The Web analytics space is hot, customers are engaged, consultants busy, vendors optimistic. There's no question this is a healthy "industry."

But that the intense competition among the top vendors has somewhat killed product innovation. And it's only now, six months into Perenety (, that I am realizing that the next generation Internet—what some call Web 2.0—needs a totally different kind of Web analytics. Let me explain.

Most analytical products available today were designed in 2001-2002, after the dot-com bubble burst, when there was a strong need to measure marketing campaign ROI. I would even go further and say that the only thing that mattered at the time was measuring Google AdWords and Overture (for 90% of customers, at least), because search engine marketing was the only marketing program that really worked and could be justified in those recession years.

It's interesting to remember that Webtrends at the time was an easy target for the newest vendors, primarily because they missed the SEM turn (they've nicely recovered since then). It's also interesting that Omniture, which can be considered the current market leader, reinvented itself right at that time—repositioning itself, redesigning its product, and aggressively targeting large content sites (automotive, publishing, corporate).

Since 2002, leading vendors have been adding powerful capabilities to analyze behavior on the site, nicely complementing the marketing analysis capabilities—and adding consulting brains to help customers understand the reports. And since 99% of customers typically use no more than 10% of the reports available to them, it is not too surprising to see vendors focusing on helping customers better use their produc, as opposed to creating more features that would likely not get used. In other words, the Web analytics market is becoming a consulting business.

Web 1.0 analytics: [Marketing campaign] —> [Landing page]
—> [Path on site] —> [Checkout sequence] —> $

Now some major changes are happening online that are going to make the current analytics products look like Webtrends in 2002. These changes (RSS, social networks, blogging, etc.) are affecting, even transforming, e-commerce because more purchasing decisions are made outside of their site—on a forum, a comparison shopping site, or a blog—places where the marketer has no visibility and no control.

Moreover, it is becoming increasingly difficult to effectively manage customer loyalty programs online because (a) customers are harder to reach via traditional tools like email and (b) repeat customers and visitors are harder to track since they may connect from multiple devices and sometimes block cookies (up to 30%, according to Jupiter Research).

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Xavier Casanova is CEO of Perenety (, a Silicon Valley startup focusing on new communication tools. Prior to founding Perenety, in 1998 he founded Fireclick, a Web analytics company acquired by Digital River.