Direct Navigation Still Ranks No. 1, However, Highlighting the Importance of Branding and Customer Loyalty in Converting Visitors

SAN DIEGO, CA (Jan. 30, 2006) – Search engines have more than twice the e-commerce conversion rate of other traffic acquisition sources, showing why marketers have paid so much attention to the online channel over the past few years, according to a first-of-its kind study from WebSideStory, Inc. (Nasdaq: WSSI), a leading provider of on-demand digital marketing applications. During the last three months of 2005, the search engine conversion rate at business-to-consumer e-commerce web sites was 2.30 percent, more than twice the conversion rate of other acquisition sources (0.96 percent), which include banner ads, affiliate marketing links, shopping search engines and other referring links, according to the WebSideStory Index, a new statistical barometer that features techno-graphic and e-commerce trends culled from the millions of users that visit web sites using the company’s award-winning web analytics technology, HBX. However, search engines, including both paid and organic listings, still trailed direct navigation* conversion rates (4.23 percent), including bookmarks, by nearly double, according to the index.

“For several years now, search engine marketing and optimization has dominated online marketing, and this data shows why: it’s far more effective at converting visitors into buyers than most other acquisition sources taken as a whole,” said Ali Behnam, senior digital marketing consultant for WebSideStory. “But as this data also shows, the best conversion rate still comes from good old fashioned branding and customer loyalty, where visitors either bookmark your site or type your URL directly into the address bar.”

The disparity in conversion rate between acquisition sources can vary by e-commerce category. For example, the search engine conversion rate for “toys” jumped to 4 percent – nearly equaling the 4.85 percent conversion rate for direct navigation in that category – while dropping to 1.35 percent for “computers and electronics.” “It makes sense that search engine users, who arrive at sites they may not be familiar with, are much less likely to purchase a big-ticket item, such as a computer or television, than they are for a toy,” Behnam said.

“This unique study provides a high-level view of conversion rates by acquisition source, but for much more granular information, including up-to-the-second ROI data, marketers will want to use an enterprise-class web analytics solution to properly refine and adjust their marketing spend,” said Jeff Lunsford, chairman and CEO of WebSideStory.

HBX Analytics is an award-winning, on-demand web analytics solution that provides actionable information about online visitor and customer behavior. It is part of WebSideStory’s Active Marketing Suite, the industry’s first suite of integrated, on-demand digital marketing applications including web analytics, site search, web content management and, later this year, keyword bid management. For more information, please visit www.websidestory.com.

Conversion Rate by Acquisition Source at Business-to-Consumer E-Commerce Sites, Q4 2005

Online Acquisition Source Conversion Rate
Direct Navigation/Bookmarks 4.23%
Search Engines 2.30%
Internet Links (Other) 0.96%

Definitions:
* Direct Navigation: Includes bookmarks and URLs typed directly into the address bar. Also includes e-mails from non web-based e-mail clients and poorly implemented redirects where the referring domain is stripped out or masked.
Search Engines: Includes all paid and organic keywords from major search engines worldwide.

Internet Links: Includes banner ads, affiliate marketing links, shopping comparison engines, and other referring links.

E-commerce Sample: The select business-to-consumer e-commerce sites used in this study generate more than $3 billion in annual online sales in five categories, including apparel, toys, computers and electronics, sports and leisure, and other.

About WebSideStory

WebSideStory, Inc. (Nasdaq: WSSI) is a leading provider of on-demand digital marketing applications. Its Active Marketing Suite(TM) includes web analytics, site search, web content management and, later this year, keyword bid management. Enterprises worldwide use these services to measure and improve their online marketing performance. For more information, contact WebSideStory, Inc. Voice: 858 546-0040. Fax: 858.546.0480. Address: 10182 Telesis Court, 6th Floor, San Diego, CA 92121. Web site: www.WebSideStory.com. HBX and Active Marketing Suite are trademarks and WebSideStory is a registered trademark of WebSideStory. Other trademarks belong to their respective owners.

Forward-Looking Statements
Statements in this press release that are not a description of historical facts are forward-looking statements. You should not regard any forward-looking statement as a representation by WebSideStory that any of its plans will be achieved. Actual results may differ materially from those set forth in this release due to the risks and uncertainties inherent in WebSideStory's business including, without limitation: WebSideStory's reliance on its web analytics services for the majority of its revenue; blocking or erasing of cookies or limitations on our ability to use cookies; WebSideStory's limited experience with digital marketing applications beyond web analytics; the risks associated with integrating the operations and products of Avivo Corporation with those of WebSideStory; privacy concerns and laws or other domestic or foreign regulations that may subject WebSideStory to litigation or limit our ability to collect and use Internet user information; the highly competitive markets in which we operate that could make it difficult for WebSideStory to acquire and retain customers; the risk that WebSideStory's customers fail to renew their agreements; WebSideStory's recent achievement of profitability and the risk that it may not maintain its profitability; the risk that WebSideStory's services may become obsolete in a market with rapidly changing technology and industry standards; and other risks described in WebSideStory's Securities and Exchange Commission filings, including WebSideStory's annual report on Form 10-K for the year ended December 31, 2004, as amended, and quarterly report on Form 10-Q for the quarter ended September 30, 2005. Do not place undue reliance on these forward-looking statements which speak only as of the date of this news release. All forward-looking statements are qualified in their entirety by this cautionary statement, and WebSideStory undertakes no obligation to revise or update this news release to reflect events or circumstances after the date of this news release.

Published on: 12:00AM on 30th January 2006