Digging Deeper into Google Analytics

Google’s new free service, Google Analytics, has inspired a tremendous response, both among users and in the press. So what is the service? Why are people up in arms about it? Can you benefit from it? Keep reading.

When Google bought Urchin Web Analytics back in March of 2005, a number of observers speculated about what the company would do. Urchin offered a service for $400 a month that helped users track the effectiveness of their online advertising strategies. Since Google makes most of its money from advertising, it wasn’t too difficult to see the connections. Google slashed the price of Urchin’s service to $199 a month, then, in November, it took the big step of making the service free. Of course, it also renamed it Google Analytics.

Despite the uproar it caused (more on that shortly), the move should not have been a surprise. Google has a habit of buying a company, taking the best it has to offer, remaking and renaming it, and releasing it for free to an excited public eagerly awaiting the next cool thing from the search engine giant. Google Earth is the example that comes to mind most quickly, but there have been others. If “Googlization” isn’t a word, it should be.

Indeed, the analysts at least weren’t surprised. “When they first announced Urchin, I speculated about a couple of possible outcomes,” recalls Eric Peterson of Jupiter Research. “The most frightening for Web analytics companies was that they would do tag-based analytics, freely available and supported by the global Google brand, and that’s exactly what they’ve done.”

The issue is more complex. Not all of the web analytics companies are quaking in their boots about Google Analytics. Some may even be smirking a bit over the way the release turned into a bit of a fiasco during its first week. On the other hand, one Google watcher unfavorably compared the move to something Microsoft did a few years ago, which again brings Google’s “Do no evil” motto into question.

{mospagebreak title=So what is Web Analytics Anyway?}

Web analytics measures and analyzes the traffic a website receives. It can help a company determine whether the money it is spending on advertising really is well spent, or should be redirected. It can answer such questions as: are we using the right keywords? How can we improve our website design? Is our email newsletter helping to draw in visitors? How do visitors come to our website, and from where (both in terms of online location and geographical location)?

Google Analytics tracks this information for you. You sign up for the service, which is integrated with Google AdWords. You do need a Google account of some kind to use the service (such as Gmail), but it doesn’t need to be AdWords. You paste a bit of Google-provided JavaScript tracking code into each of the pages of your website that you want tracked, and you’re ready to go.

So what does Google track? Well, it can track your keywords – all of them, from every search engine you have a campaign with, not just Google. That’s not all. The company says it can track “All of your ads, email newsletters, affiliate campaigns, referrals, paid links, search engines, and keywords.” That’s a lot of information.

Fortunately, Google organizes it visually in ways that make it easy to digest. Pie charts and Flash files help. It’s not just a snapshot taken out of context, either. For example, say you have an e-commerce website and you want to know not only how many visitors are buying the product you’re currently promoting, but is the spike really due to the promotion? You can set up a “goal” with Google Analytics. That is, you give it a chain of URLs (pages you expect a visitor to visit in order), and Google will track users that follow that chain.

A related item that Google Analytics helps with is funnel visualization. This is what happens when visitors go through your website, apparently eager to buy something, but then abruptly bail out. Google Analytics has a feature that specifically addresses this. It “shows you the bottlenecks in your conversion and checkout processes – attributable to such factors as confusing content or maze-like navigation – so you can eliminate or work around them,” according to one of the Google Analytics information pages.

The service also gives you information about referrers, those sites that link to yours, so you can see where your visitors are coming from. But that’s not all you can find out about your visitors, of course. If they have not turned off JavaScript, you can find out what browsers they use, as well as their screen resolutions, so you can design your web pages accordingly. For example, if you find that 38 percent of your visitors use Firefox, you can tell your web designers they’d better stop assuming that the only thing that matters is the way the site looks in Internet Explorer. Likewise, you can find out the screen resolutions that visitors use.

You can find out where in the world your visitors are coming from, which Google shows you on a nice map. If you’re interested in what companies visitors come from, Google can give you that information as well, to a more limited degree. It isn’t perfect; it may only show the user’s ISP, for example. You can even get a “top ten” list of various things, such as which companies visit your site most (of those who actually report a company, remember).

Once you have gathered analytics information for a while, you can start doing useful comparisons. For example, is the number of visitors to your site this Friday up or down from last Friday? Or from this time last month, or last year? Trying to analyze this kind of information has sometimes been known as “data mining,” and it has been around for years. Back then it was something performed with records kept in a company’s huge data warehouses; now it is available online, thanks to Google.

{mospagebreak title=Winners and Losers}

The biggest winners from this move on Google’s part are the small to medium-sized businesses who can’t afford to spend money on web analytics software or services. Many companies don’t even know what web analytics is or what it can do for them; they are also part of Google Analytics’ target market. After all, if you’re a company with limited resources, why would you spend $200 per month on a service you aren’t even sure will give you a significant benefit?

The big losers from this move will be the web analytics companies that already target the small- and medium-sized business market. Companies such as WebSideStory, who sell their products to large businesses for, say, $40,000 per year, will probably not need to worry. But what web analytics firm’s sales force can match Google’s reach, when the search engine welcomes 380 million unique visitors every month (according to Nielsen/Netratings)?

That number of course doesn’t even take into account the thousands of companies that are already using Google’s AdWords service. In her analysis of the issue, Sarah Lacy of BusinessWeek observed that “By offering a free service – and one that’s tightly integrated with AdWords – Google is almost the de facto standard.” That’s not bad for a market Google wasn’t even participating in less than a year ago.  

{mospagebreak title=No Smooth Path to World Domination}

All of this may sound excellent for Google and the companies it hopes to serve in theory, but during the first week of the launch of the free version of Google Analytics, the reality came up a little short. The company stopped accepting new accounts when it reached 234,725. That number forces it to track a huge amount of information, so it shouldn’t surprise anyone that a number of users experienced slow service, and others couldn’t get through at all.

Google has had to display the following notice: “Google Analytics has experienced extremely strong demand, and as a result, we have temporarily limited the number of new signups as we increase capacity. In the meantime, please submit your name and email address and we will notify you as soon as we are ready to add new accounts. Thank you for your patience.” Perhaps it should have used the Gmail model of an invitation-only service, as some observers have suggested. Then capacity could be ramped up a little at a time, as needed, rather than having the demand hit Google’s servers all at once.

The service has raised privacy concerns, precisely because of the amount of business-sensitive data that it sends through Google’s servers. Lisa Wehr, CEO of SEO firm Oneupweb, notes that “Privacy is a huge concern. Google saying they place a huge importance on this sensitive information doesn’t make me feel all warm and fuzzy. At the very least, they are going to use it in aggregate form.”

This of course leads to the next question: if Google uses the information in aggregate form, what will they do with it? Remember, Google also charges for advertising. With this kind of information, they can show advertisers just how valuable it is to spend their money with the top search engine…and maybe raise their prices a little in the process.

If this sounds a little, well, evil, consider this: Microsoft faced a major lawsuit for bundling the Internet Explorer browser with Windows for free. The company put rival browser maker Netscape out of business by leveraging its monopoly position in one field (operating systems) to give it a decisive advantage in another, unrelated field (browser software). Google holds a dominant position in search engine advertising. Google Analytics is free, and integrated into AdWords. Is not Google thus taking advantage of its dominant position in an unrelated field to give it a decisive advantage over all of the web analytics companies trying to serve the middle market?

This point may be food for thought. It might even be fodder for a lawsuit. But one thing is likely: just as the predatory nature of the move didn’t prevent people from using the Internet Explorer browser, it will not prevent small and medium-sized businesses from availing themselves of Google Analytics.

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