Google will provide for free its hosted Web analytics service, which businesses can use to track the effectiveness of online marketing campaigns, the California company plans to announce.

The service, called Google Analytics, is free for anybody and has a page view limit of 5 million per month, a cap that is removed if the user is a Google AdWords advertiser, said Paul Muret, a Google engineering director.

Formerly known as Urchin on Demand, this service used to cost US$199 per month with a 100,000 monthly limit on page views, he said.

AdWords advertisers also get some additional analytics features, said Muret, who founded Urchin Software, the Web site analytics system developer that Google bought earlier this year.

However, Google Analytics isn't meant to be exclusively an AdWords analysis tool. It is designed to be a complete analytics package that can monitor various types of online marketing campaigns from multiple ad sellers, Muret said.

By making Google Analytics free, Google will shine a very bright light on the Web analytics space, which should benefit that market in general by drawing in many new customers, but it will also put significant pricing pressure on vendors, said Eric Peterson, a Jupiter Research analyst.

Google's move will negatively affect Web analytics vendors that don't have strong professional services and consulting to complement their packaged or hosted software offerings, Peterson said. "Free is always compelling, but free from Google has historically been the most compelling offer," Peterson said.

However, vendors that have built strong professional services and consulting units, such as WebSideStory, CoreMetrics and Omniture, will be able to compete better, he said. This is because Google, at least so far, doesn't have a particularly large professional services and consulting staff for Google Analytics, Peterson said.

Although Google could quickly build a large professional services and consulting team if it wanted to, right now Google Analytics is more in line with the needs of small- to medium-sized businesses, and of large businesses that don't need or want that type of support, Peterson said.

Google Analytics monitors the performance of banner ads, referral links, e-mail newsletters and organic and paid search, so companies can track how visitors were referred to their Web sites and what they do once there, Muret said.

The statistics Google Analytics gathers, and the reports and graphs it generates, can be used by Web site owners to determine, for example, how effective their different ad campaigns are and how they should adapt their Web sites to improve sales conversions.

New features in Google Analytics include new reporting dashboards aimed at making it simpler for users to review and interpret usage data, as well as the availability of the product in several languages other than English, including French, Italian, German, Spanish, Japanese, Korean, Simplified Chinese, Traditional Chinese and Norwegian.

Google Analytics can monitor the usage of sites of all sizes, including the largest which are visited hundreds of millions of times per week, Muret said. Clients include The Financial Times, National Semiconductor and Ritz Interactive.

BuildDirect Technologies, an online wholesaler of building products that has been using Google Analytics since November 2004, was very surprised when it learned about Google's decision to make the hosted service free.

"To see such a sophisticated and complete Web analytics package offered for free is just incredible," said Dan Brodie, director of operations of the Vancouver-based company.

Before adopting Google Analytics, BuildDirect, which spends most of its advertising budget on paid search ads, didn't use Web analytics software. "It was almost blindly throwing money at keywords we thought would convert and just trying to get as many people to our site as we could," Brodie said.

Just several months after it started using Google Analytics, BuildDirect increased its online sales volume by 50 percent and its sales conversions by 37 percent, while decreasing its overall marketing budget by about one third, he said.

"Once we implemented the analytics software, we were able to start looking at how different keywords performed, how they converted, how traffic flowed through our Web site and where we were losing customers, so we could improve those pages to have customers carry on with the ordering process," he said.

As Google continues to improve this Web analytics service, Brodie would like to see the vendor provide a way to export the data gathered by Google Analytics to BuildDirect's business intelligence tools.

"What would really help us is an API [application programming interface], like a software interface, to pull that data back into our own internal business reporting software so we can leverage off of the data they're capturing and tie that back into our own internal reporting," Brodie said.

Brodie also reports that although owned by Google, the analytics hosted service is agnostic when it comes to gathering and presenting data from different ad networks, and Google assures customers that it doesn't peek into the information flowing through the system.

"One concern we had was that if we're bringing in our Yahoo and MSN marketing spends into Google, they could see everything about our company: all our sales, all of our marketing spend with competitors. So it was important for us to get the proper assurances that the privacy [would be protected] and that data wasn't going to be used against us," he said.

Google also sells a Web analytics software package, called Urchin 5, which has fewer features than Google Analytics, according to a Google spokesman. Its base module costs US$895, and its functionality can be extended with optional modules, according to information on Urchin's Web site.