Way to go, Dennis: Yahoo! acquires IndexTools

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yahoo-indextools-737805 Well, it’s turning out to be quite the week for Web Analytics industry news. First we had Coremetrics’s $60m cash injection; now we have the news that Yahoo! has agreed to buy IndexTools. Let me start out by sending my congratulations to Dennis Mortensen and the team at IndexTools, who have come from nowhere to take a seat at the big boys’ table. As I’ve previously blogged, I have a soft spot for IndexTools because their development mirrors that of my previous company, WebAbacus – except that IndexTools’s payout has been somewhat higher 🙂

As to the implications of this deal: Firstly, I believe this is another significant step along the path to the future that I mapped out in my recent post on The Future Of Web Analytics, Demystified – that web analytics will continue to be absorbed into other, broader businesses, eventually disappearing as a line of revenue in its own right. In his post today about the deal, Eric Peterson predicts that Yahoo! will continue to charge for IndexTools, at least for the time being; but there is a strong chance that Yahoo! will make at least a part of the portfolio (the E-business edition) free in due course – perhaps charting a similar path to the one that Google took.

My money is that IndexTools will eventually be, effectively, free, because that’s essentially Yahoo!’s business model (and ours, in our Online Services business). Yahoo! does not have a history of providing Enterprise software, and I would bet my bottom dollar that Yahoo!’s valuation models for ClickTools were not based upon their current lines of revenue. Even if Yahoo! continues to charge for ClickTools, the majority of the upside for the company is in the impact that ClickTools usage will have on its sales of advertising inventory, especially search.

That means that in, say, 2 years’ time, when the synergy effects are starting kick in, it will make little difference to Yahoo’s numbers on this deal whether they charge for ClickTools or not. So why not make it free, or at least hold the price right down to hurt folks like Omniture and Coremetrics?

As for the potential impact of a potential Microsoft-Yahoo! union on this deal, well, of course, I can’t make any comment about that. But that’s not to say that my little head’s not buzzing with thoughts about it…

3 thoughts on “Way to go, Dennis: Yahoo! acquires IndexTools”

  1. Ian, I imagine that in this move, Yahoo! is not thinking about the MS deal and wants to do “business as usual” in terms of their strategy. Or if you are cynical, they would make moves like this to be spiteful and make a potential integration even harder. Of course, this would be very interesting for you, if the deal ever went through.
    BTW, in the the third paragraph onwards, you start calling IndexTools “ClickTools.” You probably want to fix that.

  2. As I told you before, since Gatineau nothing will ever be the same.
    The market will become even more interesting from now on. What’s next? All free tools become paid?. Was the five dollar registration fee the testing for this new strategy 😉

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