Analytics firm Omniture has had an industrious few months, making a series of buyouts to boost its offering in the ‘online business optimisation’ space.
These include reporting supplier InStadia, site optimisation vendor TouchClarity, A/B and multivariate testing company Offermatica (finalised this month) and most recently Visual Sciences, one of Omniture’s main rivals at the top end of the market.
We spoke to the company’s EMEA general manager and senior vice president Neil Weston about future challenges and opportunities in the sector, including concerns over the acquisitions’ potential impact on innovation.
We also asked about the pros and cons of Google’s assault on web analytics – its strategic threat for suppliers, as well as how many customers Omniture has picked up from Google’s product.
Where are you at with each acquisition and how have they affected your European operations?
We’ve made four acquisitions this year. The earliest, InStadia, was primarily a customer acquisition, plus a little bit of technology. We’ve converted half to three quarters of the customers onto our platform and we’re on track to finish that early next year. We also picked up a survey tool and some report distribution functionality that we are rolling into our Site Catalyst product.
The TouchClarity acquisition was somewhat different. It was one leg in our three-part, build-partner-buy strategy. There were some customers but it was primarily an acquisition of technology – in particular, one-to-one behavioural targeting technology. It’s integrated into our product architecture so it is well bedded down.
On the Offermatica acquisition, that was to complement our site optimisation strategy. We acquired multivariate testing and segmented targeting technology, to offer customers most of what they need to improve the productivity of their websites.
Finally, on the Visual Sciences front, someone was going to buy these guys – Web Trends or Coremetrics. It fitted well for us for the US domestic market and was focused not only on customer acquisition, but also on the high end Visual Sciences technology.
From a product perspective, we will end up with one platform – an Omniture Site Catalyst web analytics platform. But we will also provide an on-premise solution for high-end analytical requirements with the Visual Sciences tool. The deal is in the melting pot in the US with the Federal Trade Commission and whoever else wants to get involved, and it’s unlikely to close before the end of Q1.
A lot of people have questioned whether this consolidation, particularly the Visual Sciences deal, will be a positive thing for innovation in the sector.
Yes, they have questioned that. But if you look at Microsoft or Google or Apple, all these guys are dominant in their marketplaces and continually innovating. You can make that statement but there are many examples why it is not necessarily a big issue.
In our marketplace, on a pure-play web analytics front, there are still tens of viable competitors. In your Web Analytics Buyer’s Guide, there are 19 suppliers listed and that’s not a small selection by any means.
But there aren’t that many at the top end of the market.
Yes. For the last few years, we’ve seen ourselves, Web Trends, Visual Sciences and Coremetrics all competing. But we feel we have made a lot of progress because those vendors have lacked innovation and vision.
There’s also greater choice coming into the market, with Microsoft’s free product and Google’s free product. Both of those would have significantly larger customer bases than we do, in terms of volume.
I think we have got to assume that. We’ve got a reasonable revenue track and the cost of entry would be very high, particularly to get to where we are now. But Microsoft and Google certainly have the wherewithal to do that if they want to.
Their strategies are typically to seed the market with something and then turn it into money. So it would be remiss of us not to assume that both of them will want to come and eat us up at some point in time.
Have you considered launching a free tool to compete with their existing offerings?
Yes, we have and the answer is we’re not. It’s not in our interest to do that. There are enough free tools out there that are perfectly adequate.
The effect of that has been some great marketing for web analytics as an industry. It has got people interested in metrics and once they are used to it, they reach the limitations of the free tools and they approach us.
I can’t think of any other event that has had a bigger event on the market than Google Analytics launching.
Can you put a figure on that – how many customers you have picked up from Google Analytics?
I can’t give you units but about 5% of our EMEA customers have converted from Google (Omniture says it has 2,000 customers globally).
Eric Peterson says 60% of Fortune 1000 companies use Google Analytics in some form. Do you know whether a lot of your existing customers use Google – and is that a problem for you?
It’s a bit like saying 95% of the world uses Oracle. They probably do – there will be small departments or functions or little websites that do use Google within the biggest customers. There are departmental pockets in those types of organisations and I could envisage they use some form of free analytics solution.
But I don’t see it as a problem. It’s a ‘horses for courses’ environment – if you have a small website and want a few statistics, Google will be adequate.
You mentioned your build-partner-buy-strategy earlier. How much building are you doing in the UK and Europe?
It’s not a specific strategy of the company to do R&D in Europe, but we have the TouchClarity development team in the UK and we still have some of the Instadia development team in Denmark. They contribute to and work with our development team in the US.
With TouchClarity, we’re designing, developing and moving into production software that is created here. The same is for Denmark, although on a smaller level because there were fewer segments of that that we picked up and decided to convert.
What plans do you have for your Genesis application partner platform in Europe and how big a help is it in your acquisition strategy?
We’re expanding the Genesis space, which was very US-centric because that was where it started off and that was where our partners were headquartered. But we’re also in the process of recruiting European Genesis partners right now. We’ll come out with some announcements in the near future about who those partners are.
We’re getting towards double digits in terms of European partners that are in the programme and are aiming to benefit European-based organisations that use European companies for their email marketing or targeting and so on. We just signed our eighth European partner.
Our first partner was EmailVision, a French email company. We’re looking at the top email providers in each country, and the same in affiliate marketing and e-commerce. We’re aiming to sign about 20 partners and we’re about halfway towards that. We’ll make an announcement about that in December.
It is great for our acquisition strategy because once we buy a company that is a Genesis partner, a lot of our work is already done. Offermatica is a great example – it has been a Genesis partner for over a year. Around 60% of its customer base was already integrated.
You have talked about fitting all these different elements into an ‘online business optimisation’ environment. Could you expand on that process and how multi-channel activities fit into that?
I draw an analogy with ERP systems in the early nineties. You had a general ledger and you built onto that accounts payable and receivable, and HR and planning systems in order to provide a business with the full infrastructure it needs to run.
Our online business optimisation platform is our version of that for the online marketing world. I liken the database to a ledger, where all the data is held, and all the applications are run around that.
That is becoming more and more broad and there are probably about 10 key areas of applications that sit on top of a web analytics database to form an online business optimisation platform. Integrate that with services from us and our partners and you can start to see the analogy.
Multi-channel is sort of buzzy. Everyone has multi-channel, whether it’s multi-channel communication or contact and so on. It’s about optimising online business activity.
On the TouchClarity and Offermatica buys, there seems to be a lot of talk of confusion out there about how site optimisation fits into on-site behavioural targeting, as well as what behavioural targeting actually is. How are you positioning it?
On-site behavioural targeting is about addressing an individual’s behaviour and characteristics and determining what you can do based on that history. It’s somewhat predictive.
We implement it by assessing an individual’s behaviour and understanding where they have come from, where they have been clicking and so on, and correlating that with what the complete population that has visited that page has done. If you have just clicked on a car ad, it’s logical to serve you some content about insurance. You don’t want to receive an offer for something you’ve already bought.
It’s about taking online and offline information, where you have some identification of the customer, and using it to be very accurate in your targeting. For non-identifiable users, you are building an idea of how they are most likely to react to a piece of content. It’s about targeting that content on an individual basis.
How that differs from the optimisation side is it is a different part of the organisation. Optimisation is about the user experience before shoppers get to the point of purchase. If you first go to a site and are confused by it, then you are unlikely to purchase something or fulfil the purpose of the site.
Multivariate and A/B testing is about how things work within a page and how the page in total works. That scales into what we would call segmented targeting. A visitor that has bought from you before should be treated separately from a visitor that has just found you through a Google search. It’s another level of targeting.
Who are the early movers in each space?
In Europe, people like Skype are using split testing to test different creatives on their landing pages to see which are the best performing by segment. It’s a pretty early market and these tools haven’t been around for too long. Offermatica has around 110-115 customers in the US, while there are four or five in Europe. We will be market making.
In terms of on-site behavioural targeting, all the biggest banks in the UK have deployed it to target creative at their individual customers.
Do you see on-site behavioural targeting information on users ever being aggregated and shared between sites, like a behavioural targeting network does in the ad space?
No, in a word. In the automotive business, companies have clubbed together to try and understand behaviour and benchmark performance. But in the financial services and telco business, these guys are extremely protective of their strategy.
It might happen in retail, but it’s not so easy in Europe.
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