IBM said today it has reached an agreement to acquire Coremetrics, a maker of Web analytics software.
Coremetrics helps companies plan and measure the effectiveness of online marketing campaigns. Its Software as a Service platform includes advanced analytics capabilities as well as marketing optimization tools to better target potential customers and identify up-sell and cross-sell opportunities.
Its Lifetime Individual Visitor Experience Profile tool, for example, collects data on customer buying behavior, allowing companies to create “highly-tailored experiences based on their individual history – on a website, via email and across multiple ad networks,” according to the Coremetrics website.
Coremetrics also offers software to help companies track and analyze what is being said about them on social networks.
In a conference call following the announcement, Craig Hayman, general manager of IBM’s WebSphere division, estimated that 70% of customers’ first interaction with a given brand occurs online. The acquisition of Coremetrics, he said, will help IBM clients turn those interactions into better brand recognition and “give them the highest possible return on their marketing expenditure.”
Bill Gassman, an analyst with Stamford, Conn.-based Gartner, said the acquisition was not unexpected, as IBM and Coremetrics have worked closely for years. In 2006, IBM sold its own Web analytics division, called SurfAid, to Coremetrics with the understanding that Coremetrics would continue developing it and tightly integrate it with IBM’s WebSphere e-commerce engine, Gassman said.
Once IBM decided the time was right to reenter the Web analytics market, acquiring Coremetrics was the logical next step, Gassman said.
The acquisition, he said, “strengthens their whole analytics message.”
Founded in 1999, privately held Coremetrics is based in San Mateo, Calif. It collected $30 million in its latest round of funding in 2008 and counts Office Depot, Adidas and Victoria’s Secret among its customers.
In addition to Coremetrics, other leading Web analytic vendors include Omniture and Webtrends. And, of course, there’s Google.
“The big gorilla here is Google Analytics,” Gassman said. Though Google Analytics lacks some of the more sophisticated marketing capabilities of its smaller competitors, the tool is free and has jumpstarted interest in Web analytics, he said. Gartner estimates the Web analytics market at around $500 million with an annual growth rate of between 15% and 20%.
Gassman said current Coremetrics customers are likely to benefit from the infusion of financial and technical resources IBM said it will invest in the company. His only concern was for Coremetrics customers that use e-commerce and content management engines other than WebSphere. Cometrics is likely to continue supporting competing engines, but will likely optimize its platform for WebSphere, he said.
In the conference call, Cometrics CEO Joe Davis tried to reassure customers. “We do not have any fears that our customers will suffer,” said Davis, who will stay on with IBM once the acquisition is complete.
Boris Evelson, an analyst with Cambridge, Mass.-based Forrester Research, said with the acquisition IBM has a chance to integrate Web analytics into its core BI platform. Currently, companies that want to do such integration have to rely on consultants and customized development.
IBM said it does plan to incorporate Coremetrics into its application and integration middleware portfolio. Coremetric’s approximately 230 employees will join IBM, the companies said.
The acquisition is yet another move by IBM to capitalize on what it sees as the growing and lucrative business analytics market. In the past five years, IBM has spent $11 billion in acquisitions around business analytics, including buying business intelligence vendor Cognos in 2008 and advanced analytics specialist SPSS in 2010. IBM also established a business analytics consulting practice in 2009.
IBM itself expects to achieve revenues of $16 billion by 2015 on its analytics portfolio, according to WebSphere chief Hayman. Coremetrics software will be used to enhance IBM’s other analytic offerings, and vice versa, Hayman said.
Fellow mega-vendors Oracle, SAP and Microsoft have made various attempts at entering the Web analytics market, but so far with little success, Forrester’s Evelson said. “None of the large BI vendors, they don’t really have anything comparable,” he said.
Terms of the pending acquisition were not disclosed.