To set the stage, I commend you to a recent podcast featuring an interesting discussion about the European web analytics market, moderated by Lars Johansson, the Web Analytics Association Coordinator in Sweden.

The 75-minute discussion focused on current challenges facing European enterprises investing in analytics, the Omniture/Instadia acquisition, as well as the current status and potential future of European analytics vendors. The panel was comprised of an experienced and diverse set of web analytics veterans:

• Steve Jackson, Satama, Finland
• Dennis Mortensen, IndexTools, Hungary
• Neil Mason, Applied Insights, UK
• Oliver Schiffers, United Internet Media, Germany
• Auralie Pols, OX2, Belgium
• Marc Saarde, Creuna, Denmark

I found the discussion about web analytics vendors to be interesting in that there appears to be a sense of inevitability that the European market may come to be dominated by North American analytics vendors, or "the big four" as described by the panel: Omniture, Visual Sciences, Coremetrics, and WebTrends.

I'm not convinced that this scenario is inevitable. Here are 5 reasons why I think the "big four" won't be the only game in town -- in the North America, Asia, or Europe:

1. Analytics has plenty of room to grow in SMB market. This is true in the US, as well as Europe. Companies that address SMB needs through low cost, ease of use, and ease of implementation offerings will do well. Small companies are driven to use web analytics because they are already doing SEO and SEM which drives a clearer ROI for analytics based on web metrics. Companies such as ClickTracks, Google Analytics Nedstat all address these requirements.
2. Features and functions of SMB tools will progress to match the "big four." We've seen lower-cost tools evolve quickly in areas such as segmentation, and often surpassing the "big four" regarding visualization and user interface design. The major differences are found in integrating external data to the web analytics datastore, and integrating web analytics data with external partners. These gaps are likely to close over the next few years among some solutions.
3. Not all organizations need e-marketing platforms. As I wrote in the Web Analytics Report, web analytic vendors are transforming themselves into e-marketing companies through partnerships, acquisitions, and in-house R&D. But what if you're a customer that simply doesn't need this? For example, you manage an extranet or intranet portal, or are a government agency, non-profit, or content-oriented site. Vendors that focus on analytics, rather than revenues from marketing partnerships, will fulfill this market need.
4. Except for Google, all web analytics companies must be very cautious in their expansion efforts. Of the publicly-traded companies in web analytics, Digital River, owner of Fireclick, is the largest, booking $307 million in revenue for 2006. All the rest are, in the scheme of things, fairly small companies. And their profitability has not always matched the consistency of their phenomenal revenue growth, and as such, they are all potential acquisition targets. Over-extension could prove dangerous. Perhaps only those vendors that have been flying under the radar in Europe could stay out ahead...
5. Familiarity counts. Lars' panelists and I talk of the importance of support, and local presence in Europe. This will also likely be the scenario in Asia. AuriQ, a vendor we evaluated in the Web Analytics Report, has a strong presence in Japan. Other Asian firms are establishing their foothold in this fast growing market, such as CCMedia, which is based in Taipei and has presence in Seoul and Beijing, and Digital Forest, based in Tokyo.

How do you think the worldwide web analytics vendor marketplace will shape up over the next few years? Drop me a line at [email protected]. Also, if you'd like to share experiences about your web analytics vendor, I'd love to speak with you...