May 1, 2003, 12:00 AM

Analytics software`s small market size belies its big role, Forrester says

At $205 million, it’s a fraction of the software market, but web analytics provide customer data in a way no other channel does.

Sales of web analytics software including ASPs will reach $205 million this year-a drop in the bucket compared with the total software market, and a figure that masks analytics` significant role, according to findings from Forrester Research Inc.

Analytics collect customer information on the web in a way that no other channel, such as through a phone agent or in a store environment, can, points out Forester, by offering browsing, purchasing and attitudinal insights in one place. Analytics also make the web a better channel for testing than other channels. “Firms like Procter & Gamble that rigorously test consumer behavior leverage the web’s strength; these firms can run experiments to test messaging, navigation and offers, and collect thousands of results within hours,” says Forrester.

Technology developed for the web can now span multiple channels, Forrester says, noting that analytics vendors have adopted tag-based technology to generate customer event data on the web. The same technology can trigger event notifications from a call center.

Overall, the average web analytics vendor, a group of some 20 to 30 smaller vendors, grew by about 15% last year, Forrester estimates.

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