RealTime IT News

net.Genesis Hopes To Ride Web Data Wave

On Tuesday I wrote a column about e-tailers and how the market no longer views increased traffic as a sure sign of a Web site's success. (E-tailers Get Post-Holiday Blues)

A new study from Forrester Research suggests that there is growing demand for detailed information about the behavior of consumers on a Web site, rather than raw traffic numbers.

That demand comes primarily from advertisers who want more proof they're getting an acceptable return on their investments in online marketing campaigns.

Which is exactly what "e-customer intelligence" vendor net.Genesis promises it can deliver. The Cambridge, Mass.-based company recently filed for a public offering designed to raise $70 million under the Nasdaq ticker symbol NTGX. Lead underwriter is Hambrecht & Quist.

Net.Genesis sells software that allows companies to collect data about customers' online behavior and provides reporting functions for measuring and analyzing this information.

The problem is the company hasn't sold much of it. Though it began generating revenue in February 1996 and now claims more than 200 customers -- including Bell Atlantic, CBS, Charles Schwab and The Gap -- net.Genesis had only $1.6 million in sales in 1998.

Revenue growth has picked up this year, though, with net.Genesis reporting $3.9 million in sales through the first three quarters, of which about 40 percent comes from its growing services business.

Still, you would expect more from a company that has been selling product for almost four years now. Especially when you consider the revenue of rivals such as WebTrends (WEBT), which has gone from $1.9 million in revenue in '96 to $12.3 million through Q3 '98, and Accrue Software (ACRU), which has $5.5 million in the last two quarters alone (and didn't ship its first product until January '97, almost a year after net.Genesis).

In addition to battling other stand-alone Web site analysis software vendors, net.Genesis must contend with products such as Microsoft's Site Server, which includes statistical breakouts.

Compounding net.Genesis' challenge are mounting losses. The company has an accumulated deficit of $23.8 million through Sept. 30, of which $9.6 million was incurred through the first nine months of this year.

Though it was one of the first companies to market with Web site analysis tools, net.Genesis now finds itself playing catch-up as losses widen. That's a tough combination to bet on.

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