Financial stability among web analytics vendors is a curious topic. What does it really mean and how does it really affect your investment in web analytics? History shows that it's not a question with a neat answer.

Most web analytics companies aren't profitable -- at least not by GAAP standards. All web analytics companies are not considered to be large -- at least not from the point of view of revenue generation. And all analytics companies are potentially takeover targets. And once a takeover occurs, what happens to the core tool and the service that goes along with the tool is anyone's guess.

I thought about this in light of a few events over the last month. The purchase of SPSS by IBM, the announcement of a reorganization at Unica and new release, and the release of WebTrends' Insight.

SPSS is a major player in the predictive analytics market. It has a $920 million market cap. IBM suggested in their acquisition announcement that it will expand its focus on business analytics technology. Interestingly, consider that even the even the largest independent web analytics vendor, Omniture, is only slightly bigger than SPSS with a market cap of $1.1 billion. Small change for a serious and large suitor.

I'm not sure of the details for how this will play out, but I think about other acquisitions when a huge company purchased a much, much smaller analytics player; for example, Google's purchase of Urchin, which gave birth to Google Analytics. Customers of the core product, Urchin, a log file analysis, site licensed product had to wait 2 years for an upgrade, after initially being told that they were expected to migrate to GA, a SAAS, page tag solution. While now Google supports Urchin product, it certainly caused a bit of heart burn among the client base.

Unica, manufacturer of NetInsight, announced a disappointing quarter of earnings and then indicated that it would be shifting its R&D to India. Is this a sign that the company may be not be financially stable? Personally I don't think so (although I know of at least one competitor that suggested this).  And while there has been much consolidation and churn within the web analytics market, we don't tend to see companies disappear. We see them acquired and their offerings sunset or evolved over the course of time. And the decision to be acquired doesn't necessarily have anything to do with financial stability. Sometimes management just wants to sell the company.

And then there's WebTrends, the oldest independent web analytics firm still doing business. It has perhaps the rockiest history of any vendor on the market. First independent, then becoming a public company, then bought by Macromedia, then bought by a venture capital firm, and going through more management changes than I can count off-hand. WebTrends just came out with a new release that is intended to be the first step in a re-engineered product. But even here, because the company is part of a venture capital firm's portfolio, it is certain that at some point a transition of some kind will occur. How will that impact the work that is currently being done?

Does ownership of an analytics tool by a huge company like Google or Yahoo, ensure stability? Well, remember Microsoft Adcenter (formerly Gatineau)? This was based on the acquisition of DeepMetrix and initially ballyhooed as a competitor to Google Analytics. After little take up by the market, Microsoft decided to discontinue Adcenter support after the end of 2009.

So, no matter what tool you use, and no matter how comfortable the vendor makes you feel about using it, the possibility of being thrown a curve through merger, acquisition, or divestment always lurks. To stay on top of your alternatives, you can subscribe to our Web Analytics research