What price Google Analytics?

Written by Dave Collins, SoftwarePromotions Ltd.

What price Google Analytics?

In the UK we have an overwhelming number of loyalty schemes. Airlines, music shops, stationers, bookstores, groceries and others are all eager to tap into their customers’ buying habits and spending patterns.

The idea behind the schemes is simple. The stores want to keep track of what their customers buy, and entice them to spend more. In return for this, they’ll offer special deals and money-saving coupons.

I personally am a member of three or four such schemes. I share my buying patterns, and am compensated accordingly. I’m not naïve enough to think that the companies give me the discounts out of love, but I do feel that I get good value for the information I give them.

If you’ve been keeping up with my various articles and talks over the years, you’ll already know that I’m forever preaching the importance of web log analysis, and generally speak out against the “free” options that come with your web host. Why? Because they’re usually poor quality, and often shockingly inaccurate. And as odd as it may sound, no information can sometimes be better than inexact information.

Which brings me onto Google Analytics.

Google Analytics isn’t free.

For the last few years, Google have been buying an impressive number of companies and products, and when you break down what they bought, it’s clear why they were prepared to pay so much for them.

No-one knows exactly how much Google paid for Urchin back in 2005, but the general consensus was somewhere in the region of US $30m.

I myself have worked extensively with pre-Google commercial versions of Urchin, and have always enjoyed the power, speed and accuracy that they offered. But Google Analytics isn’t Urchin, and offering a “special edition” of Urchin to website owners and advertisers is an ingenious move by Google.

Let’s begin with a basic premise. Little in life is free. And not having to part with cash doesn’t necessarily mean there isn’t a price to be paid.

Google Analytics isn’t free.

Before I move onto speculation, a few facts, taken from the Google Analytics terms of service.

(1) Analytics is provided free of charge up to a maximum of five million page views per month. Unless you have an active AdWords account, in which case there’s no limit.

Let’s think about that for a moment. Google are prepared to provide Analytics for “free”, up to a fairly generous level of traffic. Grow bigger and you may have to pay for it. Fair enough. Not that prices are listed anywhere. Why? Because the provision is little more than a safety net. But if you have an AdWords account, the sky is the limit. Why is that? Could it be that Google are gaining something more from their Analytics data if you have an AdWords account?

(2) Use of Google Analytics requires you to use “reasonable endeavours” to bring a 200-word statement to the attention your website visitors.

One of the more interesting items:

“Google will use this information for the purpose of evaluating your use of the website, compiling reports on website activity for website operators and providing other services relating to website activity and internet usage. Google may also transfer this information to third parties where required to do so by law, or where such third parties process the information on Google’s behalf.”

Other services? Internet usage? Third parties?

And this:

“By using this website, you consent to the processing of data about you by Google in the manner and for the purposes set out above.”

By purposes they mean other services and internet usage. Gosh.

(3) Read this one carefully. Pay attention to the bit at the end:

“You agree that Google and its wholly owned subsidiaries may retain and use, subject to the terms of its Privacy ….. information collected in Your use of the Service (including without limitation Customer Data) for the purpose of providing web analytics and tracking services to You. Google will not share such information with any third parties unless Google (i) has Your consent; (ii) concludes that it is required by law or has a good faith belief that such disclosure is reasonably necessary to protect the rights, property or safety of Google, its users or the public; or (iii) provides such information in certain limited circumstances to third parties to carry out tasks on Google’s behalf (e.g., billing or data storage) with strict restrictions that prevent the data from being used or shared except as directed by Google.

Certain limited circumstances? Tasks? Except as directed by Google? Considering the verbose level of detail, the wording at this point seems surprisingly vague.

Before going any further, let me clarify my position. I’m not in any way anti-Google. I think they’re by far the greatest online resource. They also provide a large number of products and services, both paid for and free. Assuming you remember my earlier comments about the word free.

Google Analytics isn’t free.

Back to their terms. Is there anything wrong with them? Absolutely not. As long as the person agreeing to them knows what they’re giving up here.

And here lies my fundamental issue with Google Analytics. Too many AdWords account holders are using Analytics on the assumption that it’s free. They’re wrong.

The AdWords system juggles a staggering number of facts and variables. Strip it down to its most basic and it’s little more than simple market forces: What a commodity is worth, its perceived value, the level of demand and the margins.

Let’s look at an example.

Company A is selling Product 1.

Product 1 costs $10 to produce, and sells for around $100.

As an advertiser, Company A tracks what they do. They know that for every ten visitors to their website, they sell one product.

So they make a $90 “pre-Google” profit for every ten visitors.

If they only had to be spend $0.10 per click, they’d be delighted. Spend $1 to make $90 sounds good.

If they have to spend $9 per click they’d break even, and would probably be less delighted.

If, hypothetically, Google realised that Company A were getting $9 in sales for every $0.10, do you think they’d shrug their shoulders and smile ruefully, or raise the minimum bid?

When a company purchases any form of advertising, they risk letting the company they’re advertising with know more than they should. But if Company A is letting Google see what their visitors click on, what they do when they get to the website, and how many of them then purchase, they are giving away everything.

The prices that Google set are not random. They are based on demand and perceived value. Give them all the information and it can only work against you.

And don’t think that you and Google have the same agendas.

Heavily Over-Simplified Example:

Three companies are all bidding on the same keyword.

Company I bids $1, Company II bids $2, and Company III bids $5.

If you were the over-zealous bidder working for Company III, you might think that Google would want to put your ad in first place. Right?

But what if Google know that the Company II ads always get good clicks, but then most people look at their landing page for a few seconds, go back to the Google results and click the next ad down.

Wouldn’t it be in Google’s interests to put Company II’s ads at the top, and then Company III? And how unhappy would you be if you were Company II and knew about this?

This is, however, only a hypothetical example. Obviously Google wouldn’t be able to track this sort of thing. I’m sure it wouldn’t even cross their minds to track such behaviour, let alone act on it. And obviously they wouldn’t care even if they could. Right? Obviously.

When you place a bid on eBay, you don’t send the seller a note telling them that even though you placed a $50 bid, you’d be prepared to pay well over $100. When you negotiate pricing on any item, you never tell the seller what the item in question is really worth to you. And when you place a maximum cost per click on a keyword, you should never tell Google how high you’ll really go if you have to.

Analytics is a powerful and effective system, but if you’re running an AdWords account then it’s not free.

One of Google’s greatest achievements has been to make people comfortable with sharing personal information. Yes, I know about the anti-Google brigade. But for all their noise they don’t even show up on the radar. With Analytics embedded inside your AdWords account you may be sharing more than you realised. Keep your eyes open.

Be seen, be sensible, be sold.

Written by Dave Collins, SoftwarePromotions Ltd.