Stephane Hamel added the following ...

Wow Eric! Great post!

You told me in an offline conversation you had been working on a post on this topic. I’m glad after reading “Some controversy in the field of web analytics… at last!” you decided to publish it! When I wrote this post, my intent was to trigger some discussion about the economy, GA dominance and web analysts hiring. Brian Clifton commented about GA, and you took on the economy part, I’m glad it sparkled some very interesting discussion!

I think your POV on the current economy is right on (sadly) and is extremely well documented and backed… which doesn’t make it look very positive for the coming months :(

Stéphane Hamel
http://immeria.net

P.S. And thanks for mentioning WASP! :)

Jason Egan added the following ...

Great thoughts here, Eric. I for one will be interested to see what plays out in 2009 for the larger WA vendors as contracts expire and sales cycles get a LOT longer.

At least it does appear for those of us with a lot of experience in Web analytics that the demand for qualified people is greater than the available supply. While this doesn’t make our current jobs “recession proof,” it would seem that the career field for Web analytics does have a lot of opportunity right now.

Of course, good luck finding a qualified candidate that is willing to uproot any kind of family and try to sell a home to take a new job in this economy. Employers are going to have to get serious about remote location work for jobs like Web analytics, site optimization and online work in general. Hey, Omniture works just the same on my PC at the house as it does in the office. Plus this saves employers and employees money.

John Hossack added the following ...

Excellent post Eric, and I’m glad that some one has finally come out and questioned whether or not the analytics industry is recession proof.

VKI Studios offers analytics services to its clients and we have seen the adoption rate of prospects slow over the past 6 months. These are prospects who are putting their analytics projects on hold, having the budgets taken away… and more people are looking to use Google’s “free” tools (GA and GWO) than before.

If the cost to analytics was simply the tool or the implementation of the tool then I think that its adoption would continue to grow at a rapid rate. What firms are finally starting to understand (I don’t think that they wanted to hear it before) is that analytics is hard and it’s not inexpensive. It’s these two facts that I think are making it harder sell web analytics platforms and services than it was 6 months ago.

Most firms don’t use their analytics to help drive positive change, either because they don’t have the skills to take advantage of the data and/or they don’t have the resources to make any changes. Analytics doesn’t provide a good ROI for these firms.

I have talked to a number of other interactive agencies lately about how their business is going and they are all towing the party line that things are great and that they don’t expect to see any impact as a result of the economic slow down. I personally think that a number of these people will be in for a bit of a surprise. At VKI Studios we are continuing to grow our analytics practice and customer base, but not at the rate that we had projected for 2008.

Jim Sterne added the following ...

The comment I’ve been sticking with is that web analytics is not necessarily recession proof, but it *is* recession resistant - up to 100 meters.

I agree that these surveys are happening in an echo chamber and am dedicated to expanding the sample in our next round of information gathering.

Eric, of all your tips above, I think numbers 1 and 2 are critical. Be a business advisor about profitability and you become indispensible - beyond 100 meters.

Jonghee Jo added the following ...

Just one comment on “Marketer’s engagement on testing” issues. Testing solutions like Offermatica, Optimost and Sitespect may have sold to just hundreds of clients but I know there are lots of companies who manage testing in-house like us. So probably thousand companies are doing some type of testing but I think 52% is an inflated number though.

Jonghee at VS

Cindy Birmingham added the following ...

It seems like anything technology-related gets hammered pretty early in the budget-cutting process when times get tight. I cannot count how many people told me that, essentially, they could figure it out themselves. In many cases the managers don’t really “get it” but if they say they do then they can cut the budget by the required percentage. … When push comes to shove, budgets get cut further and only the most forward-thinking compaies will spend the money it takes to answer the hard question. In the moment they are just trying to help ensure that income exceeds or at least meets outflow. There are always a few companies where this is the “pet project”–likely the ones that attend Emetrics, but for everyone else it’s discretionary.

I will never forget being an Account Executive at WebCriteria and the absolute halt to business when the economy tanked in 2001. Even signed contracts were negated.

Ian Thomas added the following ...

Eric,

I agree. If a company needs to reduce its marketing expenditure by 10% next year, and 10% of that was budgeted for analytics, it’s actually easier to cut the 10% for analytics than cut 10% from the actual media spend and work harder to make up the shortfall in return. Of course, it’s a short-sighted approach to do so, but with every company in the country (nay, the world) with their noses pressed to their quarterly (or even monthly) results, it’s rose-tinted thinking to expect anything else.

Of course, not all web analytics expenditure is discretionary: if you have a long-term contract with Omniture or WebTrends, you’re unlikely to default on the base fee for the service, because even short-sighted marketers understand that you need to still be collecting data and doing basic reporting; but that big project to put in MVT, or to do a big site redesign (with attendant analytics work) will be shelved - and this will hurt the major vendors since that’s where they’re deriving their profits from.

If I were working for an Enterprise web analytics vendor today I’d be paring my discretionary capability right back (read: firing consultants), whilst also manically trying to drive as much cost out of the provision of the “non-discretionary” part of my service as I can. That might mean renegotiating hosting contracts, laying off some ops staff, or prioritizing efficiency-related features in my core dev work (so as to deliver reduced ops cost in the future). Put another way, I’d be battening down the hatches.

Cheers,
Ian

Bryan Cristina added the following ...

“I agree. If a company needs to reduce its marketing expenditure by 10% next year, and 10% of that was budgeted for analytics, it’s actually easier to cut the 10% for analytics than cut 10% from the actual media spend and work harder to make up the shortfall in return.”

I see it a bit of the other way around for smarter companies. They’d rather not cut the employees who have been helping them make smarter decisions, so it ends up being more like “We need to reduce our ad spend, so make our 90% work even better. Figure it out”

Especially when they worked so hard to staff their analysts in the first place. There’s no sense in keeping your ad spend the same when no one is left to tell you if it even worked.

Anonymous added the following ...

I agree — no matter what your role, you shouldn’t underestimate the amount of pressure your executive team is under. Chances are they understand the value of web analytics if they funded it, but they may be forced to make difficult choices down the road.

As Eric said, make sure it’s really clear how your work translates into short- and long-term profit. Focus on turning your analytic findings into business action, and demonstrating clearly how those actions increase revenue or reduce costs. You might have made it through the first round of cuts in good shape, but making it through the next full budget cycle might be a different story.

I think web analytics will survive the downturn generally in good shape, but we should all be extra vigilant and use this as an opportunity to drive home the value of what we’re doing.

Paul Holstein added the following ...

Great Analysis Eric.

One thing that struck me during the last xChange meeting was a feeling of animosity between the analytics folks and front line web managers. I hope these bad feelings can be resolved before those companies start looking for ways to save money.

June Dershewitz added the following ...

Eric, you’ve given some great career management advice for web analytics practitioners who are concerned (and rightly so) that their jobs might be on the line. I look forward to reading more of your commentary on how this downturn could impact other facets of the web analytics industry - ie vendors and consultants.

Here’s a little story for readers of this blog who might be worried about what the future will hold: some of us have been through this before. As an old-timer I’ve been in the web analytics industry for 10 years now, and I experienced the dot-com boom and bust in San Francisco. In the early 2000s I worked as a web analyst for three companies in a row that shut down their SF offices. It was tough to watch layoffs happen and tough to get laid off, but each time I bounced back. I got reeeeally good at job-hunting. There were still jobs for web analysts even during the lowest point of the bust, but I had to face the fact that they paid less than what I’d made during the boom days.

So I’m bracing myself for what the coming months and years will bring, but I know - again - that we’ll bounce back.

– June

eric added the following ...

Wow, a bunch of responses so far and even more email from folks sharing their thoughts, experiences. Thanks to everyone contributing to the conversation and see my responses and thoughts below.

Stephane: Yeah, unfortunately the stuff I’m getting via email seems to reinforce some of what I put in the post which is definitely too bad. I’m hoping that folks will start writing in with comments like “You’re so wrong and here’s why …” to balance out some of the negative stuff.

I was wondering, do you have any uptake information about Google Analytics since Avinash’s announcement in D.C.? I’m sure my readers would ** LOVE ** to see those co-tagging numbers post-3.0 upgrade if you’re willing to give us a sneak peek!

Jason: You hit the nail on the head when you bring up relocation and I know this is something you’ve talked about before. But I think it takes a particularly nuanced understanding of what we do to manage analytics resources remotely, and I think that for the most part that nuance is lacking in the broader business world.

Plus, as evidenced by the conversation at the Web Analytics Forum, there is a tremendous influx of new faces in web analytics lately (likely thanks to Google Analytics.) While these people are part of the long-term solution, I suspect that short-term they will further aggravate the hiring process in companies serious about being web analytics competitors since they’ll have to wade through more candidates who look good on paper but need more experience.

Let me ask you, Jason. If you could give one piece of advice to the companies critically examining their investment in web analytics today, what would you tell them?

John: Interesting point about your business at VKI and commentary from other agencies “towing the party line” and saying that business couldn’t be better and that 2009 looks strong. Perhaps it’s as much an issue of timing as anything since things seem to be deteriorating at a very rapid pace the last few weeks?

A bunch of the email/contact I’ve had since the post published this AM has been from consultants in the industry. Clearly there may be self-selection going on here, but I keep hearing the same things repeated over and over:

• Some of our HBX > SiteCatalyst migration clients are putting the migration off, perhaps until 2010
• More clients are asking us about Google Analytics and the recent upgrade
• Budgets for analytics in 2009 are very much up in the air, and contracting is going far slower than we’d like

Now I know this is not representative of the folks doing consulting in the web analytics field, but I’m still kind of waiting for someone to write me and say “Dude, we’re killing it and the phone keeps ringing off the hook!”

Can I ask you, John, what you think characterizes the clients you have that ** will ** continue to invest in web analytics in this down economy?

eric added the following ...

Jim: Thanks for your comment and I’m in heated agreement with you! I should say, I sat on this post for a week worrying about coming across as critical of your research … you know I’m your biggest fan! But I think the “echo chamber” is working against us at this point and so I’m glad to hear you’re working on expanding the base you survey against in the future. I am, of course, happy to help you with that work in any way I’m able.

Question for you: Are there any commonalities you see in the companies that get budget/approval/support to attend Emetrics? I think your “80% report management support and interest in web analytics” number is fascinating and have been trying to figure out what, if anything, ties the Emetrics audience together. Any thoughts?

Jonghee: Thanks for your comment! I know a bunch of companies that manage testing in-house just like you do at Victoria’s Secret, but agree that even if you roll these folks in the number is nowhere close to 52%. One of my analyst friends is about to publish a number that I think sounds much, much more likely (although I cannot say what that number is … maybe I can get him to break the news in my blog!)

I think there are two ways to determine what percentage of online marketing managers are using some type of testing software:

1. Use Hamel’s WASP solution and randomly sample web sites around the world, which still misses all the home-grown stuff, appliance-based solutions, etc.
2. Ask a truly random and representative sample of online marketing managers

The latter method is to be preferred (sorry SH!) because you have the ability to ask qualifying questions like:

• Do you have a testing application in place today?
• Is that testing application homegrown or provided by a vendor?
• How many tests per month does your company do, on average?
• Do you have a testing-team in place assuming responsibility for ongoing testing efforts?
• Do you have an executive sponsor for your testing efforts?
• Etc.

Like web analytics, testing is hard and so just asking “Do you test?” doesn’t really begin to describe the landscape today. Same as asking people “Do you have a web analytics solution?” — of course they do, but it’s not the tool it’s how you use it!

Cindy: Yep, my thoughts pretty much exactly. If things continue to get worse it’s not going to be the folks that “get” web analytics making the decision about spend, hiring, etc. it will be someone with a much nicer office. This is why I provided recommendations #1 and #2 in the original post — the more indispensable people are, and the more widely known that indespensibility (?!?) is, the safer the resources and technology become.

Case in point: I don’t think very many pure-play online retailers will be scaling back on their commitment to web analytics. They, for the most part, understand how web analytics fits into their ability to maximize profits while minimizing costs (see Jim Sterne, I have been listening to your keynote all these years!)

I just worry about everybody else … all those companies and teams and executives who are still unsure about the digital opportunity and who are being squeezed from above to cut costs. Especially in Financial Services and I suspect Retail based on the comScore data and other data I’m seeing now … this is going to get worse before it gets better.

Thanks for your comments Jim, Jonghee, and Cindy!

eric added the following ...

(OMG it takes a long time to respond to so many great comments! Thanks to everyone who has written and emailed about the post this AM. Keep the conversation coming!)

Ian: Nice to hear from you again my friend! And I largely agree with you — the risk to the vendors is not the ongoing contract value, it’s the up-sell opportunities to testing, bid management (GOOG below $300, OMG!!!!), advanced visualization, consulting, training, etc. Case in point: I heard about a recent vendor training that consisted of three consultants and one client. Not the most profitable of trainings I suspect …

Regarding your comment “if I were working for an Enterprise web analytics vendor today” … man, I’m glad you don’t, you’re the hammer! LOL! Based on my conversations with Enterprise (sic) vendors I’m not sure they’re quite as concerned as you about the situation … especially those not beholden to Wall Street. I suspect that most of the vendors will simply reset expectations, slow down hiring except in rare cases (for example, certified Rock Stars submitting resumes, etc.) but otherwise continue to make the case for analytics.

Let me ask you this: Based on your comments, who do you think stands to benefit the most from the current economic conditions? Low-cost vendors like Google, consultants, companies, none of the above?

Bryan: I know you were responding to Ian’s comment but I wanted to say that I agree with you 100%. At Emetrics I pleaded with the audience during my “Competing on Web Analytics” presentation to ** not ** lose the staff they have fought so hard to hire. Again, this is why I made recommendations #1 and #2 above first and second … if you have the people in place the best thing to do is to support them as they try and find ** real ** opportunities (as opposed to generating more crappy reports …)

Let me ask you: We’re in agreement about what companies should do … but what do you think they will do?

Anonymous: Agree 100%! Since nobody can predict how long the recession will last and how ugly things might get it behooves us to collectively cover our butts, hence recommendations #3, #4, and #5 above. Thanks for your comment!

Paul: Agreed. That tension is required during the normal course of business in many situations because of the HIPPO effect … but it does have the potential to backfire. I recall awhile back that Avinash Kaushik recommended “embarrassing your boss” with your wonderful knowledge of the site/visitors/etc. I’m thinking right now is not the best time to “embarrass” anybody, especially not the guy getting told to cut costs or else …

You’re a business owner: Can I ask you whether you’d consider cutting back your investment in web analytics because of the economy? Or are you going to double-down and do what Josh James suggests their customers are doing (I ask since I know you’re an Omniture customer …)

I understand if you don’t want to answer but I also know you’re not shy about sharing your opinion … comment back if you’re willing!

eric added the following ...

June: Awesome reminder and thanks for the kind feedback on my writing. Funny story: after 9/11 when I was laid off from WebCriteria I decided to bug the CMO at WebSideStory for a job as an Senior Ebusiness Analyst (first of it’s kind in the industry, believe it or not!)

Meyar Sheik eventually relented, paid to relocate me to San Diego, paid me well, and let me work directly with some of the best companies in the world as they explored their use of web analytics software. I worked directly with Best Buy, CBS, ESPN, Disney, ABC, and a hundred other great firms. Eventually I wrote Web Analytics Demystified and the rest, they say, is history. All because I lost my job at WebCriteria.

Sometimes the opportunity is non-obvious, but as you said, it is still there if you’re willing to look.

Thanks so much for your comment, June. I know you’re busy!

John Hossack added the following ...

Eric- The clients that we have and that we are gaining that are pushing ahead with their analytics strategies are typically the ones who are pure online plays. We are seeing the multichannel or brick and mortar based businesses being the ones who are putting things on hold and scaling back.

My sense is that the pure online plays have to get analytics and testing done and done properly or they are dead. Traditional business will retract to their comfort zones, and in many cases that doesn’t include analtyics and testing.

Jacques Warren added the following ...

I’m afraid the suckiness got some stickiness…

Jim Sterne added the following ...

What’s common among companies who come to the eMetrics Marketing Optimization Summit? We get four kinds:

1. Vendors (Thank you, Sponsors!) who are interested in explaining to the converted.
2. Consultants/Agencies who are looking to stay on top of their game on behalf of their clients.
3. The Almost Converted. “They gave me this job and nobody at my company knows what I’m supposed to be doing - including me - so here I am to find out.
4. The Converted.

The Converted are exemplified by our keynotes. Kim Johnston from Symantec nailed it with her marketing project review. “Show me all the activities. If they are not measuring up to expectations, we cut them. If they are not being measured, we cut them. As a result, we are doing half the work with the same budget and getting (something like) 25% improvements in our results.”

Joe Megabow from Hotels.com going into specific, anecdotal detail about tracing Contact Us complaints to website errors with Tealeaf. James Robinson hooking up online readership to the number of papers that should be printed the next morning. These people are all over it.

A very interesting survey (263 senior global marketing executives and CEOs) by The Economist entitled Future tense: The global CMO included:

“When Martyn Etherington became CMO at Tektronix in 2002, the global maker of test, measurement and monitoring equipment was experiencing a post-Internet bubble hangover. “I counted up all the strategic objectives for the company,” Mr. Etherington says. “I remember this number vividly: 102 strategic objectives, and we weren’t even a billion dollars [in revenue] at that time.” He describes spreadsheets littering his office with 4,000 individual marketing activities, not one of which could be linked to any of the firm’s “strategic objectives.” “Just a plethora of activities, but no quantifiable metrics or any way that I could quantify that my function was actually making a difference to the business,” he says.

Mr. Etherington implemented a “get well plan” that included consolidating marketing operations that had been dispersed across the organisation, entailing about US$9m in efficiencies, and reducing the 102 objectives to about 20, and the 10 different categories of marketing job classifications at the company to three or four. Most important, he instilled a “culture of accountability” that aligned the marketing organisation with sales, including tying compensation of marketers to the performance of their sales peers. These “painful steps” could only be taken with the support of the CEO.”

Those are the kinds of companies that come to the eMetrics Marketing Optimization Summit to see if they’ve missed anything and always end up sharing with everybody else.

Paul Holstein added the following ...

Eric, in response to your question, if times were to turn tough for us and profitability threatened, we would certainly look to cut wherever it made sense. There is really no difference between a web analyst and a warehouse packer when it comes to profitability. All positions in our company are contributing to our success. If we can make a 200% return on another web analyst, we’ll hire one more. If we can make the same return on a packer, we’ll hire another packer. Conversely if we aren’t making money on a position, we’ll have to eliminate the position and try to move the person to another department or let them go as a last resort. It really doesn’t matter if we are in a recession or not. The same rule applies.

The idea that analysts are any more immune to layoffs than any other position is a falacy. I think this myth is tied to the fact that most companies haven’t yet caught up with analytics and are in need of investments in this department.

If companies learn to profit from analytics during the tough times ahead, then there won’t be much pain in the community. However, once the industry matures or if companies don’t see the value in analytics, then times won’t be safe for anyone.

Jason Egan added the following ...

Eric - That’s a great observation regarding the influx of new faces and the role that Google Analytics has most likely played here. It’s probably safe to assume that “Web analytics” is going to soon be a skill more often seen on resumes. I can easily see where there will be longer hiring cycles for companies to find truly qualfied analysts.

As for a single piece of advice I’d give a company critically examining their investment in web analytics, I’d say that they need to ask themselves not if they are getting great actionable information, but if they are actually acting on the information.

In most cases, the tools provided to us from Omniture, Coremetrics, WebTrends and Google allow us to find some great information that can create potential revenue. But that’s true only if the information is acted upon. Unfortunately, we analysts often see our great analyses gather dust. In most cases, design and development resources are needrf to enact the ideas provided in analyses.

So, if a company is honest with itself in its assessment of how much action is really taken on Web analytics analyses, they may find that the best course of action is to stop paying an expensive contract, and go with a less robust, free solution such as Google or Yahoo Analytics.

Paul Holstein at Web Analytics Demystified » Blog Archive » Analyzing Layoffs (From a Business Owner’s Perspective) added the following ...

[…] Peterson just wrote an outstanding piece about the relative job security of web analysts in a recession.  In one of the comments, he asked me if our company would consider cutbacks in analytics if times […]

Stéphane Hamel added the following ...

Regarding MVT use, Eric said “1. Use Hamel’s WASP solution and randomly sample web sites around the world, which still misses all the home-grown stuff, appliance-based solutions, etc.
2. Ask a truly random and representative sample of online marketing managers”

I think both would be important, it’s like quantitative and qualitative analysis:
1) The WASP method itself can be done in two ways
1.1) based on the analysis of 120,000’s randomly selected websites with a presence of 0.4% use of known MVT tools.
1.2) pick a specific segment of hundred or thousands of site (a region, or a vertical market) and run WASP Market Research. For example, for the Top 500 retail sites analyzed, only 12 sites showed a MVT solution, a mere 2.4%!
2) add qualitative analysis (survey) to the mix for better insight!

Regarding “double-dipping” GA with other vendors, if you provide me with a list of sites I’ll be glad to work with you on it, or I could rescan the Top 500 retail sites. BTW, I’m still looking for a “top 1000 list” of some sort for a study (see http://blog.immeria.net/2008/10/seeking-top-1000-site-list-for-study.html)

Stéphane

WebMetricsGuru » Recession Proof Web Analytics added the following ...

[…] I was pretty impressed with Eric Peterson’s last post on Web Analytics is Recession Proof? […]

The State of Web Analytics | added the following ...

[…] T. Peterson had a great post today about how recession-proof the field of web analytics might or might not be. Not only does Peterson provide an overview of the business functionality of […]

eric added the following ...

Jim: Your list makes sense and gives me additional cause for concern (potentially) given that The Converted are so few and far between. I would be pretty surprised if Joe, Kim, or James were actively looking at cutting web analytics resources to save money, even in this economy, but one never knows. Let’s hope not!

Paul: Great response, but per the comment I made on your blog post my concern is that too few business owners actually measure and track the return on investment they’re getting from web analytics. Doing this — putting a dollar amount on the value of work provided by a web analytics practitioner — is sadly well beyond the current capabilities of most of the companies I talk to.

Ironically (perhaps) part of the reason it’s difficult to tell what you’re getting from web analytics is that too few companies have implemented some kind of parallel testing framework. Without parallel (read: A/B or MVT) testing you cannot be sure whether gains made through implemented recommendations are because of the recommendations, the market conditions, promotional activities, etc.

Sadly I have been saying “if you’re not testing, you’re not really doing web analytics” since my time at JupiterRearch … but for some reason not enough people are hearing, understanding, and reacting.

Anyway, great response! Thanks!

Jason: Great response. Your comments are pretty much why I started talking about “Process” in web analytics at Emetrics in 2006. At the time some people poo-pooed me (a good friend of yours at Omniture, in fact) but I think my point has stood the test of time pretty well — if you don’t have clearly defined and well understood business processes in place, you’re never going to really be able to take advantage of the insights you can gain from web analytics.

For reference, here is a link to my white paper on process in web analytics.

Thanks to everyone for their comments, emails, Tweets, and links. Per Jacques comment above, this is probably a topic we’re going to deal with for awhile so it’s nice to see so many people sharing their insights.

Steve Jackson added the following ...

Eric, this is the best post I’ve read about the economic situation and our industry at the moment. I too have been pondering the reality of the optimism shown by the analytics industry at large.

The first signs I’ve seen of a downturn are twitchy investors in start-up customers. Earlier this year investment was not a problem, suddenly now the investors are taking a much more cautious track and its led to projects being postponed or put on hold.

Companies have also laid people off. One department for one of our enterprise customers has basically gone due to poor 3rd quarter results. We have a deal with that company till the end of the year but I would venture that it will be extremely difficult to continue that business in the short term.

I’m hearing news from some of our largest enterprise customers about budgets being tightened, but have yet to hear about how that will affect analytics investment.

Ian’s point about spending money on media is an accurate reflection of the reality. It’s much easier for a company get more eyeballs than it is to optimize sales and profits.

To me all the optimism being displayed is a bit of a sales pitch. Like you/Jim and others that have commented I truly believe in the underlying point that Optimization/Analytics is the smart use of the budget you have available, but I have the feeling that budget owners will think “you would say that though wouldn’t you!”, or “yes but this investment is long term, I need quick results.”

On the other hand I think it’s still too early to say. We’re still selling good projects and still turning over good numbers despite some hiccups with a few clients. I think we’ll understand a lot more about how recession proof we are when the new budgets are allocated for 09.

anonymous added the following ...

Very interesting and timely post.

I was recently talking to one of the more WA-focused recruiting agencies and one of their people told me they have not seen any slow-down in the amount of job postings they are getting.

At the same time, it seems like many of the gigs are 3-6-9 month contract opportunities. While there is a steady flow of opportunities where specific skill sets are needed to plug holes here and there, IMO that’s a rather short-sighted approach.

I believe the large number of such postings is telling us that companies are nervous or unwilling to make a long term commitment or put a real strategy around WA in place.

Darren Shafae added the following ...

Hi, Eric,

This was a thorough analysis of the Web analytic industry. I cannot say I am shocked that the Web Analytics Association is reporting that “70% of all companies plan to make an investment in new tools. “ Everyone is optimistic about spending patterns when being interviewed in a survey, but I think opening your wallet and making a purchase is another story. Given the current state of the economy and Google’s improvements to Google Analytics, why would you be willing to increase your spending on new analytic tools?

I can only speak from a small business owner’s perspective. I believe Google’s yearly improvements will keep me from actually opening my wallet, but, yes, I am guilty of reporting that we are going to spend more money this year on analytic tools. I honestly cannot see the need to increase our budget for more reports per Tip #2. In fact, we have attempted to intertwine our marketing (including Web analytics), customer support, and development teams to further improve our efforts to move away from reporting, so as to elevate the importance of analysis. Chapter 10 of Andrew King’s book, Website Optimization: Speed, Search Engine & Conversion Rate Secrets — http://shrvl.com/1BZz4 — has been critical to getting everyone on the same page. I finally have convinced our developers that our marketing team is not a group of superstitious fuddy-duddies. Web site optimization and analytics are crucial to survival.

Having derived this conclusion, as I am sure most if not all entrepreneurs and small business owners have, I believe that Web analytics and CPC management tools are mandatory. Companies are looking to improve results, but not at the steep prices charged by analytic tool providers. The sector will grow, but not at the small business level; it may possibly grow at the enterprise level, but only if there is an analytics evangelist in management.

Companies will expand their budgets on SEO, SEM, and CPC because they are inexpensive ways to create new business. Compared to other advertising channels, online channels continue to be less expensive and easier to use to track conversions than a medium such as radio. Given that radio can cost $10K per week to run an advisement and can target only relatively restricted areas, the SEO, SEM and CPC sectors will continue to flourish.

However, if your company does not have an analytics evangelist, you are going to face an uphill battle and potentially have to look for a new job. If you are lucky enough to be an employed Web analyst, more than likely, there is not more than one of you at your firm. You should be on Twitter to exchange your ideas with the brightest Web analysts and entrepreneurs.

Bryan Cristina added the following ...

Eric: “Let me ask you: We’re in agreement about what companies should do … but what do you think they will do?”

Hmm, that’s a good question. I think there are some good people in companies that would like to hire some smart analysts but may get shut down by some of their superiors. Other companies who have had analytics for a while and understand the value of them, they might be more open to it. I had that coming in to my current job - that and the fact I’ve worked with all of them before. But the fact that they understood the value of what analysis of their campaigns can bring, bringing me into the system was worth more than the risk of having information that had no one to tell the story of what happened.

I also think that some companies, even if they don’t cut spending, will likely require more accountability for results. Some people may hire, some may try to wing it themselves, and some may get a shorter-term consulting company to do it. I would be afraid that some of the Google Analytics Weekend Warriors would crop up as being an inexpensive option, talking up a good game from info they read on here and other blogs but failing to deliver. Those are the types that scare me the most, because it paints the rest of us as overpriced, incompetent, and generating “Well I could have found that out myself” kind of responses from companies.

In the end, I think if you’ve managed to get a job in a company and have managed to show that what you’re providing is improving their bottom line or giving them enough information to make better decisions, coupled with a sprinkle of “Good analysts are hard to find” mantras, your job is probably pretty secure.

Michael Notte added the following ...

Eric,

Unfortunately, I can’t agree more with you :-/
Being in the Automotive industry (Europe), recession is hit us VERY HARD. Toyota recently announced a severe decrease of its forecasts for 2008. Europe part is no exception.

Consequences are drastic cost reductions at all level. Even for the web. The fact the online is key area for automotive industry (http://www.kaizen-analytics.com/2008/10/automotive-internet-trends-challenges.html) - every investment will have to be reconsidered - including Web Analytics. It does not mean yet that it will be cut off or no further investment. But that business & I will have to double efforts & fight hard to demonstrate our value in an industry where online is not CORE business (we build & sell cars) and WA has low visibility in the highest sphere of management.

There is a high level of uncertainty - job is not at risk yet but future developments (and career evolution) are. For example, I had to cancel my participation to IMC in Stockholm. And it is maybe just the beginning.

So future doesn’t look as bright it looked few month ago.

Very interesting advices - we are currently working on #1 & #2. On a personal level, I may have to consider #3 - even if I really like my job here. Thought times may lead to thought choices.

(but we will never surrender! ;-))

Cheers,

Michael
(http://www.kaizen-analytics.com)

Christopher Berry added the following ...

Eric,

Eloquent post.

I believe that you’re fundamental right. The value of analytics isn’t obvious to everybody.

It’s up to the standard bearers of analytics to be active advocates for the value that they bring.

Your recommendations are spot on.

eric added the following ...

(Still trying to get and stay caught up with comments. Thanks again to everyone emailing me directly as well!)

Steve: I was recently sent some very interesting data that addresses your comment about budget owners and the echo chamber that we all live in. I’ll try and get a follow-up post with that data and some commentary on the impact on the vendors and consultancies over the weekend.

Anonymous: Corry Prohens said essentially the same thing in my interview with him last week and I’m still seeing good interest in the Web Analytics Demystified Job Board so there is clearly still a market out there. I guess my concern is not so much how things are today but how things might be tomorrow (or worse, after Black Friday if things don’t go well for online retailers!)

Only time will tell.

Darren: I agree that the companies that we see that are successful have an “evangelist” working to elevate the general knowledge about the practice, but sometimes even the brightest people have to fight an uphill battle to get management to pay attention, much less to listen!

Agreed as well about the Twitter-sphere but I would encourage folks to attend (or host) a Web Analytics Wednesday event and get to know people face-to-face. Do both!

Bryan: Great point about the relative value of an analyst versus having the information but not having anyone to tell the story. This is why I started yelling “web analytics is hard” from the rooftops about a year ago — without the right people (you, for instance) to tell the story the data and applications and investment and opportunity goes wasted.

Michael: As talented a practitioner as you are I definitely do not recommend “surrender” as an option! I’m sorry to hear that times are tough for Toyota in Europe and even more sorry to hear that web analytics has low visibility with senior management! But I am confident that the best and brightest will, as June said above, find a bright patch on the other side of this recession.

Thanks to all of you for your contribution to what has become a very interesting conversation.

Bill Gassman added the following ...

Great discussion thread Eric. Hopefully it will continue or revive every few months, so we can measure our industry as the government applies multivariate testing to the economy. The holiday season will show a lot. While a slowdown in growth is likely for the ‘for fee’ vendors, I believe Web analytics will not experience a recession in usage. There are still too many organizations that are just starting to get it. Once they tap into the volume of expertise available, such as this blog, the investments in people and process come quickly. Tools selection may start with Google Analytics, but for many, will progress to the ‘for fee’ vendors. For those firms using Web analytics to the max already, there may be a pull-back as their business pulls back. For those who haven’t yet reached a mature stage, there is lots of low-hanging fruit to harvest.

Adron added the following ...

I really dislike the word “recession proof”. I don’t want to rain on the parade, but if they can’t fix the monetary system a recession will be the most optimistic thing to expect.

On a more positive note though, I believe, if companies act intelligently in the marketing domain and inside corporate environments were usage of networks is measured, there is still massive potential for web analytics.

Most corporations aren’t using analytics in an efficient way or gaining the ROI that they could. Also most web sites, and companies that have websites that could benifit from efficeint SEO and analytics usage are not quit were they should and could be for maximum ROI.

So simply put, even in this coming downturn we could still see growth in this industry. The big question is, will ad spend and marketing dollars still be put to good use from this perspective? Will corporate environments be setup to appropriately use web analytics and other tools to increase productivity and find creative ways to connect employees?

When those questions are answered, that’s when we’ll see the results.

eric added the following ...

Bill: Thanks for your comment and interesting points. And while you know I’m generally loathe to disagree with you, I wrote this post because I’m not so completely sold on your statement “Web analytics will not experience a recession in usage.” Again, because nobody is quite sure how bad the economic situation will get and how long this recession will last, and because I think that far more companies see web analytics as “discretionary” than some points-of-view suggest (see comments from Josh James and data from Jim Sterne and Corry Prohens in the original post), I think the great push towards accountability will recede somewhat in the near-term.

The good news is that there will inevitably be evidence in either direction. For example: If the companies that “get it” are listening to conventional wisdom then none of the 50,000 odd people getting laid off from Citi this week will include their small army of web analytics specialists. Same situation at Sun (who has said that some 6,000 will be laid off, and where there are probably a dozen web analytics specialists …)

Conversely, if companies that have in the past worked their butts off to find smart web analytics practitioners are willing to lay those folks off, well, because I’m a big believer in “people, process, and technology” (more or less in that order) I think as the people go, so will the process and investment in technology.

In the end it’s an (ugly) vision of how things might go. And keep in mind, I would ** far ** rather be wrong about this vision than right.

Thanks again for writing, Bill!

Adron: You ask the $64K question when you ask “will corporate environments be setup to appropriately use web analytics and other tools to increase productivity …” Without a doubt some will because many already do (for example, Hotels.com gave a great presentation on this at the recent Emetrics summit in D.C.) The bigger question revolves around those that aren’t current positioned internally to benefit from web analytics … what will they do in 2009?

In my mind the jury is still out and they best we can do is wait and see. Thanks for writing in!

Bob Page added the following ...

The good thing about a recession is that you narrow your focus to the things you can control. Fancy metrics that are difficult to explain, to optimize for, or that are not tied to outcomes — out. It’s always back to basics.

I too went through the “analytics recession” when the dotcom bubble burst. Back then I was a vendor of web analytics products and services. But the lessons remain the same. In times of economic uncertainty, people want increased value. If we produce analysis, and the analysis is used, there will be more than enough value. The web analytics team (vendor, consultant, analyst) to produce information that is easily digested and recommendations that are easily acted upon will fare well. Not idiot-proof — but as Jim says, resistant to a certain depth.

eric added the following ...

Bob: Interesting point about the use of simple measures. Can I ask what you recommend if you don’t have a web site directly or easily tied to economic outcomes? Do you punt and use “bounce rate” and “conversion rate” anyways since they’re easily explained? Or do you double-down and look more deeply for insights that may provide the level of insight that has been missing all along?

Good reminder (like June’s) that we’ve been through something like this before. As I said earlier, the last time the bubble burst many of us landed in a better position that we left from. But this time it feels to me like the stakes are higher because there are so many more people involved.

Thousands of us at hundreds of companies around the world. Your boss is out, SDS is reorganized, layoffs are coming December 10th … who in your own organization is safe from the economic collapse? Are you? Is Dennis? Is Michael? You are three of the brightest minds in web analytics today so I certainly hope so!

Maybe it’s just my own perspective, you tell me. Either way, I appreciate your insight and am glad to know you’re still reading my blog.

John Lovett added the following ...

Hi Eric,

Great post and fabulous comment thread! Your recommendations are sound, but I must disagree on the main point. I do believe that Web analytics will weather the storm better than many other technologies and here’s why:

Accountability is paramount: As we move to a “prove it” mentality, the metrics derived from Web analytics (and to a lesser extent, testing technologies) will serve as bullets to strengthen arguments and prove why spending/campaigns/initiatives were successful.

eBusiness is becoming all Business. The Web is the face of the brand to customers and the first impression companies make on the majority of their visitors. The Web is no longer a choice for businesses; instead it is an imperative.

Failure on the Web is not an option. Companies that I talk to are actually fortifying their infrastructures to place their Web sites on more secure footing to brace for an economic slump. If companies take away Web analytics from this critical channel, they’re essentially taking away the control tower from the airport.

Just thought I’d throw my hat into the ring. In any case, this discussion is extremely valuable and one that I’m sure will continue as we all watch what’s happening.

Cheers,
John

eric added the following ...

John: First, thanks for commenting in this thread and thanks even more for linking out to it from your Jupiter/Forester blog. Second, great post on the subject in your personal blog … you certainly raise several good points, all worthy of consideration and many in line with Bill Gassman’s comments above.

For readers who have not seen John’s response yet, have a look at the Analytics Evolution blog.

As I said in the original post, way, way back up this page, I certainly hope I’m wrong about my thesis. Personally speaking, I would far prefer to have my consulting business continue to grow 40% year-over-year than suffer any particular setback. On this front, so far so good, but I am hearing from an increasing number of folks in the industry who are already feeling the effects of this economy and I’m loathe to not take that data into consideration.

And I agree with you 100% when you say that “failure on the web is not an option” — especially in this oh-so-measurable medium, companies have few excuses to not make digital measurement a key priority. And I am encouraged to hear that you’re talking to companies that are fortifying their infrastructure … but I still wonder about that echo chamber effect I alluded to above.

Is there any chance that you’re getting the responses you’re getting because you’re talking to companies that are invested in web analytics enough to pay for a Forester Research contract? Because like the survey audiences I questioned above, those audiences may have some built-in bias regarding their commitment to “getting it right” online.

I’m not saying this is the case, I’m just asking since there is data that suggests that web analytics is a lower priority than many of us sincerely want to believe. Take, for instance, this data from Friedman, Billings, Ramsey & Co. that summarizes a survey of 50 Enterprises ranking their priority of investment across software categories:

As you can see, web analytics is ranked as the second lowest priority after human capital management with 11% saying it was a “low” priority compared to less than 4% saying it was a “high” priority. Now I’m still waiting for the details of this study to see how FBR picked these companies, etc., but if you’re right that 88% of companies have invested in web analytics this data suggests there is some disconnect between “investment” and “commitment” still occurring.

Now, I believe this data was collected before the bottom fell out of the Dow, and clearly priorities have changed throughout 2008. If I get a refresh on this data I will certainly make it available.

Another point of evidence, and one we can certainly agree upon, is the fact that nowhere near your 88% of companies has made the critical investment in the human resources required to take advantage of the technology investment. Remember, and I think you said it best, it’s not the tool, it’s the craftsman.

If you’re right about tools and their usage — and I certainly think you are — then if companies start laying off analytical resources despite their tremendous value to the organization, well, I would chalk this up as further evidence that the broader organization doesn’t fully understand what we do. Same with a reduction in 2009 commitment to great consulting groups like Semphonic, ZAAZ, and Stratigent.

I guess what I’m saying is that if there is a gap between “willingness to invest” and “commitment to use” then it is still possible that some companies will re-evaluate their current investment in web analytics and, based on either a lack of measurable results, understanding, or business-wide commitment to optimization, roll-back on their commitment to web analytics in 2009.

I was excited to read that you have a survey in the field right now to evaluate diverse companies commitment to measurement in an economic downturn. It’s also great to read that you have evidence that companies are increasingly turning to testing solutions, although I suspect you’re not going to tell us that 52 percent of online marketers are currently testing. LOL!

I agree that this conversation isn’t going to become less relevant anytime very soon. I suspect the next round of interest will come on Black Friday when we’ll start to have a better look at how the recession is going to impact online retailing.

Thanks again for your comments and for pushing back in your blog post! It certainly wakes me up in the morning to read the phrase “I believe that Eric is wrong” in the blog of one of the most respected industry analysts working today. ;-)

Matt Langie added the following ...

Eric, thanks for this post.

You’re right, this economic environment brings a lot of uncertainty to every business, no matter what the industry, product, or service offered. I think we as an industry need to do a much better job of educating our customers (especially the Chief Marketing Officers and top marketing decision-makers) about the importance of web analytics to both profitability and cost/expense management. Rather than simply generating reports, we should be thinking constantly about how we can optimize all of our marketing efforts across the entire business. Business is all about execution and results, and web analytics is a key factor in this. The more we do this, the more we make ourselves a critical part of the success of our respective organizations.

Cheers.

Matt Langie
Omniture

Hugh Gage added the following ...

Hi Eric,

I don’t have a crystal ball but I remember in 2001 when I was running an online media planning and buying department in London, we found that whilst our billings stayed pretty flat they didn’t actually decline – bear in mind back then online media in the UK was probably at the same point as WA is now, maybe even a little further behind. Other media such as radio, press, outdoor and TV all declined in the same period. Even though reporting on online media was very basic in those days is was still seen to be more accountable than the other media and hence worth retaining the money on it.

My vain hope is that whilst Web Analytics may not be recession proof, and I think it very unwise if not downright irresponsible to even think it, I hope that if pitched in the correct way it will be seen as a useful and possibly even essential weapon in the armory whilst navigating the recession. In some larger organizations where web analytics is dealt with at a departmental level I think it is growing to be a default requirement.

I think that the cost of the analytics tools might come more sharply into focus especially now Google has made such significant improvements and I think that service levels from some of the big players who appear to be gaining a reputation for poor service may begin to hurt them but that is totally based on opinion and nothing else especially since Google’s service levels are for the most part nonexistent.

Thanks for an interesting post.

Hugh

Tim added the following ...

Eric encouraged me to comment on this blog post after I contacted him yesterday to subscribe to his Web Analytics Demystified group at LinkedIn and to let him know about my present job situation. I met Eric several years ago when he was one of the speakers at a WebSideStory HBX Users Forum held in Santa Monica. Soon afterward I purchased his book and it has become one of my top resources.

After reading through Eric’s post and all of the above responses, I decided to add to the conversation just as he asked because, in many ways, I am a live example of what many of you have been talking about … a Web Analytics professional who has recently lost his job due to the current economic downturn and the resulting budget cutbacks put in place by senior management. After working for over 22 years for a non-profit organization (300+ employees), 10 years of which in Internet-related roles — the last 5 as their Web Analyst working from a remote / virtual home office in another state — I was laid off on November 6, along with approximately ten percent of their salaried staff.

My primary reason for deciding to respond to this post is to possibly help other Web Analysts who are presently employed, but are wondering and worrying if they will be next. I have done a great deal of reflecting since I lost my job two weeks ago, and many of the things I read above resonated with me. I plan on being **very open and frank** … that is why I provided only my first name while making this post.

My biggest message that I wish to relay to everyone is **pay attention to Tip #2 above** … Don’t Be a Report Monkey! As Eric said, “Analysts conduct analysis and make recommendations. Be an analyst.” That statement, more than any other, resonated the most as I read his post. Here is why …

MY STORY

In January 2004 I was tasked with the assignment of finding the Internet industry’s best-in-class Web analytic tool. After a bit of research and due diligence, I made a presentation to management and recommended that we go with WebSideStory’s HBX solution (HitBox at the time). I quickly learned the tool and became increasingly efficient at cranking out reports for our internal marketing partners and management using the HBX Excel spreadsheet plug-in, Report Builder. The better and more efficient I became at churning out the regular weekly and monthly reports, the more different types of reports were requested to be added to my list. I soon found little time to do true analysis, make recommendations, or implement some of the more advanced features of the tool (conversion funnels, segmentation, etc.).

As the regular reports I sent to the team became more commonplace, although they were still desired, word would get back to me from time to time that they were being read and utilized by few. I was told by some of my closer colleagues that it was just “part of the culture” … that many of the marketers liked to make future decisions based more on their “gut feel” and that many simply did not have the time to go through my reports and charts. In an effort to make the reports more useful, I began including an Executive Summary with each report, occasionally making recommendations based on the data and trends. When the news from the data and trends was bad (declining open rates, response rates, conversion rates), oftentimes the recommendations I made in the Executive Summary were pushed aside by our marketing team, with them choosing again to simply rely on their intuition of what our constituents wanted.

MY MISTAKE

In the face of the above resistance to culture change within our organization … my desire to have internal marketing staff make **informed decisions based on Web analytics** … I made a mistake. I remember a year or so ago actually making the decision to stop fighting it … to yield to the existing culture by just sending them the reports they wanted and make fewer recommendations, which I knew they wouldn’t follow anyway.

Like I said, that, I now believe, was a **huge mistake.**

Why do I say that? Because of what was shared with me by the two vice presidents who called me on November 6 to inform me that I was one of 26 people being laid off. When I asked how the decision was made of whom to let go, they said that senior management had gone through each department, had examined each job function, and had asked the following three questions:

1) Can we completely eliminate the function?
2) Can we scale back the function?
3) Can we outsource the function?

When they came to my function as Web Analyst, I was told that although management believed that they could not completely eliminate the role, it could easily be scaled back and that the organization could **live with less reports and data.** I believe they are now also strongly considering switching over to Google Analytics to save money (I was asked to prepare a feature comparison on GA and HBX a month ago).

Now, think about what the response of these two vice presidents told me. It basically confirms that senior management saw **little value in my reports, as far as the reports contributing to the bottom line of the organization.** The same goes for paying for a Web analytic solution like HBX … they do not see how it contributes to the bottom line. By my decision to stop fighting the culture a couple years ago, I had also stopped giving them any evidence that Web analytics was a good investment for our organization.

SO … WHAT DID YOU LEARN, DOROTHY?

Although the fact that my position of Web Analyst was carried out remotely from my home office in a different state, that was **not** the reason I was laid off. I agree with the comments made in the above interview with Corry Prohens of IQ Workforce that remote / virtual offices will continue to grow more popular in our field. I did it for the last five years making only one or two trips per year to the home office.

No, the reason that I was laid off was due, in my opinion, to **senior management not seeing a high enough value of Web analytics and how it can be used to contribute to the bottom line.** To the degree that I permitted my role as Web Analyst to become one of “just supplying reports” in the face of the resistance I experienced to culture change within the organization, to that degree I am partially responsible for the low assessment of the worth of analytics by senior management, and therefore, the ultimate loss of my job. Now I need to find a place where I can serve as a Web Analyst again … although this time a little wiser and doing my job a little differently, not holding back on recommendations and insights gained from the data.

The single most important thing you can do to keep your job in this economy is to help management see the value in what you do! Remember, like Eric advised, “Don’t be a report monkey. Analysts conduct analysis and make recommendations. Be an analyst.”

I sincerely hope that my story and comments will help others avoid my present situation.

For those who would like to contact me, I may be reached at tjs@comporium.net

Tim

eric added the following ...

Matt: And as you can imagine I agree with you wholeheartedly about the need for education inside the business. This would explain my ongoing efforts to elevate our collective knowledge about the subject through my books, blogging, consulting, presentations, etc.

But this is my point — there has simply not been enough education to date at the right levels inside the Enterprise to create the necessary level of understanding about “what web analytics is good for.”

Now I know you guys and your worthy competitors are all fighting this fight constantly the same way that I and other web analytics thought-leaders are. But I think we have a long way to go still, especially when I look at the FBR data I presented above in a comment to John Lovett from Forester.

I have an idea! Why don’t you guys invite me to your super-cool client summit in Utah this February so I can deliver my powerful and engaging keynote presentation titled “Making Measurement Matter: How to Get Senior Management Totally On Board with Web Analytics” to your best customers? Wouldn’t that be cool?

I mention the idea because I heard that at your Western-themed Halloween Party in Orme the Saloon had signs suggesting that you guys “Wanted Eric Peterson” to come to Utah. ;-)

Anyway, thanks for your comment and let me know about the presentation.