Case Web Analytics In the 1990s, Josh James enrolled in an information systems class as part of…

Case

Web Analytics

In the 1990s, Josh James enrolled in an information systems class as part of his business management and entrepreneurship degree program. Being not particularly excited about the topic, Josh sat near the back of the room. During the first class period, Josh noticed a student near the front of the class who was easily answering all of the questions, and he decided he wanted to get to know him. His name was John Pestana, and they quickly became friends. John—a technology whiz with a knack for spinning web code—suggested that he and Josh start building websites for companies, and a partnership was born. As their student-run business grew amid the dotcom craze of the late 1990s, their clients began to ask about whether their fancy new websites were drawing any more web traffic. The two young entrepreneurs immediately recognized a compelling business opportunity, and they soon founded Omniture, a web analytics company that quickly grew to dominate the web analytics market. With innovative analytics tools, Omniture attracted many large companies, including Walmart, Comcast, NBC Universal, and Hyatt. In 2006, Omniture went public and was the numbertwo performing technology initial public offering (IPO) that year. Three years later, Omniture was acquired by technology giant Adobe Systems for US$1.8 billion. Adobe continues to develop the web analytics tools, which have since been integrated into the company’s suite of online marketing solutions, the Adobe Marketing Cloud.
Web analytics is the measurement, collection, analysis, and reporting of web traffic data with the goal of understanding and optimizing web usage. The key features of most web analytics tools are enabled by a small bit of programming code that is embedded in each of the pages of a website. As a user navigates from page to page, various pieces of information about the user are collected. These include metadata such as the type of browser (Safari versus Chrome versus Internet Explorer), the type of device (mobile versus desktop), or the viewable resolution of the user’s screen; browsing data such as how long the user stays on each page or where the user clicks; and navigation path data, such as which page the user came from or how many total pages the user has viewed within the website. The data are collected anonymously and aggregated for later analysis. For popular sites like Walmart.com or Amazon.com, web analytics software can collect millions of points of data within a relatively short amount of time.
Many companies employ entire teams whose sole purpose is to analyze web analytics data. These analytics data can be a gold mine of valuable information that a company can use to inform strategic decisions regarding its website. Consider the value of such information to a major online retailer like Zappos.com. Using analytics data, Zappos’s analysts could study the browsing behaviors of thousands of different users to identify potential improvements to their website. They might find that users get stuck on a certain type of page and identify changes to the menu structure to improve the navigation. They may find that many users add items to their cart but exit the site without completing their order when they are prompted to create a user account. This discovery could lead them to move the account creation process to a different point in the checkout flow or perhaps even make account creation optional. These are only a few of the nearly infinite potential discoveries that web analytics data can help discover.
Given the large mass of web analytics data collected by a site like Walmart.com, there is a high potential for information overload. Thus, a key feature of successful web analytics solutions is the ability for business users to filter data in helpful ways, allowing them to drill down into items of interest. Another way in which analytics platforms reduce information overload is through the use of easy-to-interpret graphical representations of the data. These range from simple bar charts and line graphs to shaded geographical maps and complex charts depicting users’ flow through a navigational structure. These and many other information summarization methods make the vast amount of web analytic data digestible so that business leaders can make informed, strategic decisions.
Web analytics is a prime example of business analytics in the digital age. For companies that conduct the majority of their business online, and in particular for retailers, entertainment hubs, and news providers, web analytics data provide invaluable insight into the behavior of their customers. Those companies that learn to effectively leverage those data can make significant changes that directly affect their bottom line.

1. Why do you think Omniture services were so popular, given the time period in which the company was founded?

2. Think of an online service (not retail) that you use frequently. How could this company use web analytics data to improve its website and positively affect its business?

3. Do you think that capturing usage data for performing web analytics is an invasion of privacy? Why or why not?

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