What is Digital Analytics? A Simple Guide
In this post, we're going to dive into the world of digital analytics.
The practice of digital analytics has been around since the early days of the internet. In the mid-1990s during the rise of the internet, webmasters would track metrics like page views, hits, and visits through log file analyzers. Those were the simple days.
Skip forward thirty years, the digital analytics landscape has sprawled into an ever growing ecosystem of tools and technologies. Business needs have changed. Privacy concerns have mounted. New megatrends have arisen.
So, we figured that now is the best time to take stock on what the digital analytics landscape looks like today and how we see it evolving in the near future, taking insights from our latest report - The Digital Analytics Technology Landscape: From Packaged SaaS to Composable Analytics Architecture for AI.
What is Digital Analytics?
Most businesses today have a digital estate. From mobile apps to websites, this digital estate creates data or what we like to call 'behavioral data'.
This data shows how users interact within your digital space. It includes the pages they visit, the actions they take, like clicks or purchases, and how long they stay on an app or site.
The practice of digital analytics describes the process of collecting, measuring, analyzing, and interpreting this behavioral data. The data can be either quantitative or qualitative. It gives companies important information to help them understand user behavior and improve the customer experience.
Why is Digital Analytics Important?
Digital analytics has been critical for any business looking to thrive in an ever-increasing digital economy. It’s helped businesses understand how their users interact with their websites and apps. But in the era of AI, the definition of a “user” has expanded.
Today, AI agents, copilots, and automated systems are increasingly navigating digital products, triggering events, making decisions, and even interacting directly with customers. Here's why this shift makes digital analytics more business-critical than ever:
Customer-Centric Experiences: Creating meaningful customer experiences today requires understanding not only how people interact with your digital products, but also how AI agents act on their behalf. Digital analytics gives you a complete view of these behaviors—human and AI—so you can deliver more personalized, accurate, and context-aware experiences at every touchpoint.
Power AI With High-Quality, AI-Ready Behavioral Data: McKinsey estimates that companies using AI to power “next-best-experience” models can improve customer satisfaction by 15–20% and increase revenue by 5–8%. But these results depend on rich, high-quality behavioral data that captures real customer intent. Without it, AI outputs risk being inaccurate, biased, or disconnected from the behaviors that truly drive your business.
Optimize Digital Products and Services in Real Time: Customer-facing digital products and services are on the rise across industries. Digital analytics provides real-time insights into how customers and AI agents interact with these products, enabling companies to identify pain points, iterate quickly, and optimize the experience.
Competitive Advantage: Companies that master digital analytics gain an edge by feeding their AI engines with clean, structured, first-party data. This data unlocks advantages competitors can’t replicate, empowering businesses to stay ahead in their respective markets.
Better Marketing Performance: Marketing teams increasingly rely on digital analytics tools to gain a complete view of campaign performance through multi-touch attribution modeling. By capturing granular behavioral data, they can more effectively optimize targeting and personalization strategies, driving higher ROI and lower customer acquisition costs.
Enhanced Data Governance: When managing customer data, data governance is paramount. Modern digital analytics tools now incorporate robust data governance features, helping you to remain compliant with regulations while still extracting valuable insights.
How Digital Analytics Has Evolved
The digital analytics landscape has evolved dramatically over the last decade. It's critical that you keep abreast of these changes to ensure you have the best digital analytics setup for your business. Below, we highlight some of the key trends and changes that we cover in more detail in our report:
From Web to Omnichannel: In 2012, the rise of smartphones, tablets, and mobile apps marked a shift in analytics needs. Companies realized they needed to gather detailed behavioral data not just from websites, but from all types of devices and customer interactions. Today, this extends to IoT devices, wearables, smart TVs, connected vehicles, and emerging touchpoints.
Cloud Integration: The integration of cloud data platforms has become essential, allowing for more scalable and flexible analytics solutions to orient around a central source of truth.
Real-Time Processing: Modern digital analytics now offers real-time processing of behavioral data, enabling quicker insights and faster decision-making.
Advanced Analytics and AI/ML: The incorporation of advanced analytics, artificial intelligence, and machine learning has become a strategic imperative, allowing for more sophisticated data analysis and predictive insights.
Data Governance Priority: With increasing concerns about data privacy, data governance and security have become top priorities in digital analytics implementations.
Composable Approach: There's a shift towards a composable approach to digital analytics. A composable approach involves assembling best-of-breed technologies that integrate to create a tailored analytics stack. These technologies typically leverage cloud data warehouses or lakehouses as a central repository for all customer data.
First-Party Data Focus: Access to AI-ready, first-party and zero-party data has become crucial, providing businesses with unique insights that can't be replicated by competitors. This is vital for any organization looking to create a sustainable competitive advantage.
So as you can see, gone are the days of digital analytics tools acting as simple tracking tools. They're now comprehensive systems for helping you understand and optimize entire customer journeys across all your digital touchpoints. If you're still using digital analytics for basic tracking, now is the time to assess and modernize your approach. Our report provides in-depth insights and strategies to help you navigate this evolving landscape.
Packaged vs. Composable Digital Analytics: What's the Difference?
In our latest report, we take a look at the two most common digital analytics solutions: packaged and composable.
Packaged digital analytics solutions, such as Google Analytics and Adobe Analytics, are all-in-one platforms. They offer tools for basic tracking, analyzing, and reporting on website and app performance. But they often come with limitations in data ownership, customization, and scalability. They're also prone to causing data silos, vendor lock-in, and challenges in adapting to evolving business needs and privacy regulations.
Composable digital analytics architectures, on the other hand, represent a paradigm shift in how organizations approach their data strategy. The concept of composability has grown in prominence since 2021 when Gartner Analysts stated that composable data and analytics were key to digital transformation.
At its core, a composable digital analytics approach allows companies to assemble best-of-breed technologies that give them full data ownership and transparency. These technologies then integrate to create a tailored analytics ecosystem. This approach leverages cloud data warehouses or lakehouses as a central repository for all customer data. From there, specialized tools for data collection (such as Snowplow), data modeling (such as dbt), visualization (e.g., Looker or Tableau) can be plugged in as needed.
Below, we summarize the key differences.
And what we know, is that companies using composable analytics are cutting data latency by 99%, enabling real-time AI applications.
Top Challenges in Digital Analytics
The data leaders surveyed in our report highlighted legacy tools as the primary obstacle to digital analytics success. Over 50% of respondents pointed out that legacy tools lack the flexibility, data collection capabilities, governance features, and real-time functionalities that they need.
In particular, the transition to Google Analytics 4 (GA4) in July 2023 presented significant challenges. Many of the leaders we spoke to expressed their continued concerns about data accuracy, transparency, and privacy adherence. Additionally, users continue to find GA4 challenging to navigate.
"The most damaging thing about GA4 is that it's unclear who it's actually built for. The interface is too complex for casual marketers but not powerful enough for serious analysts. The reporting is too limited for agencies but too overwhelming for small business owners. The data model is more flexible than Universal but harder to understand for non-technical users."
Timo Dechau, Event Data Architect & Consultant
A third of the stakeholders surveyed have data silos and fragmented analytics stacks, negatively impacting their understanding of customers and business performance.
A quarter mentioned concerns about not having self-service analytics available and the high costs and lock-in to analytics suites.
Mastering Digital Analytics: Your Next Steps
What's evident from our latest report, is that digital analytics is no longer just about basic web tracking. Modern digital analytics is sophisticated. It provides a multi-faceted, omnichannel approach for understanding and optimizing customer and AI agent interactions across all digital touchpoints. And the space will continue to evolve at pace as we see further advancements in cloud technologies, real-time processing, and AI/ML capabilities.
Does your digital analytics setup provide you with data ownership? Does it give you real-time insights? Does it have advanced AI/ML capabilities and robust data governance?
For your organization to compete, you need to be answering 'yes' to all these questions. If not, our report is a great place to start modernizing your digital analytics and progressing your digital analytics maturity.
Transform Your Analytics Strategy: Get The Complete Report
Unfortunately, many companies still use traditional, packaged analytics tools and are limiting their analytics workflows. As a result, they're missing out on the latest infrastructure and tools to take their digital analytics to the next frontier.
Download our comprehensive report, The Digital Analytics Technology Landscape: From Packaged SaaS to Composable Analytics Architecture for AI, for an in-depth exploration of:
- The latest trends shaping the digital analytics landscape
- Detailed comparisons of packaged vs. composable digital analytics solutions
- Strategies for implementing a modern, cloud-based analytics infrastructure
- Best practices for leveraging AI and machine learning in your analytics processes
- Tips for navigating data privacy regulations while maximizing insights
Let's get ahead of the digital analytics revolution and realize the full potential of your behavioral data. And let's make your business thrive. Click the link below to get your copy of the report and start your journey towards mastering the new era of digital analytics.