Should Google Offer a Paid Version of Google Analytics?

Recently there has been some rumor buzz about Google releasing a “paid” version of Google Analytics (beyond what is currently available through Urchin). Assuming, for a second, that something like this is coming in the future, the real question is whether this is a good or bad idea. In this post, I’ll examine some of the pros and cons to this potential move by Google.

Why Google Should Offer a Paid Version

So what are some of the reasons that Google should offer a paid version of its web analytics offering? I can think of the following:

• There will always be a group of web analytics users that want advanced functionality and are willing to pay for it. These advanced features are often resource-intensive and I could see Google wanting to recoup some money to enable these features or the additional data storage they necessitate.
• There are millions of websites using Google Analytics for free and if Google can extract even a small amount of revenue from these, it can add up quickly. Since I don’t think Google is hurting for revenue, I assume that the money generated would be filtered back into the product which would mean even more enhancements to a product that pretty robust already.
• One of the reasons Google may be thinking about offering a paid version of the product is to open the door to its sales team to cross-sell other Google products and services. By being free, Google Analytics has infiltrated millions of websites which creates an easy entrée for a Google sales rep to say: “I see that you are using Google Analytics, did you know that Google also offers Google Ad Words, Google Apps, etc…” While they can already do this, if a company has already started paying for Google Analytics (and it has made it through procurement!), that makes the cross-sell so much easier. It also helps weed out the companies that are serious, which will often be the ones willing to pay.
• Services baby! It is no secret that professional services are a huge money maker. When I was at Omniture, we had a sizable consulting group and there are a host of other firms (including Analytics Demystified of course!) offering services around web analytics. While I am not sure if it would be a good move or not, Google could offer paid-for services around a paid-for web analytics tool itself or through its certified partners.
• Competition! I love competition. I think it helps drive innovation. In my opinion, the consolidation of the web analytics industry over the last few years has reduced the amount of innovation and I think Google having a paid product will ultimately mean that everyone in the industry gets more.

Why Google Should Be Careful About Offering a Paid Version

So what are the pitfalls that Google might want to look out for? Here are a few worth considering:

• Too much functionality! One of the strengths of Google Analytics is its simplicity. Since it is a free tool for most users, it has not been beholden to the axiom that more features must always be added to continue justifying the investment. Like all software products, as time goes by, more features are added to meet the needs of the most advanced users, which often results in casual users leveraging 10% of the functionality. While it looks like Phil & Nick have done a great job adding the features their users want to date, once someone is paying you money, the balance of power tends to shift in a big way (think difference between privately held vs. publicly traded company). I hope that Google will not lose its simplicity “mojo” that got it to where it is today.
• Customer Support? One of the biggest expenses for software products is the cost associated with supporting its customers. When I worked at Omniture, we had a massive customer support organization of account managers and client care that grew exponentially. If Google has paid clients, I would imagine that it would need to provide support at a level that far exceeds what it is offering today. This is not an easy task and Google is known for being somewhat hands off for most of its products. When your product is free, people accept that they are going to be on their own more than when they are paying for something and if support isn’t good, I could see Google Analytics losing a bit of its current luster. I also imagine that Google loses quite a bit of money on Google Analytics (which I assume it makes up for on the AdWords side), and this will be even worse once it has to staff up to support users unless it can find a way to get its partners to offer that support.
• SLA’s (Service Level Agreement). Paid-for vendors have legal requirements around the availability of the product and the handling of product issues. To date, it is my understanding that Google Analytics has not had SLA’s since it is a free product, but I would imagine Google would need to provide a reasonable SLA for the paid side. SLA’s are never fun and usually end up costing time and money…
• What happens if no one buys it? Google has done a lot of things that have changed the market and some that have not done quite as well (i.e. Google Wave). Google shook up the web analytics industry in a huge way with free Google Analytics, but what would it say if only a small % of companies decide to pay for its product? Does this serve as a boost to its paid competitors? I guess the real question comes down to this. If I am a Fortune 500 company and am currently using Google Analytics and a paid product from Omniture, Webtrends, Coremetrics or Unica (which is very often the case!), what features will Google Analytics add to its paid product that will get me to only use Google Analytics and get rid of my other paid vendor? I would guess that the things I would be looking for are 1) my own dedicated servers so I know my data is really my data and can be kept as long as I want, 2) knowledge that Google is not seeing any of my data and using it in its search algorithms, 3) support and SLA’s at the same caliber I am getting from my other paid vendors and 4) 90% of the features I can get from my other paid vendor. If Google can deliver on these items (and I am sure it can), I think it will make a compelling case as to why companies should standardize on Google Analytics, but I don’t think this will be something that happens overnight.

Obviously, all of this is still speculation, but I, for one, look forward to seeing what Google does and how they address some of the items I have described here.

I highly recommend you check out this YouTube video on disruptive innovation. I think it is very cool to watch this and think about Google being the “entrant” and the other paid web analytics vendors as being the “incumbents” described in the video. This video talks about what Google has done to the other paid vendors and how Google could one day become the incumbent and fall prey to even newer entrants (or reincarnations of the old incumbents!). Fascinating stuff!

So what do you think? Will they do it? Will people buy it? What things do you think Google needs to do to make it successful? Please share your thoughts by adding a comment here…