Acceleration's online analytics director describes the evolution of web analytics, predicts where it's going and makes the case for standardization.

The 'long tail' was first introduced by Chris Anderson in Wired magazine circa October 2004. Anderson based the theory on a statistical concept called 'long-tailed distribution.' Since then, it has become one of the most significant new business concepts driven by the internet age, and is applicable to almost all industries.

A long tail simply implies that if a company supplies a certain product that is difficult to get a hold of, the sum of demand from lots of different places will be big enough to make supplying it feasible.

We see this concept emerging within the web analytics' sector: Google has provided easier, more flexible tools to everyone, and the demand for more detailed, specific analytics' data has increased dramatically.

Within a traditional high-street purchase environment, catering to the demand for a niche product for a tiny group of customers simply isn't feasible. This is especially relevant in smaller towns and shops, but when the same niche demand exists across the world, the combination of a lot of smaller groups makes up a much larger market.

Amazon, Netflix and iTunes are the most notable of internet giants catering to this need. Each site provides consumers the opportunity to purchase books, movies or songs they could never before find in bricks-and-mortar stores. The sales/rentals of these items won't be huge, but due to the low cost of storage, transacting and shipping, it becomes an extremely viable business and often competes head-to-head with the total sales generated by the big contemporary hits.

Service providers
The long tail curve has already been defined within the web analytics providers' space, and at the head of the curve we see the high end, premium solutions like Omniture, WebSideStory, CoreMetrics and Webtrends.

To the middle and tail end of the web analytic providers' curve are various other providers, some specializing in niche areas of analysis, but all generally providing the same thing: reporting web traffic figures.

During 2005 and 2006, larger players snatched up many smaller providers, and most of the surviving providers sought ways to make it to the hot list or to stay there.

One such company trying to stay ahead is Google. With a relatively basic, but free product, Google has supplied web analytics to a market that no one has been able to reach before. This is the very long tail: creating a huge amount of demand for a free product, which in turn makes the thinner ends of the curve thousands of times longer than it was previously.

By offering a free product, interest in the web analytics' market exploded. The benefit of getting more out of a Google AdWords account by using Google Analytics encouraged many companies already using other Google products to implement it as well. Added to this, companies using other analytics' products have now also installed Google Analytics, running two packages simultaneously.

During August 2006, Chris Lake from E-consultancy interviewed Brian Clifton, European head of web analytics at Google, and Clifton stated that "a rising tide floats all boats." This is debatable, but what is certain is that Google has introduced substantial growth to the analytics' market that would have taken years to develop organically without it.

In the near future, analytics' needs will become more sophisticated and reach a stage that Google Analytics cannot address. Therefore, Google Analytics will either evolve along with the need, or clients will migrate to more robust, high end solutions. However, since Google Analytics is currently advanced enough to cover a large part of the current market, many of the lesser known mid-curve level providers may go out of business or seek other differentiating features.

Ever changing demand for services
As demand varies for web analytics as a whole, there is also a 'long tail' curve that defines the need for analytics' reports from typical or standard to more sophisticated and fully integrated.

The demand varies according to industry, the type of website and the experience of the individuals who will use the data. There are certain reports, such as traffic and clickthrough rates, that all providers must supply in order to be considered a serious provider. These standard reports are now well known and the struggle is now to find those few reports that are more advanced yet easy to implement, easy to understand and that can make a huge impact to the bottom line.

Until recently, these huge impact reports were not found at the head of the reporting demand curve, as would be expected, but rather were buried somewhere in the tail. The reason for this is directly related to the newness of the industry with many users not yet knowing what they should be looking at. This situation has been exacerbated by the lack of standards in a very new industry.

I believe we will see more standards being introduced in the short term and, as users start gaining insight into these, their questions will become more sophisticated as will their requirements on their web analytics' technologies.

If standards are implemented, this will increase demand and push certain service further up the long-tail curve, therefore benefiting the entire industry. This would hopefully lead to similar results to the publishing industry, after the OPA (Online Publushers Association) imposed standardization onto the online ad industry.

The need for standardization is further fueled by the direct correlation between Google Analytics and Google AdWords. When standard reports exist, it's easier to quantify your web analytics' spend, which for most companies is still very unclear. By using Google Analytics to quickly improve your spend on AdWords, it becomes more measureable. Unfortunately Google Analytics has no way to show you your total spend if you spend marketing dollars on marketing efforts other than AdWords.

Most of the top analytics' providers also have some way to justify the value of their solution when measuring total online marketing spend in a single view solution. However, in most cases it requires a lot of input from the consumer and needs a dedicated focus to become worth while. In order to assist businesses in analyzing the data they receive from web analytics' providers, more and more consulting practices will open. Even the analytics' providers themselves will focus predominantly on these types of services in the near future. The worst thing is losing a client just because it doesn't have the internal knowledge or resources to fully maximize the data you provide.

The next big trend will be to see all marketing data in one standardized dash board, without the need to invest in an expensive solution such as SAS. Being able to review all your online marketing data, and perhaps even your offline marketing data, side-by-side with an accurate attribution of user interaction with multiple marketing channels, provides insights into behavior and campaign performance that has previously been unavailable.

Niel Bornman is online analytics director, Acceleration. Read full bio.