Web analytics bites into a 'cross-channel cookie'

Web analytics software has come a long way from simple traffic-counting tools. Applications are beginning to help businesses service customers across multiple channels.

According to a new report from Forrester Research, Web analytics technologies are rapidly evolving from simple programs designed to measure online performance into critical business-facing applications.

The latest survey released by Cambridge, Mass.-based Forrester predicts significant growth for the Web analytics space this year. The study, "Why Web Site Analytics Matter," forecasts that organizations will spend $205 million on the tools in 2003, which would represent 15% to 20% growth over 2002.

While the market remains relatively small compared with traditional CRM analytics software, Forrester principal analyst and report author Bob Chatham said the Web measurement applications sector is poised for takeoff.

"This is a boom we've talked about for years, and it has always been 18 months out," Chatham said. "But with the tools reaching users today, companies are being armed with loads of great data and the ability to do something with it immediately."

Chatham said the greatest short-term potential for Web analytics lies in the ability to produce results not just related to online commerce or service, but across multiple business channels. An example might be a Java-based tagging system that generates customer interaction responses for both Web-based and call center applications; such a tool could be built using emerging standards like VoiceXML.

"Companies are beginning to talk about the 'cross-channel cookie,' allowing real-time customer identification across a range of channels, not just the Web. It is improved analytics software that allows for this," Chatham said.

In terms of driving immediate return on investment, Chatham said companies should recognize that the opportunity to cut customer service costs using Web analytics-based systems is often underestimated. He said that many organizations failed at initial efforts to create online customer self-service, largely because the analytical technology available to support applications was immature. However, the rapid evolution in Web analytics tools lets companies deploy applications that are now more powerful than most users need, Chatham said.

To better leverage the software, Chatham advises organizations to "learn to think analytically" and design experiments that offer clues regarding how customers respond to various forms of interaction, such as self-service or automated marketing campaigns.

Chatham is also expecting that this will be a year for major vendor consolidation in the Web analytics space. At least 26 vendors are currently marketing applications, but this number will shrink drastically as larger players rise, he said. Among the companies Chatham sees as Web analytics market leaders are Coremetrics Inc., Omniture Inc. and WebSideStory Inc., all of which Chatham believes will grow significantly during the next 12 months.

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