Agency.com Angles for Traffic Analysis Business

In a bid to boost its bottom-line, interactive shop Agency.com plans to roll out site analytics services — despite the fact that in doing so, it’s entering a sector dominated by well-established rivals.

The Alley-based firm’s new Site Analytics offering relies in large part on technology developed in-house that records and analyzes Web site logfiles. Using the technology, the firm aims to track visitors’ anonymous movement through a Web site, gaining insight as to how to optimize the site’s user experience. That tweaking could, for example, be aimed at cutting down e-commerce abandonment or better segmenting customers.

Additionally, the technology could employ a persistent cookie to track users’ responses to online advertising. Such tools, say the firm, should help clients better realize a return on their IT investment.

“In the past, there were many benefits that online operations generated, which unfortunately were difficult to directly attribute,” said Kwong Sai, Agency.com’s vice president of performance analytics. “With Site Analytics, companies can now leverage their data to take actions, allowing them to accurately measure the true value of their online presence.”

Ostensibly, Agency could use the tools to upsell an Agency.com consulting contract to clients, or they could be brought in as a value-added service. Either way, with promises of a quantifiable return on investment, the service is aimed at encouraging clients to boost spending, at a time when they’re increasingly reluctant to make new marketing or IT outlays.

But the entry also means that Agency.com will compete against some well-established rivals in the arena. Perhaps best-known in the field are NetIQ’s WebTrends line — which includes hosted and in-house software products — and outsourced analytics player WebSideStory, which also has a consulting practice.

Last month, Alley research outfit Jupiter Media Metrix also threw its hat into the ring, announcing an agreement to resell LiveTechnology’s LiveStat analysis service. Like Agency, it too hopes to make inroads into a crowded sector, but also faces unique problems that could emerge from discrepancies between the traffic numbers it gleans from logfile analysis, and those from its Media Metrix division’s panel-based figures.

Ad networks, too, have gotten into the action — ValueClick last year acquired StraightUP!, a logfile analysis play. At the time, the Westlake Village, Calif.-based company said it would use the acquisition primarily to help quantify return on investment for ad campaigns launched through its service.

Despite the growing competition, Sai said he sees a large opportunity for Agency.

“Other companies have been around for a long time … but what happened is that they overpromised and underdelivered,” he said. “People bought into it but got burned. They report the data to you but don’t do anything with them … They’re not providing the missing link, the analysis.”

“That ‘s where we come in,” he added. “They give you data, but we give you analysis and turn that data into action. Everyone is jumping on the bandwagon, but I’ve been building this product for nine months. [Competitors] will charge you for technology, but its up to you to make sense of it, and that’s where companies get disillusioned.”

At any rate, Agency.com’s move into this new arena comes at a time of great change at the firm. The company just went through a major restructuring to organize itself more in the style of an old-line consulting firm.

Those events followed a move by Seneca Investments, a joint venture between ad giant Omnicom and venture capital firm Pegasus Partners, to take control of the company and essentially take it private. A special meeting will be held Oct. 31, during which shareholders will decide whether to accept Seneca’s offer to buy them out at $3.35 a share. At the end of the day on Wednesday, the stock was trading at $3.29 per share.

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