Recently i'm accused of being a Facebook Fanboy. I resemble that remark.
See, I get a hard-on just saying that word. Metrics… mmmm, sexy. Jim Sterne, you make me hot baby.
Metrics is the New Black. And Yahoo & Microsoft are wearing White waaaaaay past September.
So i’m here to tell you -- Google is absolutely killing everyone in this space. Ain’t even a contest. In fact, I don’t think most people even realize it is a “space”. It’s like Bill Gates back in the 80’s deciding he’s going to dominate the worldwide market for PC software, and everyone else out there saying “what is this ‘personal computer’ you speak of? I like my digital watch just fine”. Meanwhile, Google’s the only one at the party who’s got a damn towel.
Seriously: Google is an 800-lb gorilla here, and there’s barely a few other chimps out there competing. GOOG is amassing the greatest suite of measurement technology around, and I swear NO ONE IS PAYING ANY FUCKING ATTENTION… except perhaps Jim and a few other metrics geeks. I can’t believe Yahoo and Microsoft are ceding yet another critically-important market to Google, and yet hardly even realize how bad they’re getting pounded.
Here are the products i'm aware of under the Google Analytics Platform:
- Google Analytics: a pretty little urchin that maps your measurement (note: 2 acquisitions: Urchin & Measure Map)
- Google Website Optimizer: a tool for doing basic a/b testing & landing page optimization
- Adwords & AdSense analytics: conversion tracking & funnel goals in Adwords & Adsense
- Google WebMaster Tools: tools for ensuring web analytics tracking is available for your site.
- Feedburner: publishing & measurement tools for your blog or RSS (recently acquired by Google)
- others i'm overlooking here? (whoops there's one i forgot)
- Google Checkout: provides info on conversion from search visitors to sales, helpful for CPA (thx for the reminder Bryan... forgot to include this in first draft)
Maybe I’m missing the hidden web analytics jewels in the Yahoo & Microsoft & eBay & Amazon empires, but I gotta think Omniture going public (and not tanking), along with Yahoo’s pickup of MyBlogLog last fall are probably the only significant recent developments among all companies not named after a very long string of zeros. even there, people probably think of MBL as a social networking service for blogs & bloggers, rather than a low-end web analytics company snapped up by Y! (congrats again eric, todd, & rafer).
UPDATE: Shri reminds me in the comments that eBay has several analytics tools for Sellers. and of course PayPal itself is an analytics tool, in similar ways that Google Checkout is noted above. and probably there are other tools in these areas from Amazon & Yahoo as well, but i'd still say none of the other companies are focusing on significant opportunities in web metrics tools & services outside simply doing adjunct services that supplement reporting on their own core products. the point i'm making is that Metrics is not a feature of some other product -- rather, it's a Product (capital 'P'') in its own right.
But I digress.
Let me explain why I think metrics & web analytics are so damn important, and at the same time why Google is willing to pay hundreds of millions to acquire measurement companies and technology, then suddenly turn around and give it all away for free. I mean WTF, right?
Google’s Master Plan, Part I: Help Everyone Sell Shit Online… Only Better.
Ok, here’s Google's dirty little secret about analytics:
Google makes [more] money by helping everyone -- and i mean EVERYONE -- improve their Conversion Rate. And eventually, they need everyone to get better at Conversion Optimization in order for Google to make a strategic move from CPC- to CPA-based pricing.
Huh? Conversion Rate? CPA-based pricing? What the hell am I talking about?
Well, consider that Google makes most of its money selling clicks. They sell clicks on AdWords links on Google.com, and they sell clicks on Adsense links on other people’s content sites. And where do those links go? Why, they go to other people’s websites. Mostly, they go to e-commerce websites where people sell shit. And the people paying for those clicks hope that eventually, those users who click on links will convert from site visitors to buyers. If they convert well, the website owner makes more sales, and more money, and they buy more SEM advertising. If they don’t convert well, the website owner makes less sales, and in fact could even be losing money on buying unprofitable traffic from their SEM campaigns. Which means they spend less money with Google. Thus: better conversion rates = more spending on SEM & Adwords campaigns. And this is why Google buys metrics companies for millions and then gives away their products for free.
Now let’s take that one step further, and consider the ongoing evolution of the advertising industry.
As a merchant or advertiser, I’d love to buy risk-free advertising – that is, I’d like to make sure every dollar I spend on advertising results in a sale worth two dollars. But for the most part, I have no such guarantees. However, advertising is inexorably getting better – before 1995, I could only buy offline advertising (TV, newspapers, radio, magazines, billboards) which was pretty unmeasurable except via sampling & surveys. Then in 1995 with Yahoo & AOL I was able to by online advertising (banner ads = CPM), which were mostly unmeasurable, except that I could sort of count impressions. Then more recently in 2001 via Overture (nee Goto.com) and then later Google I could pay for clicks (= CPC), which was pretty measurable, except that I couldn’t track user behavior very well once they clicked thru to the site. And potentially, click fraud from my competitors or CPC affiliates (= Adsense) could increase both my clicks and my cost without increasing the # of sales I receive. Sucks, right? Yet Google still makes money on that crap. But they know they need to fix that and do a better job for their customers.
Google’s Master Plan, Part II: Guarantee Every Click You Buy Generates a Sale (= CPA)
Now finally in 2007, Google (and others) are introducing advertising based on cost-per-action (CPA) pricing, where advertisers only have to pay for actual results (ideally, sales). In a perfect world, Google starts moving to CPA pricing for a significant portion of its customers, who feel great about it because now they’re only paying for advertising where they KNOW it’s going to create revenue. But in order for Google to make such a move en masse & provide such guarantees, they need to know a helluva lot about your site conversion, and they also want to give you every possible opportunity to learn about and improve your site conversion, so they don’t waste money or clicks sending users to your site that don’t result in sales. Thus, Google can offer CPA more effectively if they’re evaluating how the clicks they send to your site conversion to sales. Which is another reason why metrics are so damn important.
Got all that? Probably not, huh? Ok, just remember this:
better metrics => better conversion => more money for Google => give away metrics free
That’s why they’re buying up all the metrics tools they can think of, and why they’re giving them to you for de nada.
Yahoo, Microsoft, eBay, & Amazon: We don't do Metrics? HellOOOoo?
Strangely, this same logic should follow for several other companies offering either advertising or e-commerce or both: Yahoo, Microsoft, eBay, and Amazon to name just a few. Yet none of those other companies (except Yahoo minimally) appear to be very active in acquiring metrics technology or companies, nor are they seemingly doing much to build out such technology internally & provide very much metrics info back to their customers. (update: heard thru grapevine MSFT may be putting a facelift on their purchase of DeepMetrix from a year ago and getting ready for a debut soon... but they're still late)
So again I say: What. The. Fuck. ?!?!?
Are you guys all idiots? Figure it out and get cracking. Build, Buy, or Partner to get some goddamn metrics tools & technology for you & your customers. Or Google is going to eat your lunch. Again. When will you ever learn? Sigh…
Miles Metrics Before I Sleep.
However despite Google's growing dominance in metrics, there’s still a huge # of problems to be solved here. Google has created a great set of tools & technology, but there’s just way too damn much complexity. It’s nigh impossible to use default Google Analytics reports to make relevant decisions. You need to customize the tools to your business -- and customize the conversion goals & funnel to your product features / user transition states -- and then you need to present & interpret metrics data in ways that enable good decisions.
Product Managers should use metrics to help guide decisions about products & features, do A/B testing, and make tradeoffs between building new features vs optimizing existing ones. Marketers should use metrics to help guide decisions about what customer acquisition channels to use, which ones to pay for, and how to segment and focus on customers that exhibit behavior generating the highest value / ROI. Founders/CEOs should use metrics to create dashboards they can use to simplify the # of variables they look at, and to support the company’s overall strategic and tactical direction. Sounds great, but just one problem: all this shit is still WAY TOO HARD.
Metrics isn’t about an avalanche of reports & data you review every day, week, month, or quarter. Metrics is about making information actionable, and forcing simplest possible data necessary to make just-good-enough decisions.
Haven’t figured everything out on this one yet, but I’ll be working on this topic in the near future (see Startup Metrics for Pirates: AARRR!). Both with Google & Facebook products & services, and for a few startups where I’m advising or investing, metrics are critical to make good decisions. But the process framework to use here is still a bit rough. Hope to improve on this set of metrics ideas, & appreciate any thoughtful comments or feedback.