IP Democracy: Google Offers Free Tools to Boost AdWords ROI

Google has taken another step that could send major ripples through the online advertising business and the ad industry in general. On its blog site, the company announced it was providing a free hosted “web analytics” service called Google Analytics, which is based on an earlier paid service called Urchin that Google acquired earlier this year. The service will be integrated with Google’s AdWords service.

In the New York Times, Bob Tedeschi explains:

Google Analytics will crunch numbers on behalf of users, telling them how often visitors who saw an ad associated with “automotive tools” clicked on the ad, versus those who searched for “hardware stores.” [It] will also allow publishers and marketers to analyze the performance of non-Google ad campaigns, like e-mail marketing, banner ads or search ads on Yahoo, MSN or any other search engine. That service is free even if companies do not advertise with AdWords, as long as their users do not view more than five million Web pages in a given month.

The new service will cause significant ripples in the analytics industry, said Eric T. Peterson, an analyst with Jupiter Research, an Internet consultant…Just 17 percent of the 250,000 or so companies with at least $1 million in annual revenue and a Web site now use analytical tools and services for those sites, Mr. Peterson said. The remaining 83 percent have been deterred by the cost of such tools, among other things. “And now here comes Google,” he said.

Comments by Paul Muret, a Google engineering director and one of Urchin’s founders, are reported by Elinor Mills of ZDNet:

Google Analytics will let Web site owners see exactly where visitors to their site are coming from, what links on the site are getting the most traffic, what pages visitors are viewing, how long people stay on the site, which products on merchant sites are being sold and where people give up in multistep checkout processes, said Paul Muret, an engineering director at Google and one of the founders of Urchin.

Google Analytics also includes a feature that automatically imports the cost data for return on investment reports into the Google Analytics program so advertisers can see how much they’re paying for keywords compared with how much money they’re making off them, Muret said.

There are three summary views, for executives, Web masters and marketing officials. Though in theory people who are using Google Analytics and competitive services to monitor their ad campaigns could be exposing information to Google on how those rival services work, Muret said Google would not get any competitive advantage from that. “We have very strict controls on the data. It is only used to provide reporting to customers and people using the analytics,” he said.

ClickZ’s Pamela Parker sheds some additional light on how Google Analytics will be integrated with AdWords and its potential implications:

In a move likely to attract even more people to sign up for AdWords accounts, Web site analytics will be free to AdWords advertisers. Google won’t require a minimum spend from users. The software is integrated into the AdWords service in several ways. Users will be able to access both Web site and AdWords analytics through a single interface. Additionally, Google Analytics enables automatic tagging of each keyword in a marketer’s portfolio so it can be easily tracked within the application. The automatic importation of keyword pricing data is also supported, enabling users to track ROI.

Though the company will incur costs associated with providing the service for free, Google believes providing the information will benefit AdWords in the long term. “We want the ROI for advertisers to be real,” said Muret. “Their long term sustainable advertising health is good for Google.”

Peterson believes the offering will entice many businesses to adopt analytics for the first time. “Urchin was good when Google bought them, and now it’s a little more complete package. All you have to do is ask for an account and put some JavaScript on your Web pages,” he said. “I think it’ll push more people along and really increase the interest in Web analytics.”

Posted by Mitch Shapiro on November 14, 2005 2:40 PM to IP Democracy