How Yahoo! buying IndexTools changes Web Analytics
Yahoo! just announced that it has acquired IndexTools. When I first heard about this deal I thought “Oh, that’s nice for Dennis and Dennis is a pretty nice guy so that’s nice … and the title of Director, Data Insights at Yahoo! is a pretty nice title.” But then I really stopped to consider what Yahoo! pushing IndexTools out to the world means to web analytics (Disclosure: I have been working on a white paper for IndexTools; unfortunately that work is on hold for the time being.)
While we have seen a lot of deals in the last two years, this one is potentially the permanent game changer.
Depending on the deployment model that Yahoo! uses to bring IndexTools to the masses, this acquisition may spell the beginning of the end for some folks who are pretty invested in the status quo. I was unfortunately forced to write this post well in advance of the announcement because of my travel schedule so I am sure I have missed some details but consider the following:
- Many people consider IndexTools to be every bit as good as far more expensive solutions, offering strong support for visitor segmentation, customization, marketing workflow management, advanced merchandising, and reporting that is far superior to that currently offered by other free and low-cost solutions. In fact, IndexTools is often referred to as “Omniture at a fraction of the cost” and having used both applications I’m hard pressed to disagree — everything you need to do “Enterprise” (sic) analytics is in IndexTools, without exception, and Dennis has shown an uncanny ability to roll new features into the product that directly address emerging market needs at the point they’re needed, not years ahead of time and certainly not years too late. For an excellent review of IndexTools see Eric Enge’s piece at Stone Temple Consulting.
- Prior to the acquisition, IndexTools was poised to release their own ad hoc segmentation and analysis engine, dubbed Rubix, that directly competes with the likes of Omniture Discover and similar high-end offerings. I have seen Rubix and my first reaction was “Oh man am I glad I left Visual Sciences when I did.” Dennis and his team have taken advantage of the work that Visual, Omniture, and others have done and essentially packaged it up in a much more user friendly and approachable way. The result is something that I believe a far greater number of analysts will be able to take advantage of, regardless of the price point, and something that other free and low-cost vendors simply have no response to today. Lars Johanssen of SATAMA and my very good friends Rene and Aurelie from LBi/OX2 have similar summaries of Rubix worth reading.
- Yahoo! will almost certainly be able to take advantage of the good work that Google has done establishing their Google Analytics Authorized Consultant (GAAC) network, giving Yahoo! an immediate deployment network (oh man do I hope they call it the “YAAC” Network!) Having run IndexTools on my own site for some time I very much expect that many GAAC partners will actually prefer IndexTools for most of their deployments given the dramatically improved capabilities of the application. Here is a list of companies I expect to call Dennis and the team at Yahoo! to inquire about how they can be YAAC partner.
- One of the things that people really like about Microsoft Gatineau is the inclusion of a small amount of demographic data available for segmentation. I like what Ian and his team have been doing, but I suspect that A) Yahoo! has access to very much the same data (only a whole lot more of it) and B) the existing segmentation capabilities in IndexTools, not to mention Rubix, will make that data a whole lot more useful to marketers. Imagine if you deployed IndexTools having real-time access to age, gender, income, and behavioral demographic data to apply to all the reports in your system, collected via Yahoo’s huge network, obfuscated, and presented properly showing sample sizes and statistical correlations. That would be cool, huh?
The net effect, again depending on the specific go to market strategy Yahoo! uses, is potentially a profound shift in the nature of the web analytics market today. Consider the following options Yahoo! has:
- Yahoo! can simply slap a big “Y!” on the IndexTools products and continue to sell them, perhaps through IndexTools and Yahoo’s existing partner network. The advantage of this option would be minimal interruption to IndexTools customers and it gives Y! a chance to migrate data collection and reporting technology from Europe to locations around the world. This would also give Y! time to look slowly at adoption and use of the product and think about their long-term strategy towards web analytics.
- Yahoo! can brand IndexTools and give away the E-Business edition while continuing to sell the Enterprise version, Rubix, etc. The advantage of this option would be driving adoption and taking some of the attention away from Google Analytics in a sane and measured way. This would also give Y! better data regarding the amount of effort really required to support a real web analytics application (because let me tell you, for most of us, it ain’t easy!)
- Yahoo! can slap the logo on and say “Come and get it, people!” giving away the whole hog to all comers. The advantage of this option would very likely be a high adoption rate (for IndexTools target audience, which is definitely different than the G.A. audience and more directly competitive with the likes of Omniture.) The disadvantage of this option is it has the potential to break IndexTools current architecture and could cause service interruptions which is something nobody wants, regardless of how much they pay for the service.
If it were up to me, I would select the second option, driving adoption and interest in the application while protecting IndexTools most valuable (Enterprise) customers at the same time. The second option would give Y! the greatest amount of information about the road ahead — to be sure there will be challenges — but would also give the company some much needed love.
Knowing some of the players involved, however, my money is on the first option. Nice and conservative, and basically exactly what Google did when they acquired Urchin. Despite what I’m sure is a strong desire on the part of Dennis and Yahoo! to have a tremendous impact on the marketplace around them, they say that “slow and steady wins the race” and that is probably more true today than ever before.
If Yahoo! chooses the third option immediately, or as Google did, waits six months and then goes to a totally free model, suddenly there are far fewer reasons to pay for web analytics at all. Even if they charge a nominal fee for more advanced functionality like Rubix, or force us to buy ads on Yahoo! a la Gatineau version 1.0 (which Microsoft has since put an end to, for good reason), I suspect there will be a profound disparity between what Yahoo! will charge and the CPM rates that most companies are paying today.
Wait, before you say “Yahoo! will never give IndexTools away for free … it would be too expensive” keep in mind that you said that about Google and Urchin. My money is on free IndexTools before Christmas 2008.
While it is very easy for the top-tier of vendors to dismiss Google Analytics as “pretty, but basically inadequate” and “little more than an entry-level tool” the same claims cannot be used against IndexTools; consider again that many reviewers have said that IndexTools provides 80 percent of the functionality in Omniture at 20 percent of the price. If Yahoo! begins to provide 80 percent of the functionality in Omniture for NONE of the price, well, you get the gist …
If Yahoo! provides a low/no cost option for IndexTools, suddenly companies wanting to invest in web analytics will be far more likely to take advantage of the 10/20/70 rule for web analytics success I described over a year ago, focusing their efforts on people and process and worrying less about the technology used. Companies will be able to get their feet wet with Google Analytics and then, as the need arises, upgrade to IndexTools when they’ve mastered the basic processes and have hired the right people to move beyond basic reports and start to generate more complex analysis.
Obviously this acquisition is not without risks — Yahoo! could take too long to integrate IndexTools into their arsenal, the Microsoft/Yahoo! drama could play out in an unexpected way, and Google could respond by bringing Google Analytics dramatically up-market to be more competitive with Yahoo’s new position. Mitigating these risks are the fact that the team at Yahoo! is exceptionally bright (Bob Page, Michael Wexler, many others), any MSFT/YHOO drama will inevitably take years to play out, and if Google Analytics comes up market, well, then we have two truly great free or low-cost tools to choose from!
We have long talked about web analytics technology becoming a commodity, forcing a paradigm shift from the vendor-focused world that we live in today to the end-user focused world we truly need. Instead of asking “What tools should we use?” the conversation is now poised to become “How do we best use the data to drive our businesses strongly forward?” In a market where some vendors are still incredulously insisting that “web analytics is easy” I think this shift is long overdue and will be more than welcome by the majority of us practicing today.
Again, congratulations to Dennis, the team at IndexTools, and the acquisition team at Yahoo! I am very much looking forward to seeing how this announcement is received by the marketplace and how this change in the landscape benefits consultants and practitioners alike.
Rene Dechamps Otamendi added the following ...
Hi Eric,
This is a great news for the Industry indeed.
Congrats to Dennis and his fine team!!!!!
Let’s see in the coming weeks/months which of your options Yahoo decides to take but in all cases for sure it’s going to change a lot of things for the vendors. Time will tell hoy much…
Cheers from eMetrics Munich,
René
Marton added the following ...
Great post Eric! I hope we can finish that white paper soon :)
Marton Szoke
Founder & CEO
Indextools
Hosam Elkhodary added the following ...
Indeed very interesting news. Thanks for the great insight Eric and congratulations to the IndexTools team.
IMHO, and even with status quo, this has given IndexTools significantly higher visibility and would (should?) potentially force companies looking for a new web analytics tool (or perhaps those planning on changing their current one - HBX?) to consider delaying their decision and wait this one out.
Yahoo compra Index Tools | Javier Godoy added the following ...
[…] Eric afirma que esta es una nueva señal de cómo el sector va a cambiar radicalmente, pasando de ser una industria de herramientas a ser una industria de analistas. […]
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Casper Radil added the following ...
Dear Eric
You are probably right in many of your considerations, but a few is far of the point. About demographic data like gender, age and income, I (as a sociologist) believe that neither Yahoo! nor Google or Microsoft will never be able to collect any serious data. It will probably be fun to look at, but no market research company should take any notice of random looking data from Messenger, mail accounts and so on.
Secondly there is no reason to believe that this takeover will change much. Dennis has indeed done a lot to promote Indextools, but it is still not a high-end product. It (their probably soon to be free solution) might have 80% of the functionality of Discovery , but this is a generalisation for all users. For people doing advanced analysis, like those to be employed in large companies (when they begin to understand the need of web analytics), it is closer to 20% (due to the need of advanced segmentation) which is due to the fundamental differences in data structure behind the two interfaces. So in the long run, nothing much has changed (except that we now know for sure that Microsoft will not buy Yahoo! for some time).
Anyway thank you for all your interesting thoughts on the subject and your fine books and papers. And by the way. How about the name “Yahoo Analytics!” (or “Yahoo! Analytics!”?
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Bryan Cristina added the following ...
I think this is great news, and I was happy to see Dennis was all for it. I’ve been a big fan of IndexTools ever since doing vendor research for a project last year, unfortunately, clients aren’t as into it as I was. It’s not that they didn’t like the features, it’s that when companies are already timid about analytics in the first place, going with a company they haven’t likely heard of isn’t an easy sell, even if it is considerably cheaper.
People know Yahoo and this will make it easier to get a good tool at a good price into these client’s setups, and I think the results will speak for themselves. Rubix makes it all even more incredible.
Sam added the following ...
I am very new to understanding web analytics, which is how I found your site. I am an Omniture shareholder and am trying to understand if this is a good risk over five years. While I am fascinated in the growth of the internet and it’s myriad opportunities, as evidenced by the growth in web analytics, your article, combined with an accompanying article that you wrote (http://blog.webanalyticsdemystified.com/weblog/2008/04/matt-belkin-of-omniture-web-analytics-is-easy.html )about how difficult web analytics are, lead me to the following assumptions and conclusions. I would appreciate your thoughts:
1. The internet marketplace is still in its infancy. The conclusion is that there is ample opportunity worldwide for many ‘good’ companies.
2. Mr. Peterson attests to Omniture’s ‘market leader’ status in his commentary. Can it be that a market leader would be immediately ‘compromised’ by such innovation.
3. Web Analytics is not easy. When something is free, it can be great. However, in many years of sales, people are often distrustful of ‘free’ offerings - funny as it may seem, business people often want something to cost something before they believe in value. As we have all been reading, Omniture has been racking up some impressive customer references. If you have a large company, you are probably still going to want to outsource your web analytics to a professional organisation with excellent references before you hire in-house people to take advantage of free products.
4. If web analytics is not easy, how much support will have to come from a Y! Index Tools product that is free? The company’s that invest also have to apparently invest in HR to manage the data. As is usual with things that are free, the costs probably come in the form of add-ons for service later, which is never very popular for budget directors.
5. Y! has made a lot of promises over the last few years and started a lot of ideas that have simply flopped - not necessarily because they are not good, but Y! has shown a terrible ability to execute. The manner in which their emotions instead of business sense are leading in the rejection of Microsoft are my case in point. I dont believe Jerry Yang any more about nonsense what is good for shareholders. Y! shareholders would be much better off with the current deal. Conclusion is that there is a very real possibility that Y! takes a very good IndexTools product and screws up the execution to the point where the one strong competitor eventually becomes a not-so-strong competitor.
In conclusion, perhaps from a purely analytical perspective of the quality of the product and the personnel involved, this looks good. However, what are your experiences concerning sell-through, marketing of the product, saturation of the marketplace to where this deal would TRULY be “the game changer”. Arent there a lot more if’s in this from a practical standpoint?
Thanks for your blog and your input. It is truly rewarding.
sam
Yahoo aquisition of Indextools added the following ...
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Clint added the following ...
You know, I’m very happy for Bob and his team, but there’s this little nagging voice in my head that keeps asking “Remember Keylime?”
Way back in the day, Keylime was a competitor in the space and then after its acquisition - it more or less disappeared…
Laura added the following ...
Free IndexTools by Christmas! Should I write my letter to Yahoo Claus now? Having recently discovered the power of IndexTools, it would be great to see an IndexTools competitor to GA.
Victor Vega added the following ...
Hi Eric,
I enjoyed reading your thoughts, speaking of IndexTools US, we at the West Village office in New York; are pleased with the decision that our CEO Mr.Marton Szoke & COO Mr. Dennis Mortensen has taken with Yahoo.
Forces are now joined to “change the game” for the future of analytics.
Victor Vega
Business Development Manager
North & South America
StartupNewz.com added the following ...
Analysis of How Yahoo! buying IndexTools changes Web Analytics…
Eric T. Peterson, who has been working in web analytics for over ten years provides his analysis of the Yahoo shopping; Yahoo bought IndexTools to boost its Web Analytics kitty and shore up against the other players (Google, Microsoft and the rest of …
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Lies, Damned Lies... added the following ...
Way to go, Dennis: Yahoo! acquires IndexTools…
Well, it’s turning out to be quite the week for Web Analytics industry news. First we had Coremetrics’s $60m cash injection; now we have the news that Yahoo! has agreed to buy IndexTools. Let me start out by sending my…
Yahoo! buys IndexTools! « The Analytics Guru added the following ...
[…] Yahoo! buys IndexTools! Wow! Dennis Mortensen is a lucky guy and I’m glad I know him (hope he’s bringing a bunch of cigars to Emetrics SF next month and will finally show me Rubix - before it gets changed all over to Yahoo Analytics! - or whatever Yahoo! ends up calling it). I first read about the news today in a post by Lars at his blog, Web Analysts Info - Yahoo! to Acquire IndexTools and a more through analysis by Eric Peterson in on How Yahoo! buying IndexTools changes Web Analytics. […]
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Wayne Vaughan added the following ...
We’ve been using Indextools since 2002. One of the best things about the product is the API. We’ve used the Indextools API to integrate web analytics data with our marketing automation software. Our customers love it! I can only hope that Yahoo will make their products even better (and maybe cheaper)
My biggest concern is that Google and MSN will stop allowing Indextools to interface with their systems. Indextools allows you to link to all the major search engines and automatically integrate PPC and campaign data with your web analytics. They also have a PPC bid management system that works with the major search engines. It would be a shame if Google and MSN locked them out of their systems now that they’ve been acquired by Yahoo.
Trace Johnson added the following ...
This was inevitable for the Yahoo team to better leverage the Yahoo Search Marketing platform. It is game changing only if the acquisition is capitalized on quickly though.
The web analytics industry as a whole is very condensed with limited numbers of practitioners for the glut of companies who are realizing the necessity/value of acting on analytics data. It is also a complex industry which has a steep learning curve. The added value of ad hoc segmentation is only valuable if there is someone to interpret the data and disseminate it in a functional format.
For my clients, it will be less about which analytics platform to go with as price is no longer the issue; rather it will be which aren’t worth the effort of installation. I am a big fan of redundancy for validation purposes. I am also just fine switching between platforms for specific data sets if they are presented in a useful way.
This throws a hiccup in Omniture’s roadmap, but one that I still iterate can be overcome by seamlessly integrating their analytics platform into additional data sets (offline, CRM, inventory, etc.) Omniture also has a great service model if you are willing to pay for it. Now if the customer service of IndexTools steps up to Yahoo Search Marketing’s customer service levels, just let me know where to put in my application.
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Jacques Warren added the following ...
Hi Eric,
Big news indeed. I like your analysis and prognosis of the situation. I particularly like what you say at the end about the power shift from vendors to users. I remember us having a similar discussion some time ago (http://blog.webanalyticsdemystified.com/weblog/2007/08/congratulations-to-the-waa-standards-committee.html).
I also find interesting all that talk about web analytics applications becoming free. I think it’s a web culture thing: we don’t see an SAP offering Business Objects for free. But on the Web, there is a strong pull toward that new paradigm (cf. Chris Anderson who will make again handsome money talking about that new economy of free!).
eric added the following ...
Everyone who has commented: Wow! I pushed my post then hopped on a 9 hour flight home from London and look what happened. I need to rest and digest all the commentary but thanks a ton to everyone who took the time to write in.
Long-story-short, I see this as a big day. More later!
SEO Tuts » Blog Archive » IndexTools acquired by Yahoo! added the following ...
[…] has acquired IndexTools, a leading web analytics company. For another take on this, check out Eric Peterson’s post on the topic. As Eric notes, one of the interesting things about this is that IndexTools is a tool […]
» IndexTools acquired by Yahoo! added the following ...
[…] has acquired IndexTools, a leading web analytics company. For another take on this, check out Eric Peterson’s post on the topic. As Eric notes, one of the interesting things about this is that IndexTools is a tool […]
tristan bailey added the following ...
Hope to see a free version this year. It should give GA a kick and have to share the market which is all good.
Web Analytics Europa added the following ...
Thanks for the thoughts, Eric. It is always a pleasure to read what you think. And most of the time you are even right.
It will stay an exciting business, for sure.
Web Analytics Europa
http://www.webanalyticsblog.de
Ralf Haberich.
Steve Jackson added the following ...
@Eric
Great post. I got about ten calls yesterday afternoon before flying back from Copenhagen. I have published my own thoughts on my blog also but it’s uncanny how we were talking about this very thing happening at 1am in the morning at Mollys in Helsinki!
Sapenne » Blog Archive » Yahoo! acquiert Indextools added the following ...
[…] et “évangéliser” la stratégie analytics pour Yahoo!. Pour ceux qui parlent anglais, E. Peterson propose sa vision de la situation et discute des différentes options possibles, mais gageons […]
SiteMagnify added the following ...
This is excellent news - let us hope for more than just a Y! logo ala Omniture HBX - Yahoo! could just take over and win this Analytics Data game - if they make the tool readily available and promote it with their YSM offering - it could very quickly amount to more sales on their paid search offering and use everyone’s search & traffic data to improve their search algo and maybe win back some Google searchers. Let us wait and see. Great Post Eric. Thanks for the relentless quality.
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[…] will this affect the rest of the market? Eric Peterson already blogged about that one in his How Yahoo! buying IndexTools changes Web Analytics post a couple of days ago that you might want to read again, in the light of this official annoucement. Seems that […]
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Jon Tehero added the following ...
Like many readers, I am fairly new to the world of Web Analytics. I am taking a web analytics course at my university and have been fascinated by the possibilities. Again, like others, I’ve believe that web analytics is very much in its infancy and there is much that can be changed and improved as time rolls forward. So in my limited knowledge, I am of the opinion that Yahoo’s entry into the arena can really be a great thing for for the whole industry. Now I am not sure that I necessarily would anticipate a “profound shift in web analytics” because I think it will take time. I do recognize that it will mean more competition, and with that competition comes growth and innovation. I am excited to see what effect this will have on other services like Google Analytics.
I would agree that this is going to be offered as a free service sooner than later. That’s how it is if you are in competition with Google, Microsoft, and others.
Someone above mentioned that fact that further segmentation through the gathering of age, gender, income level, etc, is rather unrealistic to expect accurate results. I would second that! Surfers want a certain amount of privacy and often will provide inaccurate data just to ensure that they feel less “tracked”. I do however think there can be some useful applications of such data as long as the dominating assumption is that result may be more loosely tied to reality than other information we collect.
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Dennison Uy - Graphic Designer added the following ...
While I’m all for competition, I believe it would be unwise to make everything free and go head to head against GA. Doing so will only make them the second option, and unless they are on top this option isn’t even worth considering. Acquiring indexTools will definitely give Y! an edge in the web analytics market, but they should use a different strategy.
website design added the following ...
Well, it’s turning out to be quite the week for Web Analytics industry news. First we had Coremetrics’s $60m cash injection; now we have the news that Yahoo! has agreed to buy IndexTools. Let me start out by sending my… I agree whit this.
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