Google Analytics Sends Bad News to Web Tracking Business

By John Pallatto  |  Posted 2005-11-15 Print this article Print

Opinion: News of Google's new free Web site analytics service may sound like the crack of doom for the established commercial services, but they evolved in a precarious niche from the start.

If you are a computer industry executive, nothing can spoil your day as much as learning that a new competitor has jumped into your market by offering for free the same service that your company is charging thousands of dollars for.

But that is exactly what happened this week when Google introduced its analytics service that tracks the myriad activity of Web services as users explore a site and click on ads. Google Analytics will just be a new service added to its AdWords advertising system, which generates nearly all of Googles revenue.
The announcement blindsided such companies as WebSideStory Inc., Omniture Inc. WebTends Inc. and Coremetrics Inc., which can charge thousands of dollars for their analysis tools that tell Web marketers how well visitors like their site design, products, promotions and advertisements.
While Web site traffic analytics is the bread and butter of these companies, for Google, with its billions in advertising revenue, analytics is nothing more than a little add-on service that it can give away like the plastic toys kids find in cereal boxes. The news was enough to temporarily send WebSideStorys stock price down by 12 percent as investors speculated whether the Google announcement spelled the end of Web analytics as a money-making business. This led to further speculation that if Google is offering a Web site tracking service, then the likes of Yahoo, MSN and AOL will have to jump in too. For the independent site tracking services, the new Google Analytics service is as much a threat as Microsofts decision to offer its Internet Explorer Browser for free to overwhelm the user base of Netscape Navigator. Click here to read why Google thinks that its Web analytics service will be a hit with advertisers. Google signaled its move into Web site analytics last March when it bought out Urchin Software Corp. of San Diego, which marketed analytics tools for tracking Web site marketing performance and on-site user experiences. At that time Google officials said that it would offer the Urchin analytics tools to Web site operating and marketers. There was considerable speculation at that time that Google would offer Web analytics services for free, though the company did not confirm that. Now the other shoe has dropped. The Google service would be of greatest value to the many small businesses and small commerce Web sites that use Google as their marketing platform. Most of these sites generate too little revenue to afford paying even a few hundred dollars for Web analytics services. Getting access to Google services might help them increase their volume and become a bit more of a Web marketing powerhouse. Next Page: Listening for the crack of doom.

John Pallatto John Pallatto is's Managing Editor News/West Coast. He directs eWEEK's news coverage in Silicon Valley and throughout the West Coast region. He has more than 35 years of experience as a professional journalist, which began as a report with the Hartford Courant daily newspaper in Connecticut. He was also a member of the founding staff of PC Week in March 1984. Pallatto was PC Week's West Coast bureau chief, a senior editor at Ziff Davis' Internet Computing magazine and the West Coast bureau chief at Internet World magazine.

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