In the past month we’ve seen not one but two online testing vendors secure new rounds of financing:
- Optimizely raised $1.2m in November from a group of angel investors; more info here.
- Monetate raised $5.1 million this month from First Round Capital, Floodgate Fund, and other institutional investors; more info here.
Obviously this is very exciting for Optimizely and Monetate, and I’d like to offer my congratulations. It’s been a tough road for businesses seeking funding – from any source – during this period of recession and subsequent austerity. These recent events could be construed as an indicator that the business environment is thawing and pent up capital is finally finding its way to businesses, but credit is also due to the capabilities and business acumen of the Optimizely and Monetate teams.
I can’t overlook the larger implications for Online Testing. This news is great for Optimizely and Monetate, but the flow of funding into online testing is a validation of site optimization as a whole. For Web marketers and vendors alike, the willingness of investors to put other peoples’ money – and even a bit of their own in some cases – behind these businesses shows that:
- Online testing is important. The Web is pervasive, making the Web site a major hub of activity for many businesses. With this increased emphasis on the Web, a great Web site is no longer optional, therefore optimization is mission critical for cultivating great customer experiences and maximizing marketing ROI.
- Tools for marketers is imperative. The new generation of testing tools are designed for business users. These applications can be implemented and integrated easily and the user interfaces are modern, intuitive, and streamlined to put marketers in control.
- Online testing is effective. The success of site optimization is predicated on the assumption that online testing is effective and can help organizations improve the performance of their Web sites and marketing. As Forrester’s research has shown, online testing yields positive results across a wide range of goals.
- Online testing has room to grow. Online testing is a significant potential market, with broad applicability and rapid growth building on relatively low current adoption rates. And the impact of marketer-friendly tools are further democratizing testing, expanding the historical market definition even further.
I am most interested in the shifting equilibrium in online testing between usability and robust analytics. Is an optimal mix of these historically dueling priorities possible? Or is this unrealistic?
Given the potential size of the market and broad spectrum of difficult-to-reconcile requirements, I think we will see more diversification before another round of consolidation. The leading edge of this trend is evident upon examination of the newer entrants into the online testing market who are explicitly pursuing previously ignored market segments. We are seeing the end of one-size-fits-all online testing tools and the emergence of multiple online testing categories, possibly spanning a multi-dimensional matrix of user personas (marketer and the optimization analyst), granular testing applications (landing pages, Web sites, multichannel, etc.), and technical depth (integration and optimization techniques).
And while it's great to see some legitimate options emerging for SMB firms and entry level users, I have some concerns about the low end of the market. Can these emerging vendors fully differentiate and establish themselves in the market, particularly in the face of an omnipresent and constantly improving Google, purveyor of Google Website Optimizer? Are the price points, sometimes in the low hundreds of dollars per month range, able to support a sustainable business? I suppose that's where the funding comes into play. These are challenges and also opportunities. We've seen this before in other markets, it is playing out concurrently today in web analytics and social media listening platforms. Only time will tell, and in the meantime I welcome the innovation that these vendors bring to the market.
What do you think?