What Is Web Analytics

October 12, 2005

Eric T. Peterson

Eric Petersen is the author of Web Site Measurement Hacks: Tips & Tools to Help Optimize Your Online Business

Web Analytics

Web analytics is a component of online business that has been slowly gaining momentum over the last half-dozen years, one whose time, many say, has officially come, based on Google's acquisition of Urchin Software in 2005. In general terms, web analytics is the process of collecting data about the activities of people accessing your website (visitors)--how they found you, when they visited, what pages they looked at, what they bought or downloaded, and so on--and mining that data for information that can be used to improve said website.

In This Article:

1. Books About Web Analytics
2. Websites and Weblogs
3. Associations, Groups, and Events
4. Tools, Tools, Tools
5. Jobs in Web Analytics
6. Summing Up

Web data is often analyzed to push and pull the three general levers available to businesses on the internet: marketing, merchandising, and site design. Marketers will often use this data to determine how well (or poorly) their hard-earned marketing dollars are spent. By identifying every inbound marketing campaign, marketers are able to make apples-to-apples comparisons regarding how well each type of acquisition vehicle performs, usually by examining some type of conversion rate. Merchandisers and content managers will analyze web data to better understand which products or content encourage visitors to click more deeply into the site and stay engaged. Designers use web analytics to better understand impediments to success on sites by examining the flow of traffic around the site. Perhaps the most common use of web analytics data is fall-out reporting--looking at specific valuable paths on the site (for example, the checkout process) in an attempt to understand why visitors abandon the process prior to completion.

More and more, companies are re-examining their investment in web analytics and working to determine how to get more out of the money they've spent. Occasionally, companies incorrectly conflate the terms "web analytics" and "web measurement," but the terms are worth differentiating. "Web (data) measurement" is the act of collecting the data whereas "web analytics" is the process of actually interpreting the data, ideally to improve your business online. One of the most prevalent trends, evidenced by the increasing number of job postings for "web analytics manager" and "web data analysts," is the idea that companies need to staff for analytics success. Hiring smart people, or outsourcing to savvy organizations, is critical to being successful with web analytics, and smart people need resources.

With all of this in mind, the rest of this article will focus on how the reader can learn more about the subject of web analytics using resources widely available both online and offline.

Books About Web Analytics

Perhaps the best place to start exploring the subject of web analytics is simply by purchasing a book on the subject.

Web Site Measurement Hacks (Eric T. Peterson, O'Reilly, 2005), is a compendium of ideas and insights about how web data analysis works, written by some of the brightest minds in the industry. The book includes 100 hacks, covering all aspects of web data measurement--from vendor selection and implementation to retail to key performance indicator reporting. Web Site Measurement Hacks also includes Perl code to allow you to build both your own traffic-analysis and weblog-measurement tool. With contributions from senior members of nearly every well-known analytics vendor, plus big names like Bryan Eisenberg, Jim Sterne, and Jim Novo, Web Site Measurement Hacks has something for everyone, regardless of skill or experience. A free "ten-hack sampler" of the book is available at the author's website.

Web Analytics Demystified: A Marketer's Guide to Understanding How Your Web Site Affects Your Business (Eric T. Peterson, Celilo, 2004) is widely considered to be the most complete treatment on the subject available. Covering the basics of web analytics, including data sources, terminology, and the most widely-available tools that marketers, merchandisers, and site managers use, Web Analytics Demystified breaks down analytics and web data along the customer lifecycle--reach, acquisition, conversion, and retention--providing a valuable summary of key performance indicators for each. According to Bryan Eisenberg, author of The New York Times bestseller Call to Action, "Eric Peterson has done a great job at making web analytics accessible to everyone from executives and marketing professionals who are responsible for the success of their websites, to web designers and IT professionals responsible for implementing solutions and optimizing their results." A free copy of the book's first three chapters is available from the author's website.

Web Metrics: Proven Methods for Measuring Web Site Success (Jim Sterne, Wiley, 2002) is the seminal work on the subject written by one of the most influential members of the web analytics community, Jim Sterne. Sterne was the coauthor with Matt Cutler of E-Metrics: Business Metrics for the New Economy, a work that single-handedly changed how companies thought about web data, and Web Metrics is an expansion of the ideas presented therein. Anyone who is struggling to understand how web-data analysis can change his or her business or why he or she would invest in web measurement software should absolutely read this book. Jim Sterne has authored a handful of great books about online marketing and in his free time organizes the Emetrics Summit (see below) twice a year and serves as the President of the Web Analytics Association (see below).

Measuring the Success of Your Website: A Customer-Centric Approach to Web Site Management (Hurol Inan, Pearson Education Australia, 2002) is exactly that, a customer-centric view of the hows and whys behind web-data analysis. In extremely clear terms, Inan covers the most popular metrics, data considerations, and the vendor-selection process. Inan also publishes a regular newsletter, Attuned, which is an excellent resource for anyone interested in the subject. More information about Attuned is available at www.hurolinan.com/Book/n_05.asp.

Call to Action: Secret Formulas to Improve Online Results (Bryan and Jeffery Eisenberg, Future Now, Inc., 2005) is a New York Times, USA Today, and Wall Street Journal bestseller written by Bryan and Jeffery Eisenberg, two gentlemen whose names are synonymous with improving website conversion. With contributions from some of the best and brightest, including Dell's Sam Decker, Amazon.com's Tamara Adlin, and User Interface Engineering's Jared Spool, Call to Action picks up where Web Analytics Demystified and Web Metrics leave off. Crammed full of anecdotes and truly actionable advice, this bestseller draws on Eisenberg's patented persuasion architecture model for site planning and measurement, and is a must read for anyone interested in measurement for improvement's sake, not just for the sake of gathering data.

Websites and Weblogs

As you get more and more interested in the subject of web analytics you may be interested in some of the voluminous content available on the internet.

In addition to these informative sites and lists, a few people have started blogging on the subject of web analytics:

Associations, Groups, and Events

As you get more and more interested in the subject you may want to surround yourself with like-minded professionals.

The Web Analytics Association is the world's only formal web analytics group. Founded by authors Bryan Eisenberg and Jim Sterne, and supported by dozens of web analytics vendors, the W.A.A. promises to deliver the highest-quality education and events on the subject.

The Web Analytics Forum at Yahoo Groups was founded by Eric T. Peterson in 2004 and is the world's most active discussion on the subject of web measurement and analysis. Completely free to join, this group is an excellent resource for anyone interested in the subject regardless of experience.

If you're more of a people person and enjoy offline interaction, you should definitely consider attending Jim Sterne's Emetrics Summit in Santa Barbara, California or in London, England. This is the absolute "must attend" event for anyone truly interested in the subject and is always attended by the heaviest of heavy hitters in the analytics industry.

Tools, Tools, Tools

Once you've read the books, visited the sites, and joined the groups, the next logical step is to start experimenting with web analytics tools on your own. Fortunately, there are a number of freely available tools out there for you to experiment with.

Sane Solutions provides its NetTracker Lite application free of charge. Anyone who has access to his or her own log files and is interested in some pretty good analytics at a fantastic price should give this application a look.

If you're a Perl junkie, you might want to check out the "Build Your Own Web Analytics Application" at the end of each chapter of Web Site Measurement Hacks. These hacks, written by Dr. Stephen Turner--the original web analytics "hacker"--walk you through the process of building your own tag-based web analytics application.

Analog, the most popular log file analyzer in the world, is still available for free. While it's not quite as pretty as NetTracker Lite, Analog does quite a bit of analysis for the price.

Dozens of free and inexpensive web analytics applications are discussed in Hack #10, "Find a Free or Cheap Web Measurement Solution," of Web Site Measurement Hacks.

Jobs in Web Analytics

The final step for you, if you're really into this kind of thing, is to go out and get a job in web analytics. While there are a multitude of job sites on the internet, two have emerged as the best places to look for jobs in web analytics: the Web Analytics Association's (WAA) job board and Indeed.com. The association hosts a list at www.webanalyticsassociation.org/en/jobs/search.asp, made up of jobs posted by group members and provides direct contact information for hiring managers. While the list is not nearly as extensive as Indeed.com, because the WAA is a highly-targeted source of information about web measurement, this board is likely the best place to start looking, especially if you're OK with the idea of relocating.

If you're pretty well settled into a community and are hesitant about relocation, Indeed.com has a great job opening aggregator that allows you to search for "web analytics" jobs by geographical location. The city nonspecific search is at Indeed.com, and at the time this article was written the search matched over 700 openings worldwide. If you already have experience with one of the analytics packages, you might want to search for the vendor's name to find positions that are specific to the application you know best. A quick search for "Omniture" yielded 188 openings, "WebSideStory" yielded 40 openings, and "WebTrends" 1,129. Keep in mind that these company-specific searches always return openings at the vendors themselves, but you may want to consider working for a respected vendor--in a market as strong and competitive as web measurement, the vendors are always looking for talented, motivated people.

If you're new to the field, or just interested in getting into web data analysis as a profession (salaries approach $100,000 annually, adjusted for geography and by experience) you should consider trolling the Web Analytics Forum at Yahoo Groups to familiarize yourself with common concerns and concepts. It's also not a bad idea to research vendor websites to better understand how applications are positioned to the companies that purchase them (and who would ultimately be hiring you!) If nothing else, buy a copy of Web Site Measurement Hacks and read the first chapter, focusing on Hack #1: "Talk the Talk", Hack #2: "Best Practices in Web Measurement" and Hack #4: "Staff for Web Measurement Success."

Summing Up

As companies continue to use web-data analysis to dramatically improve the success of their business online, interest in the subject continues to grow. As interest grows, so does the volume of information available, which is great news if you're newly interested in web analytics. Get a book, join a group, read a weblog, play with an application--all of these things will help you refine your understanding of the subject and get to the point where you can either improve your own business or command a relatively high salary in a rapidly-expanding market.