Get the newsletter · 2018 essays (PDF) · Featured · Recent

Faceoff between Facebook app analytics startups

New Facebook sub-sector
A sector has emerged recently that’s been interesting to follow – Facebook analytics companies.

These companies include:

It’ll be interesting to see where they go – I thought I’d elaborate a bit about the web analytics industry from my vantage point at digiMine, which later evolved into Revenue Science.

Evolution of web analytics companies
Early on the analytics space, there were a ton startups who wanted to get their hands on log files and pixel data. DigiMine was one of those companies, started by some data warehousing experts out of Microsoft led by Usama Fayyad (now Chief Data Officer at Yahoo). The idea was to do data analytics as a service, sucking in information about ecommerce, web traffic, as well as industry-specific data, and do all the math for companies – they were great at this.

Over time, however, the number of meaningful questions that customers wanted the analytics to answer went down – the focus became very much on web traffic, and specifically # of pageviews per day, # of sessions, and all the other common metrics you see on Google Analytics. As these metrics become more standard, then the customers (who were often larger F500 companies) started to buy based on "checklists" of features, rather than usability/UI, speed, or other important factors.

One problem for companies who took on the "high-end" approach of answering complex quesitons (often described as the most "powerful" queries) is that both the question and the answer elude the grasp of the end customer. If your end user doesn’t know how clustering algorithms work, it’s unlikely that they appreciate the value of software that does that for them, especially if there isn’t a direct ROI attached.

The space eventually devolved until a few winners emerged that satisfied the base requirements while supporting the infrastructure in a cheap, scaleable way.

What’ll happen in the Facebook analytics space?
If the Facebook analytics companies follow the same route, then you’ll see heavy competition as folks figure out what the core featureset required for the space. Once the basics are defined, then the next step will be for the companies who know how to scale the product to have a better cost model than everyone else.

Also, when doing a B2B infrastructure play, in a sense these small companies are taking a sector bet that all the apps in the Facebook economy will end up making some money. After all, if everyone’s just a small lifestyle play, there isn’t much revenue to go around in the apps world.

Net/net, the space seems like a challenging one – it’ll be fascinating to see where the web analytics analogy holds, and where it breaks. Analytics is seen as an important add-on and strategic entre into
other areas – will be interesting to see what emerges over time.

PS. Get new updates/analysis on tech and startups

I write a high-quality, weekly newsletter covering what's happening in Silicon Valley, focused on startups, marketing, and mobile.