For the past few weeks I have been thinking about the economy and trying to reconcile two seemingly contradictory observations:

1. The economy sucks, and it doesn’t seem likely to improve anytime very soon
2. The web analytics sector is reportedly recession-proof and, in fact, predicted to grow in 2009

While I hardly need to provide any proof of the first observation, evidence for the latter has been emerging from a variety of voices in our community for the past few months.  Case in point:

• In January, the Web Analytics Association reported that nearly 70% of companies planned to continue to invest in new tools and staff throughout 2008
• Back in July, Corry Prohens from IQ Workforce wrote in a guest post in this blog that “74% of practitioners expect that spending on web analytics will increase at their company during the recession”
• In September, my good friend Jim Sterne surveyed the web analytics crowd and found that 87% of practitioners plan to maintain or increase their budgets for web analytics tools and services in  the face of the current economy, and that nearly twice as many respondents indicated they planned to increase budgets for web analytics (21%) as planned to decrease same (13%)
• Last week, the fine folks at E-consultancy splashed all across the news with the headline “Web Analytics: A Silver Lining in the Recession Cloud” by reporting that web analytics was poised to grow in 2008 by 12%

In the E-consultancy report, the organization’s head of research Linus Gregoriadis was quoted as saying: “The profile of Web analytics continues to grow as it becomes more integral to business decision-making and organisational strategy. The credit crunch is putting the spotlight on analytics as organisations work harder to understand where they are getting the best return on investment and where real value is being added.”

Recently, Josh James, the CEO of Omniture said something similar during the Q&A portion of the company’s Q3 earnings call in response to a question about whether businesses saw web analytics as discretionary:

“Every dollar that a marketer has, I think everyone has in every organization is under pressure right now and certainly marketing spend is where CFOs like to look and see if they can cut. But, what we’ve seen with our customers is their online channels are the ones that are performing the best. Their online channels are the ones that are giving the most direct impact within that quarter that spend is also taking place.

In terms of the way that they think about Omniture, even if they cut let’s say 10% of their marketing spend, they’re going to use us to a) identify the 10% they’re going to cut and b) use us to optimize the other 90% to try to get back up to the same results as they had with the 100% the year before. These kinds of times actually drive usage of our product.

When things are good it’s a lot easier when you want more sales just to throw more money at the top of funnel and to generate more leads and go through the process. When things get bad people try to focus on of everyone that’s already coming to our store, what can we do to keep them more attracted? What can we do to get them to look at other things? What can we do to get them to read additional articles? All of those behaviors drive uses of our product.”

All of this sounds absolutely spectacular. Except for one thing …

I’m not sure I believe any of it.

I think that we are collectively starting to suffer from the echo chamber effect, essentially reiterating that web analytics will be fine in this lousy economy because, unsurprisingly, we are all making money off of web analytics and we would very much like to continue doing so. The WAA, IQ Workforce, my friend Jim, E-consultancy, Omniture, me … our collective businesses are all more or less explicitly tied to continued investment in the sector. So why wouldn’t we look for data that suggests that the picture continues to be rosy and the future bright?

Why indeed.

In terms of the data presented above, as a former researcher I would offer this assessment: many of these surveys appear to suffer from sample bias. Asking the Yahoo! group, members of the Web Analytics Association, or the audience attending Emetrics about their interest, investment, or organizational focus on web analytics is kind of like asking your average Democrat in Portland, Oregon how they feel about Barack Obama.  The problem is not the audience, the problem is the interpretation: I think it is misleading to extrapolate the responses from a non-random sample of businesses and business people to the larger audience.

This kind of sampling leads to claims like “52% of online marketing managers are currently engaged in A/B or multivariate testing …” Fifty-two percent implies that tens of thousands of online marketing managers are testing. Which sounds great, except that when Offermatica and Optimost were acquired by Omniture and Interwoven they had a few hundred customers between them, and Stephane Hamel’s WASP tool reports that 0.4% (zero point four percent) of the Top 500 online retailers are using easily detected A/B or multivariate testing tools.

Don’t get me wrong, I too have been guilty of sampling biased audiences, although in the past year I have stopped conducting primary research due to both the sampling issue and the plethora of free research that suddenly appeared in the marketplace.

Ultimately I’m suspicious of this optimistic data that we’re seeing, especially in the context of statements like this one made by Mr. James made on the earnings call referenced above about the effect the economy is having on Omniture’s ability to forecast Q4 and 2009:

“Towards the end of September however, it became apparent that the challenging macroeconomic and financial environment may have some impact on our business going forward although it remains difficult to quantify the uncertainties specifically.”

Mr. James and his CFO specifically don’t want to talk about 2009 on the call. Which makes sense to me, since here are some other data points:

• The economy sucks, and without belaboring the obvious, it appears that this suckiness will stay with us for quite some time;
• While I don’t question Mr. James assertion that his best customers make excellent use of web analytics, in my personal experience this is not universally true;
• Some of the largest consumers of web analytics products are starting to struggle;
• Despite the conventional wisdom that dictates that brilliant analysts are safe when times are tough, I am getting more and more calls from brilliant analysts who are being laid off or being offered severance packages to walk away.

It is this last point coupled with something I learned at Emetrics that has me the most concerned.  In D.C. at Emetrics I heard Liz Miller from the CMO Council say that most CMO’s are a few years away from fully understanding the value of web analytics. If Liz is right, and her credentials are impeccible when it comes to the CMO’s office, then given the anecdotal evidence that continues to come in I wonder if web analytics is slightly more discretionary than we’d like to believe.

Don’t get me wrong, I sincerely hope to be wrong in this assessment. As an author, public speaker, evangelist, consultant, and conference co-producer focusing on web analytics I honestly hope to be able to write a follow-up post in six month saying, “Wow, I was really super-wrong about where the web analytics industry was going …”

But what can you do if I’m more right than not? What if you work in an affected sector or work for a company known for their web analytics acumen that is suddenly faced with bankruptcy or worse? What if the folks you work for who profess a great love for data-driven decision making are really HIPPOs in their heart and when the real bloodletting begins are just as likely to look for savings in areas that can be easily cut (human resources, for example) as opposed to those that would require breaking contracts?

What indeed.

If you’re in any way concerned about the current economy and your personal employment situation, here are five tips that I would offer to help you best prepare for the worst.

Tip #1: Focus on Increasing Profits, Not Minimizing Spend

My friend W. David Rhee just published a great response about the relationship between web analytics, sales, and marketing in a down economy.  To paraphrase Dave, if the bosses begin to panic, you don’t want to be in a situation where you appear to be an expendable marketing cost that can be cut.  It is far better to be focusing your analytical efforts on how the organization can be increasing profits, even if you have to fight to spend more time conducting analysis and less time generating reports.

Essentially you want to take Mr. James statement above to heart and work your butt off to optimize the lower-levels in your conversion funnel, working with what you already have, not what you might be able to attract.  The good news is that the technology supports this analysis; the bad news is that more often than not, the deeper you get in the funnel, the more difficult optimization becomes for a variety of reasons, not limited to the business, IT, and “the way we’ve always done it!”

Be a profit center, be big picture, become truly invaluable.

Tip #2: Don’t Be a Report Monkey

The unfortunate reality about web analytics work is that far too many smart people spend far too much time generating far too many reports that far too people actually read and even fewer actually derive real value from.  Sound familiar?  When I started the conversation about process in web analytics in 2006 at Emetrics, over 80% of the audience said they spent too much time on “reports” and not nearly enough on “analysis” … sadly I’m not confident that things have changed much in the past two years, especially on a percent-of-practitioners basis.

There are any number of great posts about why reporting is over-rated and how the real value in web analytics comes from careful, business-focused analysis of the data, there are still too few companies that have put the hub-and-spoke model into practice and are able to effectively leverage web analytical resources.

My advice to to step-up and find the real value in your data, even if you have to conduct the analysis on your own in the wee hours.  It’s not as if you can just stop generating reports (tempting as that may sound) but if you’re a good analyst, taking the time to figure out where the real opportunities to increase revenue are is the work you want to be doing anyway.  Taking the initiative to make data-powered recommendations and presenting them is a good way to demonstrate your skills and commitment to the business (but don’t stop doing the job you’re being paid to do!)

Analysts conduct analysis and make recommendations. Be an analyst.

Tip #3: Start Watching the Job Boards

Even if you feel pretty good about the situation you’re in you have to admit that the most accurate term to describe the current economy is “dynamic.”  In situations like this the worst thing you can do is be caught off guard and so I would offer that spending a little time surfing the Web Analytics Demystified Web Analytics Job Board (also see the WAA’s version) would be time well spent.

According to the nice folks at SimplyHired the number of job postings looking for “web analytics” experience of some kind continues to increase:

Assuming these postings are all accurate and still open, this is fantastic news since it contradicts my thesis that our sector is at risk.  The only thing that concerns me is that when I add a major market to the search, the trend graph starts to look substantially different. Here is the trend of jobs in SimplyHired for “web analytics” jobs in San Francisco:

Not quite as encouraging, huh? Now I might be using SimplyHired incorrectly but the general trend observed in the Bay Area makes me wonder if job growth in the sector is as strong as the first graph shows. Plus, anecdotal evidence suggests that an increasing number of companies are imposing hiring restrictions and outright freezes, meaning that many of these postings are effectively “inactive.”

By no means am I suggesting that any gainfully employed web analytics practitioner should jump ship in this economy unless you are absolutely confident about the situation you’ll be moving into.  But keeping your eyes, and your options, open makes increasingly good sense in my opinion.

Be smart about your current employment situation.

Tip #4: Think About Your Skill Set

I recently interviewed Corry Prohens from IQ Workforce and asked Corry about requirements for web analysts and what he looks for when trying to place folks. I recommend you read the entire interview, but here is what Corry had to say about what IQ Workforce looks for:

“In general we look for someone that has tool expertise, communication / interpersonal skills (these jobs are increasingly front-office), analysis & presentation skills and some complimentary kicker (testing, SAS, SQL, search marketing, development skills, search marketing skills, etc.) based on what our clients need at the moment.”

I went on to ask Corry about what two criteria he believed would help practitioners land a great job in this economy:

“If I were a web analyst I would learn how to use SAS to manipulate data & models.  I would also try to pick up experience in  testing/optimization.  Having one (or both) of these would open a lot more doors than a straight WA skill set.”

Real analytics experience and a focus on testing and optimization.  Great advice, even if the former is somewhat non-obvious (perhaps that’s why it’s such great advice!)  And while you may not be able to implement testing technology on the job, Google Analytics and Google Web Site Optimizer are free and easily implemented on a personal blog.

Push yourself and expand your skill set. Move ahead of the market.

Tip #5: Network, Network, Network

In my experience one of the most valuable things you can be doing during uncertain times is expanding your network of contacts.  Fortunately the web analytics industry is pretty well set in terms of opportunities to meet other practitioners, both locally and globally.  Here are a few networking opportunities that I highly recommend:

• Attend or host a Web Analytics Wednesday event.  Web Analytics Wednesday is the world’s only local social networking event for web analytics professionals and it has helped dozens of folks find their next new job.  Take advantage of the many events happening before the end of the year or, if you don’t see an event in your town, contact me directly about getting a chapter started where you live!
• Join the Web Analytics Demystified group at LinkedIn.  A few years ago I started a LinkedIn group for web analytics professionals.  Now the group has nearly 1,300 members worldwide and is open to anyone interested in getting connected via LinkedIn.
• Join the Web Analytics Association.  The WAA is the only association we have and is actively working to create great value for their members around the world.  Joining the WAA gets you discounts to great conferences, access to their job board, and plugs you in to an increasingly vibrant community.

At the end of the day, despite the great demand for our skills and long-term opportunity afforded to all of us, a web analytics job is like any other job.  Your professional growth and development is as much a function of the people you know and your relationship to the community as your native analysis skills.

Get to know your peers. Have fun while you do it!

What Do You Think?

This has become a ridiculously long post considering that I could have just said, “I think there is more risk than we realize.  Be prepared.”  Most of us working in the web analytics arena have become quite used to the good times rolling and have every faith that they will continue to roll.  Only now, budgets are shrinking, jobs are being lost, and the general fear is that the President-Elect will create a business climate that is somewhat less friendly than most would like.

Still, my firm belief is that if you’re great at what you do and if you’re working for folks who clearly “get” the web analytics value proposition you have nothing to worry about.  All I would caution is that you not assume the latter is true, again especially in the context of the conversations I have constantly about senior-management not really understanding the art and science of digital measurement and analysis.

So now it’s your turn.  Do you think I’m way off base?  Do you believe the data I was somewhat critical of earlier in this post?  Does your boss “get” web analytics?  Are you optimistic like Mr. James that your company will be able to leverage your investment in Omniture (or whatever) to optimize your marketing spend?  Or are you worried about your job, or worse, have you been laid off?

I normally don’t allow anonymous comments but given the somewhat sensitive nature of this post and the feedback I’d love to hear, as long as the comments are appropriate I’ll approve them.