I-Managers Outsource Analytics

I-managers eager to make use of business data obtained through Web analytics are increasingly outsourcing the task to save time and money.

Analytics firms, including Coremetrics, digiMine and NetIQs WebTrends, said they are seeing a surge in demand for services provided on the model of application service providers. And I-managers contracting with the firms said its faster and cheaper to outsource the analytics work than to install and maintain the infrastructure and personnel needed to handle the job.

"Even if your site is doing badly, you want to know why you are doing badly," said Dan Vesset, an IDC analyst, about why Web analytics firms are growing. "You want to be able to target customers better and be able to analyze online behavior better."

For years, I-managers have been using data mining and analytics to better understand how visitors are using their sites. By aggregating click-stream data and then crunching it with algorithms, Web site operators can detect problems and gauge the effectiveness of ads or promotions.

But installing analytics software can take months and require lots of server space. By hiring an outside firm - at a cost ranging from less than $100 per month to more than $20,000 per month - an I-manager can have Web server log information collected and forwarded to the ASP automatically. The next day, the I-manager visits a secure site to download reports on the previous days activities. That model appeals to companies like Nortel Networks, which just signed a deal with Coremetrics; Major League Baseball, which has a deal with WebTrends; and AtomShockwave, which recently signed a deal with digiMine.

"We had quite a few people internally dealing with Web analytics. DigiMine allows us to streamline that. We tell them what kind of reports we want and they deliver it," said Scott Roesch, general manager of AtomShockwave, which runs two Web sites, AtomFilms.com and Shockwave.com. To do in-house what digiMine does would have required at least two additional IT staffers and the cost of licensing the software, Roesch said.

The main difference between companies that do analytics outsourcing is in how they capture data. DigiMine and WebTrends use Web server logs to capture click-stream data. Coremetrics uses a pixel-based information-capturing system that is more data-intensive and which Coremetrics claims is more accurate.

WebTrends, one of the oldest analytics firms, currently has 55,000 customers using its Web analytics software. The company decided to provide analytics as an ASP last year after seeing startups like Coremetrics and digiMine take hold. "We decided to play in the industry rather than watch someone else come in and take it," said Jeff Seacrist, a product line manager of WebTrends.