Google's Urchin Deal Proof Of Rising Analytics Tide

Google's deal last week to buy Web analytics company Urchin Software, along with efforts from Yahoo! and Microsoft to bolster their analytics offerings, promise to further spread the use of customer behavioral data to manage online advertising campaigns.Large e-commerce sites have long used Web analytics software like WebTrends and Coremetrics to better design their sites to appeal to visitors. Now, search providers are allowing big and small advertisers to tap into analytics data to craft their ad campaigns, comparing response rates of different media to determine which offers the best return on investment, and to increase customer conversions on their Web sites."We don't want to just give a bunch of data," said Steve Mitgang, a senior vice president at Yahoo! and head of its performance-marketing unit. "What marketers want to have is the ability to get an insight and have an instant kind of actionability associated with it." The need to quantify the returns on search comes as search-advertising costs rise, putting pressure on advertisers to turn clicks into customers. In 2004, search prices were up 44 percent, according to iProspect, a Watertown, Mass.-based search-advertising agency. "As search gets more and more competitive, you're going to have to be very good at Web marketing to make it work," said Kevin Lee, CEO of Did-it.com, a New York search marketing firm.San Diego-based Urchin will greatly increase the analytics Google can offer to its advertisers. Urchin provides thousands of mostly small businesses insight into their marketing performance, producing reports that track how their search ad campaigns convert into sales and what visitors do on their sites. Businesses can use the data to improve their sites and marketing strategies to bolster sales. Unlike high-end tools, which can cost more than $10,000 per month, Urchin has versions as cheap as $495 per month for its hosted service. Google, which declined to comment on its future plans for Urchin, joins Yahoo! in offering low-cost analytics to the small- and medium-sized companies that fill the ranks of search advertisers. Microsoft said its yet-to-launch MSN adCenter would give advertisers free audience reports to better target their search campaigns. Yahoo! sells analytics tools like Search Optimizer, which allows an advertiser to manage and measure search campaigns based on marketing objectives, and Marketing Console, which tracks the effectiveness of all online marketing campaigns. Search Optimizer costs as little as $249 per month and Marketing Console starts at $149.The affordable analytics tools "definitely push the use of analytics across a broader market," predicted Prashant Desai, director of product development at Reprise Media, a New York interactive agency. Despite free conversion trackers offered by search engines, Jupiter Research found less than half of marketers track their search campaigns back to sales. "Click-through rates are not a good metric for advertisers to determine the value of their keyword campaigns," said Eric Peterson, a Jupiter Research analyst. For search engines, analytics tools provide a fringe benefit of access to reams of customer behavior data that could be used to improve ad targeting, combat click fraud and get an idea of how much sales their advertising produces, said Sara Holoubek, chief strategy officer at iCrossing, a New York search ad agency.The downside of using analytcs from these sites is that they compile the sales data, said John Squire, vp of product marketing at Coremetrics, which puts advertisers in the position of letting the search engines know the true value of their media. Squire said he has a client spending $50,000 per month on search advertising and enjoying a 75-times return on ad spend. "They really don't want Google, or MSN or Yahoo! to know what their return is," he said.

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Google's Urchin Deal Proof Of Rising Analytics Tide

Brian Morrissey

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