Brent Hieggelke of WebTrends chats with Executive Editor Brad Berens about his predictions for the coming year.

It's January, so we have a lot of people making predictions about the coming year. I chatted with WebTrends vice president Brent Hieggelke about how he sees Web analytics changing in the coming year.

iMedia: What do you see as the big developments in Web analytics in 2005? Not just for WebTrends, of course, but across the industry.

Hieggelke: At the macro level, Web analytics are poised to be a breakout category in 2005 for many converging reasons. The first of which, at a macro level is online marketing spend, which drives the demand for analytics downstream. With the IAB issuing a common set of measurement standards, large agencies and brands will become more comfortable investing a greater share of their wallets into online. Many big organizations are really starting to internalize the direct and indirect influence that their Web channels are having on their businesses and brands, and that even a two to three percent budget investment will drive a huge economy for Web-related services. Since measurement and tangible ROI analysis is one of the main attractions for CMOs to move to online, analytics are poised to be discussed at every twist and turn, and the industry could see the largest growth as a result.

Within the organizations themselves, the role of analytics have evolved in several critically important ways over the last couple years, to the point where the information coming out of the packages is much easier for more people to access, understand and then decide what specific actions to take as a result. So the industry has moved from being essentially a report card on -- or rear window view of -- the business to being one set of essential guiding posts of how to drive the business forward. Its now one of the windshields of the business and the decisions about where to go and which turns to make determine where the business ends up.

More and more marketing professionals now understand the fact that they are empowered like never before to test -- fail, test -- succeed, test -- succeed wildly, all while not really risking the business or the marketing budget as they test.  It's very addictive and very viral.

Within the Web analytics themselves, the reporting and analysis capabilities have become much more marketing-friendly now, and this is also driving their increased adoption. Data is now organized like marketers expect it to be: visually. Flow charts of paths through a Web site are easy to understand; metrics appear right on top of your Web pages, so it's simple and fast to see what is working and what isn't.

Emails can now be tracked all the way through to conversion success, with clear weaknesses made obvious. That way, corrective action can be taken to optimize as the emails are rolling out. Marketers are using real-time analytics to test and tune campaigns; they are using operational analytics to make design, campaign and Web site architecture decisions.

They are also using strategic information: integrating other campaign and product cost data to evaluate true revenue contribution to help them decide where to place their marketing bets for the next quarter or next year.

In the red-hot area of search, we should see a continued investment, but with more focus on organic search performance. With the PPC bid rates on the rise, the concerns over click fraud emerging, and the undiscovered green fields of PPC marketing becoming rarer, organizations will turn their focus to the essential areas of earning a successful ranking on the first page of their key search engines. This combined with their paid search efforts will become part of their integrated search strategy.

In the specific area of Web analytics platforms, which has seen the rise of ASP solutions grabbing the headlines over the past year (with solutions such as our WebTrends On Demand among others), we are seeing customers' interest in the software market continue strongly. As their internal proficiency grows, as the products get easier to implement, as the mission-critical information becomes more strategic to more people in the organizations, many customers insist on owning it themselves. In fact Bob Chatham -- the industry analyst for Forrester -- predicted in a Market Overview paper in late November that the pendulum would shift back to software from the ASP space. We are seeing strong performances in both parts of the market and certainly could see Mr. Chatham's predictions coming true. However, the ASP space is definitely still attractive to some segments of vertical markets, and we expect it always will be.

Finally, we are seeing the Web analytics role becoming more essential and better networked. Discussion groups exist, rumblings of trade associations are out there, and this new role (as a serious business contributor) will become a competitive position within organizations.

Anyone who invests in this skill-set is making a very wise investment in their own marketability as a marketer. It's the best time in history to be a marketer. We are redefining every aspect of marketing strategy, direct marketing campaigns, branding, advertising, with the fundamental shifts of putting the customer in control, and mass marketing losing its respect. Add the fact that it is all easily testable -- and inarguably measurable -- to the fact that it provides proof positive to the contribution that marketing is making within a greater organization, and it's easy to see why Web analytics is a hot, growing category, and a wise place to spend more and more time in 2005.

Wednesday: We dig a little deeper into two things: first, branding and Web analytics; second, what role Web analytics will play (or fail to play) with regard to integrated marketing?

Brent Hieggelke, Vice President of Marketing at WebTrends and author of “Winning on the Web: The Executive Pocket Guide to Smarter Marketing”, is responsible for WebTrends marketing strategy, demand generation, brand awareness, and other promotional and educational activities.

Mr. Hieggelke was chosen by BtoB Magazine as Who’s Who in B-2-B in 2003. He is an experienced international speaker including conferences such as Search Engine Strategies, Internet World, the Direct Marketing Association and the American Marketing Association.