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IBM doesn’t make too many mistakes, but I thought it made a big one four years ago when it sold off its SurfAid Web analytics business to Coremetrics. Today, IBM reversed course in a very smart move when it swallowed up Coremetrics to tap into its customers’ growing need for Web analytics. And while IBM getting back into the Web analytics game is a big story by itself, it’s a bigger story when you look at what this means to the Web analytics industry.

Google in some ways took the air out of the Web Analytics business with its purchase of Urchin, later christened as the free Google Analytics tool. Google Analytics is a great Web metrics system that is probably used by more than half of all Web sites. It does the job and and at an unbeatable price. At the time, many analysts claimed that there would be no room in the market for paid analytics, but there are reasons that more companies still want to be in this space, even against a free competitor:

  • They want to use the data. Adobe acquired Omniture in a surprise move, because they seemingly had no need for such a capability, but Adobe knows that to compete with Apple and with Google, they must figure out how to support advertising where Web activity information is crucial for behavioral targeting, personalization, and a host of other activities that can keep Flash relevant.
  • Their clients want the data. IBM sold off Web Analytics but now they are buying Business Intelligence. Since IBM sold off SurfAid, they have acquired Cognos, marking a new seriousness about BI that was missing before. Nowadays, no BI company can afford to be without Web Analytics.

IBM is making a very smart play here. Web Analytics can no longer be confined to the Web. The need for Web activity to flow through to the rest of the enterprise is vital, and so is the need for BI companies to be able to report on Web activity just as they do any other number in the firm.
But for IBM, the decision was probably even easier, because its strong position in Web application and commerce servers (with WebSphere) and in content management (from its Filenet acquisition) means that it has many ways to use Web analytics software than just through BI. This is the rare situation where a single acquisition can have a good effect on several businesses, making the price something that can be amortized across value in more than one place.
Google Analytics is just fine for a small company that wants to track Web activity. Even some large companies can use it to great effect. But companies that want to get serious about being data driven need to look at Web analytics as a part of a larger BI activity.
Does your BI vendor need to own its own Web analytics solution for this to happen? I’m not sure, but I know that it’s a lot easier to pull off if they do. As IBM watched much of the market hand its data to Google, and watched Adobe siphon off another big chunk, they have no way of knowing how easily they will be able to tap into that data in the future. Buying Coremetrics assures them of a way that their clients can keep their data and allows IBM to analyze it for them.

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Mike Moran

About Mike Moran

Mike Moran has a unique blend of marketing and technology skills that he applies to raise return on investment for large marketing programs. Mike is a former IBM Distinguished Engineer and a senior strategist at Converseon, Revealed Context, and SoloSegment. Mike is the author of three books on digital marketing, an instructor at Rutgers Business School and a Senior Fellow at the Society for New Communications Research. He is also a Certified Speaking Professional.

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