Hosted or licensed: It’s a tough choice

According to JupiterResearch, the U.S. Web analytics market will increase to $931 million in 2009 at a compound annual growth rate of 20 percent during the next 5 years. The hosted segment of the market will grow comparatively faster and surpass spending on licensed software solutions in 2007.

“The licensed software solutions are generally not as mature and lack some of the latest features,” says Eric Peterson, site technology and operations analyst at JupiterResearch. The hosted solutions rely on tags, and it can be hard to deploy the tags throughout the Web site. Each type has its benefits and drawbacks. Now we’re seeing a relative stalemate.”

The ASP vs. licensed software debate closely mirrors the debate around the preferred method of data collection, tags or log files. Licensed software tends to use logs, because it sits on the server attached to the corporate network. ASPs prefer to use tags placed on each page and monitor them on the Web site. “It’s hard for an ASP to use log files,” Peterson says. “It means trying to FTP gigabytes or even terabytes of log files over the network. The hosted services could do it, but they almost always use tags.”

The growth in the market, according to Peterson, in his report “U.S. Web Analytics Forecast, 2004 to 2009,” will come primarily from companies currently deploying homegrown analytics software. These companies will be attracted by the rich feature sets and stable and predictable pricing of the leading Web analytics products.

Additional market growth will come as the vendors sell upgrades and enhancements to their existing customer base. Here, Peterson says, the greatest growth will occur in online retail, financial services, travel and information portals, all growing more than 60 percent from 2004 to 2009.

Back to feature: Special Report: Web Analytics

About the Author

Alan Radding is a freelance technology writer in Newton, Mass. He can be reached at [email protected].