The End of the [Google Analytics] Gravy Train?

In America, we have a slang saying" "the end of the gravy train..." This expression is used when something that has been provided for free or cheaply comes to an end. The expression originates from the 1920's when politicians and businessmen were making easy profits from lucrative deals (not related to trains, but the word train was used because the profits were steady and continuous!).

In the digital analytics world, Google Analytics has been the dominant platform for almost twenty years. This is mainly due to the fact that it is tightly integrated with the largest advertising network in the world (Google Ads) and because in most cases it is free. Over the past two decades, Google Analytics and Web Analytics became synonymous like Kleenex and tissues. Almost every website has an instance of Google Analytics on its pages unless it is prohibited due to regulations such as GDPR. Even organizations that pay for the enterprise version of Google Analytics often do so at a highly subsidized fee structure.

Giving away a free (or highly subsidized) digital analytics platform isn't cheap. It must cost Google millions of dollars each year to provide a robust platform to so many organizations free of charge (or subsidized). It's no secret why Google does this - Google knows that providing analytics helps and encourages its customers to spend more on its advertising. And since Google has a monopoly in advertising (according to the US and EU governments), it has plenty of money available to give away or subsidize a digital analytics platform.

But what would happen if Google found itself in a position where it lost some of its dominance and operating profits? Google Ads has been the ultimate "gravy train" for Google for the past two decades. But in the past year, there have been some major industry shifts that could impact Google as a whole, which could, in turn, impact its desire or willingness to continue to subsidize Google Analytics. The following are some of the developments I think are most relevant:

Shift to 1st Party Data

When digital (websites and mobile apps) were a small part of an organization's business, it was easy and cost-effective to rely on advertising networks to find new leads and customers. If you think of digital as a channel, then paying for digital campaigns makes sense. But when digital transformation (and the COVID pandemic) made digital the majority of the business and the primary interface with customers, organizations realized that they needed to invest in building direct relationships with customers. Instead of outsourcing their relationships to advertising networks that they had to pay over and over again to reach customers, brands started taking matters into their own hands and build 1st party data strategies so they could own their own customers. (more on this from my colleague Ted Sfikas). The net result is that many brands have become less dependent on 3rd part data and advertising networks, which hurts companies like Google.

Loss of Advertising Market Share

Likely related to the previous items, for the first time in the digital age, Google is losing market share in advertising. New players like Amazon, Apple, TikTok, and Microsoft are starting to take advertising market share. For the first time in a decade, the combination of Google and Meta has gone under 50% in digital advertising. If Google loses its "cash cow" in advertising, it may start looking for things to cut to improve its margins and giving a digital analytics platform to millions of organizations could be a logical place to start!

Potential Breakup - GA Standalone?

With the US antitrust suit in full swing, there are already rumors of a potential Google breakup. While this could take years in court, Google may decide to proactively split itself into competing business units to thwart any breakup options imposed upon them by the government. This breakup could force Google to split several of its business units and there could be a scenario in which the Google Ads function and the Google Analytics function are not part of the same over-arching entity. This would force Google Analytics to fend for itself instead of being subsidized by the Google Ads business.

While I am not privy to the Google's financials, I have to believe that if Google Analytics were a standalone business it would not be able to survive in its current form. I have to believe that Google Analytics loses millions of dollars each year through its free and subsidized platform offering. If Google Analytics were force to be its own entity, I imagine it would either need to 1) cut off most of the free users or force them to pay, and 2) jack up the prices that enterprise customers are paying for the GA360 version of the product. If this scenario came to pass, many organizations would have to determine if they are willing to pay for Google Analytics and enterprises would have to pay significantly more for the paid version. We have seen in B2B that many people will use products when they are free, but are not so excited about it when they have to pay or pay more than planned (See Evernote, Dropbox, etc.).

Privacy Issues

Over the past few years, Google Analytics has come under fire for the way it handles privacy and user identification. Many organizations in the EU are now prohibited from using Google Analytics as are many healthcare organizations in the United States. As Google comes under fire by the EU and the US Antitrust Department, I would expect that more organizations will determine that the cons of having Google Analytics on their digital properties outweigh the benefits, especially when there are alternative digital analytics platforms available (did you know Amplitude offers a free version ;-)?)

Unknown Future

It's difficult to know what the future will bring. Perhaps little will change and Google Analytics will escape the challenges above unscathed. But given all that is going on around Google as a company, including losses in advertising marketshare, breakup whispers, and privacy issues, it's prudent for organizations to contemplate contingency plans around digital analytics. If you have concerns about your reliance on Google Analytics, I encourage you to review other digital analytics options and learn how they compare to Google Analytics. It's possible that one day soon "it may be the end of the [Google] gravy train..."