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The new face of Web analytics

This article appears in the issue January 2012, [Volume 21, Issue 1]
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In this article, Forrester analyst Joe Stanhope discusses the market drivers propelling Web analytics forward.

It's no secret that marketers are expanding their reach to incorporate messaging, affiliates, search engines, advertising and emerging media such as social and mobile into the delivery of relevant and engaging multichannel consumer experiences. And as marketing expands and evolves, so too does the remit of Web analytics. The website remains a central pillar of the online marketing mix, putting Web analytics squarely in the center of digital analytics. Web analytics is now in a position to build on its legacy of tracking website behavior to provide comprehensive analysis of digital channels, helping organizations gain a solid picture of how each individual customer interacts with the company's digital footprint.

As a result, Web analytics is a crucial resource for gaining insight for customer intelligence (CI) professionals. To leverage that insight, firms must use Web analytics beyond exclusive website marketing and operations to drive multichannel analysis, decision support and campaign execution for the entire digital marketing strategy. This article outlines the market drivers propelling Web analytics forward, and provides a framework for CI professionals to consider as they strive to adopt next-generation digital analytics.

The Internet has always been a dynamic environment, and today it's changing more rapidly than ever. The expansion of marketing, and thus the extended role of Web analytics, can be credited to several changes including the adoption of emerging channels, increasingly sophisticated customers, the rise of data-driven marketing, the democratization of analytics and the arrival of the Splinternet.

Points of engagement

Marketers face a growing catalog of channels and touchpoints that factor into customer relationships. Social media and mobile are redefining marketing as once-novel customer communication techniques mature into primary points of engagement. And marketers show no signs of slowing down as emerging channel capabilities proliferate. A recent Forrester survey revealed that 45 percent of marketers already have or plan to adopt new forms of social media such as blogs, discussion boards and communities. And mobile marketers are beginning to try new tactics including mobile coupons, video and games. As marketers engage, coordinate and execute across numerous channels, the need for comprehensive digital analytics has never been greater.

Today's empowered consumers reject single-channel, marketer-driven interactions in favor of multichannel, bi-directional relationships. With the use of smart phones, Internet-connected devices and new devices such as tablet computers, customers are now capable of being online 24 hours a day, from nearly any location. Along with the expectation that brands should be present in both traditional and emerging channels—and on any device-customers expect messaging to be personally, geographically and situationally relevant. As one marketer said, "Customers want personalized content across all touchpoints and they want it immediately. Any contact on their behalf needs to be addressed within hours, not days."

Marketing is increasingly becoming a data-driven profession as customer expectations and the monetization of interactive media grows. Digital channels have departed from the realm of experimentation to represent significant revenue, driving higher expectations for marketing performance and an understanding of the opportunity cost of not optimizing digital customer interactions. To drive the highest possible return on those marketing investments, firms realize that they need to make the most of their digital analytics, and that means expecting more from Web analytics than fixed reporting on website behavior.

Today, users prioritize marketing-centric tasks such as attribution, segmentation and customer engagement as top hurdles they seek to resolve with Web analytics. Developing the elaborate analyses to support those efforts requires several streams of data from a variety of sources, leading users to also focus on data integration, a function most Web analytics platforms support. What else do sophisticated users seek? Deep, actionable analysis. The Forrester survey showed that more than half of Web analytics professionals employ A/B and multivariate testing, campaign attribution, behavioral targeting and predictive analytics as top attributes that are, or would be, most beneficial to their business.

Splinternet era

In today's marketing environment, everyone is an analyst. As channels and customer touchpoints increase, marketers need visibility to the entire engagement funnel, and analysis is no longer strictly the domain of statisticians. Digital analytics is becoming a multi-talented, collaborative effort as firms strive not only to develop comprehensive analyses but also to offer insights that directly support the business. When developing a measurement strategy, firms must consider how analysis will be distributed to marketing and business stakeholders beyond channel owners and analysts to ensure that they have a comprehensive view of customers and prospects.

However, this increased level of data sharing comes at the cost of potentially overshadowing key insights. The drive for sophisticated and complete analytics must be balanced with focus and careful design to avoid data overload. Reports, dashboards and analysis applications must be streamlined and efficient to allow for rapid analysis and discovery of key findings without overwhelming users.

The era of an easily compartmentalized Internet—comprised of the Web browser, well-defined touchpoints and open technology architectures—has been usurped by the Splinternet, a large-scale fragmentation of devices, data access and technology standards. The Splinternet has an expansive impact because it breaks many of the foundational assumptions upon which digital marketing has been historically based. That includes Internet-connected devices that go beyond the PC, the inversion of data ownership models by social media and the diversification of technology platforms as vendors such as Apple and Facebook assert control over access points and technical standards. In order to reach customers, marketers must create separate marketing strategies for each application or device, necessitating yet more streams of analytics to support measurement, attribution and optimization across a decentralized digital landscape.

To succeed in an increasingly complex world, smart companies will embrace those market trends as an opportunity to develop sustainable competitive advantages through comprehensive digital analytics. To do so, organizations must take a holistic approach, anchored by their existing Web analytics practices, encompassing four key tenets: technology, organization, experimentation and balance.

First, firms must invest in the online marketing suite. Acting as Forrester's framework for coordinating digital marketing technology, the online marketing suite is a network of interactive marketing specialists—held together by a central hub—that supports marketing analysis, content and execution. The online marketing suite's capabilities include data collection and tracking across the entire digital customer funnel, centralized analytics and business rules, and workflow to guide marketing processes. That level of coordination ultimately drives unified visibility across the marketing mix, increased efficiency, improved collaboration among marketing stakeholders, and the ability to put tactics and interactions into context.

Centralized teams

Technologies are powerful enablers, but organizations also need the skills, staffing resources and defined organizational design to manage data, plan and execute multichannel activities, perform robust analysis and collaborate. As one marketer said, "It's no longer acceptable for marketers to remain isolated within their silos. These new touchpoints are more than just marketing activity, they involve IT and many other parts of the organization."

The Forrester study shows an increase in the number of firms that are developing centralized marketing teams to consolidate capabilities across channels, lines of business and products to facilitate multichannel marketing. Organizations also extend their resources and skill sets beyond in-house capabilities by leveraging the operational and strategic expertise of external agencies and consultancies, as many firms report that they employ third parties to support emerging channels and adopting technology for multichannel marketing.

Drivers of success

Given the tremendous volume of digital interactions, span of customer motivations, variability in granularity and quality of data for analytics, as well as nascent performance standards for emerging channels, it is impossible to know intuitively which promotions and experiences will resonate with customers. The best approach to evaluating the many available permutations of promotional and customer experience design is through statistically sound, quantitative analysis. Organizations must apply structured, experiment-oriented practices to digital analytics. First and foremost, that requires a corporate culture that encourages and rewards experimentation, as well as the development of a formal testing program to support the design, execution and analytics of optimization techniques such as A/B and multivariate testing.

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