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Google’s Analytics — What’s the Data Worth?
First, the obvious — offering their analytics solution for free was a no-brainer for Google and was predicted by several bloggers months ago. All their analytics software requires is servers and bandwidth, with a small
amount of service thrown in to larger customers who are already funding Google’s success. In return
they get massive amounts of data, data that was a missing piece of the surfing and searching puzzle
for Google — until now. What could Google do with site-surfing data, you ask?
1. Solve the click fraud problem.
One of the few things that makes Google look, well, stupid, is their lack of a solution for click
fraud. The problem they and other providers have is that there is only so much you can do
with the actual click event. To really find advanced click fraud you have to know how the user
behaves once they hit the destination site. It’s easy to see abuse once you have a record of average
page hits and visit lengths, but you only get that if the client lets you tag their site to measure it.
Google, once they work out the algorithms, will be able to reduce click fraud to a negligable amount and
will instantly have an advantage over their competitors in this space.
2. Increase keyword bids and buys.
Many critics wonder if ad spends will decrease when Google Analytics users see their actual ROI from their
keyword buys. It may. But whatever Google loses here they gain back quickly by simply offering an easy
way to “convert” a traditionally natural search term into paid bids through their interface. If you can
show a client that they have been earning $1,000 a month from a natural search result for “widgets”
in the 8th position (something Google didn’t know before, but knows now), you can not only recommend
that the client purchase the #1 position for that keyword at $2.50/click, but you will have data that
shows them how much such an investment could be worth. No guesswork — Google will know how much that
keyword is worth to a site that converts x% of the time. And imagine the bid management Google could automate
with this sort of data.
3. Product specific buying habits.
Google Analytics allows you to store product data with each sale, including category and sku numbers.
Google will now have Amazon-esque insight into what products are purchased by customers who were looking
for certain things. They will know how much they spend, what time of the day they spend it, and how likely
they are to come back and buy some more or even how likely they are to jump to a competitor’s site if the price
is lower. The list goes on.
All of this relies on a lot of users actually signing on and using the tool correctly, of course. But
I think they will gain a good share of the market fairly quickly.
One final thought for you affiliate marketers out there. Google Analytics allows you to track sales to
affiliates as well. While I don’t think Google plans to drop PPC in favor of CPA AdWords anytime soon,
they now have the means to do so. And they already own the #1 slot for “Affiliate Marketing“. 
2 Comments
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Logical and extremely plausible, Jeff. Since we are still speculating, let me put forth two more possibilities on the table:
a) Could Google actually incorporate all that web-tracking information that it gathers into its measurement of ‘page rank’ or ‘web site rank’ to ultimately get it into its search algorithm? Obviously there will be limitations— but assuming theere is a critical mass of data generated from the adoption of Google Analytics, wouldn’t that be a reasonably good indication of what websites are deemed important by users, and consequently meriting a higher ranking in search results?
If Google does come up with something like a Google Site Rank based on the traffic stats it accumulates, I suppose we could say, bye bye to Alexa rankings (for whatever it is worth today..)
b) Could Google be eyeing another revenue stream from the “intelligence” it can provide to marketers? Hitwise makes its money by providing ‘competitive intelligence’ on web-traffic measurement captured from the ISPs; Google could well provide a much cheaper alternative. Note that eBay has just started selling “intelligence” to its users/ prospective users, and the size of its user base makes it potentially a significant revenue stream. May be Google sees an opportunity in a similar offering..
I’d be more willing to bet that #2 is possible, especially with their recent release of Google Base. They will certainly have access to more ecommerce data than any other company, I just wonder if they will keep it to themselves, sell it, or give it away for free as they have with so many other things.