Tuesday, November 06, 2007

Omniture, WebTrends and the Web Analytics Industry

Last week saw pretty big changes in Web Analytics Industry. Omniture bought one of it’s biggest competitor Visual Science and later in the week there was management shakeout at WebTrends.

"This has been one of the weirder weeks in Web analytics ever. One of the biggest publicly traded companies gets acquired, and another lets its executives go. Now I'm afraid to wake up tomorrow and find out what else might be going on," said Eric Peterson to ClickZ.

I agree, the changes in Web Analytics Industry happened so fast that you never know what might next. As I was writing this post I was worried that I will have to change the post by the time I finish it.

Omniture's purchase of Visual Sciences was the first big news of the week. It was great news for Visual Science investors and Omniture. Omniture bought one of their biggest competitors and further strengthened their position as a market leader in Web Analytics industry.
One of the beneficiaries of Omniture/Visual Sciences deal is going be WebTrends. Just like Omniture and other Web Analytics vendors, WebTrends will also have to compete in a market with one less competitor. Not everybody who would have gone with Visual Sciences will now go with OmnitureVisualScience.

I have found that there are generally 3 types of customer. One those who always like to go with number one vendor in the market, they will go with Omniture (and would have anyway) even though it might not give them everything they need for the price they need. There are those who make rational decision based on through due-diligence, they will choose Omniture, WebTrend or whatever tool makes most sense given their needs and budget. And then are those who will go with number 2 or number 3 just to make sure they don’t become prisoners of the market leader and make sure they don’t empower a company to become a monopoly. These customers will choose anybody but Omniture.

Recent changes at WebTrends however have caused some concern in the market. Blogger and Reporters in Web Analytics field have been speculating about what it means to WebTrends and Web Analytics industry. There are conflicting reports on if these changes are to put WebTrends on a path to be acquired in next few months or if they are to better prepare WebTrends to take on Omniture.

In my opinion, it will not be good for web analytics industry if Omniture also acquires WebTrends. As Sean Burton commented on my blog post blog post about WebTrends Management changes “I doubt that Omniture would be looking to buy WT at the junction, and it would be a crying shame if they did.

The competition between the two companies has driven the market forwards, and has resulted in numerous improvements for the end customer.”


WebTrends is a top competitor to Omniture today. As long as these two companies are competing there will be innovation, at least in near future. We certainly need more than one player in the market to continue innovation.

After coming back from WebTrends Engage Conference I came to the conclusion that WebTrends was on the right track with their new products and I expected them to give Omniture run for its money. At that time I did not even think about the management changes that just happened.

I am very impressed with Marketing Lab 2 and hope that WebTrends investors (Francisco Partners) don’t sell the company. If they do decide to sell then they should sell it someone who can keep the competition going on in this market. It is very critical for the growth of Omniture, the other tool vendors and this industry overall.

The sentiment at WebTrends is very positive and all the people I have talked to or heard from did not give any indication that the company is getting ready for a sale, on the contrary they are excited to move forward in this red hot web analytics market.

Here is one of the comments that an employee of WebTrends left on my blog:
“Wild speculation and facts on the ground are, it turns out, two very different things. I am employed @ WebTrends presently, and can tell you that the change in management is a viewed positively by employees. The partners could have sold the company, which is a net positive asset in anyone’s eyes (consider the brand, customers, product set, years of exp. developing solutions in the verticals, 2X growth since divestiture, etc, etc.). But they chose the strategic move, retrenching, which will require further investment but reflects a longer-term view. The interior culture had eroded badly due to the lack of strategically cohesive vision, employee engagement, unity among the functional business units, and execution in the channel. The surgery performed removes the chief architects of the disaster that was our management team. Certainly the partners could now cut staff levels to improve the marketability of the company in the hope of selling. Omniture would be an unlikely suitor given the VS buy (cash, FCC, etc. make their being the only enterprise vendor in the space unlikely). If the worst that happened is acquisition by a better funded SW behemoth as a stand alone business unit I don’t think you’d hear much opposition from employees, and it could radically improve WebTrends position. Change happens in SW. This is just another new day for a company that has grown accustomed to high-velocity change.”

Another former employee (recent) of WebTrends, also seemed very confident in Marketing Lab 2 (ML2) and WebTrends ability to take on Omniture.

One of the current employee said that Webtrends has seen YOY growth in last year and investors did not have to put any more money, which is a good sign but the growth is not what board was expecting based on how fast the industry is growing.
He also said that there is no plan for “fire sale” as a reporter from Portland Business Journal reported. The reporter could not contact the management of WebTrends and reported based on the speculation. He added that the WebTrends Visitor index and Scoring are getting good market traction. More than what WebTrends can currently handle. They have to do some more work on technical side and services to further improve WebTrends position in the market. He said we are rated number one in integration with other vendors such email, behavioral targeting etc. and board wants to continue use these strengths and take the company to next level.

Another senior employee of WebTrends said that these changes were welcome and somewhat expected by the senior team here. He said that the mood was very positive at WebTrends. He said that they know that they are number two in a very hot market, but also are the only sizeable player with new products, a big team in EMEA, partners in Asia Pac, etc., plus $80 million in revenue. According to him, it is okay to be number two, the underdog for once. He was enthusiastic about Webtrend’s new direction and said that they are ready to steal some market share from Omniture. He said “We’ve won some big deals from them recently, so why should we not take more?”

I wish Greg Drew and Jason Palmer good luck in their new ventures. I am sure they will continue to be a part of this growing industry. I also hope that WebTrends will continue to be a strong market force and provide the competitive landscape that this industry needs to keep innvovating.

Thoughts? Comments?