me that over half of Enterprise businesses were using free solutions I have to admit I didn’t believe him.  In a way I still don’t, but perhaps that’s only because I work with a slightly different sample than he presents.  Regardless, John’s report paints a picture of an increasingly challenging market for companies selling web analytics and a new sophistication among end users.

Speaking of sophistication, there are a few points in the report that I question, and since I have pretty good luck getting feedback from readers on big picture stories I figured I’d bring them up here in the blog.  Before I do I want to emphasize that I am not questioning Forrester or John’s work—I am merely trying to explore some data that I find contrary to my own experience in this public forum.  To this end I pose a handful of questions that I would love to discuss either openly in comments or via email.

The first point I question is the observation in Figure 3 that 70% of companies report having a “well-defined analytics strategy.”  Two years ago my own research found that fewer than 10% of companies worldwide had a well-defined strategy for web analytics.  Last year Econsultancy reported that only 18% of the companies in their sample had a strategy for analytics.  To jump from these low numbers to the majority of Enterprises just doesn’t square with my general experience in the industry.

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Remember, the implication of this data point is that 70% of all companies having more than 1,000 employees have a “well-defined analytics strategy.”  According to a 2004 report from the U.S. Census Bureau there were just over 12,000 companies in the U.S. with more than 1,000 employees.  Without assuming any growth between 2004 and 2009, Forrester’s 70% figure would result in over 8,500 companies in the U.S. that have a “well-defined” strategy for web analytics. Does that sound right to you?

Consider that the combined customer count for Omniture, WebTrends, Coremetrics, and Unica combined in the U.S. doesn’t even add up to 8,500 companies.  Even if you use the more conservative 13% who “strongly agree” with Forrester’s statement you end up with over 1,500 U.S. companies.  I may suffer from sample bias, but personally I can barely think of 150 companies that I would identify as having any strategy for web analytics, much less a “well-defined” one.

Most companies I talk to have the beginnings of an over-arching strategy—they’ve realized the need for people and are beginning to reduce their general reliance on click-stream data alone.  But given that I think about this topic from time to time, I think a “well-defined” strategy for web analytics takes into account multiple integrated technologies, appropriate staffing, and well thought-out business and knowledge processes for putting their technology and staff to work.  What does the phrase “well-defined strategy” imply to you?

Similarly, if 60% of companies truly believed that “investments in Web analytics people are more valuable than investments in Web analytics technology” there would be THOUSANDS of practitioners employed in the U.S. alone.  But again, every conference, every meeting, every conference call, and every other data point suggests that the need for people in web analytics is still an emerging need.  Hell, Emetrics in San Jose earlier this year barely drew 200 actual practitioners by my count.  How many web analytics practitioners do you think there are in the United States?

Same problem with the rest of the responses to Figure 3 on web analytics as a “technology we cannot do without” (75%) and the significance of the role web analytics plays in driving decisions (71%).  Perhaps I’m talking to entirely the wrong people, perhaps I’m interpreting these data wrong, and perhaps I’ve gone flat-out crazy, but these responses just don’t match my personal understanding and experience in the web analytics industry.

This issue of data that simply does not make sense, while not universally manifest in the report, manifests elsewhere as well. For example, Figure 8 reports on the percentage of application used segmented by fee and free tools:

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When I look at these responses and see that 63 percent of respondents using fee-based tools and 50 percent of respondents using free tools claim to be effectively using more than half the available functionality, again I find myself scratching my head. As this data appears to speak to the general sophistication of use of analytics I went back and looked at Dennis Mortensen’s quantitative study of how IndexTools was being used around the world.

Dennis reports that fewer than 10% of his customers were using even the most basic “advanced” features in web analytics (report customization) and that fewer that 4% of his customers (on average) are making any “advanced” use of the IndexTools application. While this dataset is somewhat biased towards European companies who I believe, on average, to be somewhat behind their U.S. counterparts it does provide an objective view in how web analytics are used that seems to directly contradict the self-reported responses in Forrester’s figure 8.

Clearly there is a gap between the responses John collected and the current state of the web analytics market.  Since John is a very smart guy I know part of his rebuttal will include the observation that he surveyed people directly responsible for web analytics (see Forrester’s methodology) and that people in general have a tendency towards positivism. Trust me, my son is the most handsome little boy ever born and my daughter’s beauty is only matched by that of Aphrodite … same for your kids, right?

Given the difficulty associated with gathering truly objective data regarding the use of web analytics, this type of self-reported data is usually what we have to go on.  While Omniture, WebTrends, Coremetrics, and Unica all have the fundamental capability to report data similar to that provided by Mr. Mortensen, it may not be in their best interests to expose underwhelming adoption and unsophisticated use (if that is what the analysis uncovered.)  Ultimately we’re forced to accept these self-reported responses and  then reconcile them against our own views, which is why I’m asking my readers what they think about the data Forrester is reporting!

Regarding these self-reported attitudinal responses on how web analytics is used strategically, perhaps the truth is found in the companies who “strongly agree” with John’s statements.  If we apply this lens, as opposed to the more optimistic view, we get the following:

• 17% of companies recognize that web analytics is a technology they cannot live without;
• Web analytics plays a significant role in driving decisions at 12% of companies;
• 13% of companies have a well-defined web analytics strategy;
• 9% of companies recognize that investments in people are more valuable than investments in technology

These numbers start to make a lot more sense to me.  Likely the truth, as with so much in our industry, lies somewhere in between, but I would love to hear what you think about these adjusted numbers.  Do the lower numbers make more sense to you, or do you agree with John’s more optimistic assessment?

Unfortunately if the lower numbers are correct the implication is that despite the incredibly hard work that companies, consultants, and industry thought-leaders around the world have done for years we still have an incredibly long way to go before web analytics is recognized as the valuable business practice that you all know it can be!

Regardless I want to state that I do not disagree at all with the fundamental thesis in this report, that “free” is creating a whole new level of interest in web analytics and that, given proper consideration, free is an excellent alternative to paid solutions.  Lacking clear strategy and resources, too many companies have wasted too much money on paid solutions for free to not be compelling.  Thanks to the dedication of the Google and Yahoo teams, the world now has access to great applications that are in some regards more compelling than fee-based alternatives.

While I may not have said this a few years ago, today I honestly do believe that “free” is a viable and appropriate alternative to fee-based solutions. While not appropriate in every situation, it is irresponsible to suggest that any company not willing to fully engage in web analytics should pay for ongoing services and support. Given advances from Google and the availability of Yahoo Web Analytics, any motivated company large or small now has access to a wealth of data that can be translated into information, insights, and recommendations.

Conversely I agree with John (and Jim, and almost ever thought leader I respect) who states that you need to “prioritize your business needs and culture for analytics first and then evaluate the tools.”  This goes back to the fundamental value proposition at Web Analytics Demystified: It’s not the tools you use but how you use them. If you’re not invested in developing and executing a clearly defined strategy for digital measurement, you may as well be grepping your log files.

I would love your feedback on this post, either directly in comments or via email. Thanks again to the folks at Google for making this awesome research freely available and to John Lovett for shedding light on this incredibly important aspect of our sector.  Remember: we are analysts—our jobs are to ask hard questions and then ask even harder ones!