Google buying web analytics company

(Updated with more context, etc.)

Google is buying Web analytics company Urchin, we’ve learned from a third party, a move intended to strengthen its relationship with its advertisers. A San Diego company, Urchin helps companies evaluate the effectiveness of their search engine marketing campaigns by letting them track consumers from when they first enter keywords into a search engine to the actual purchase. A source says the deal was for around $30 million. Overture Services, now owned by Yahoo, bought a similar company called Keylime Software in 2003.

Google’s move is an attempt to help quench the growing thirst among search engine advertisers for more data about users. Specifically, advertisers want to know which keywords they buy on Google and Yahoo lead to online sales. Google and Yahoo (through subsidiary Overture Services) both offer tools that help advertisers capture this data. But search engine marketers say it pales in comparison to the type of data that a company like Urchin collects.

Other companies in this space include Omniture, WebTrends, and WebSideStory.

Urchin offers two products. One is Web-statistics software that Web site-owners install on their own servers. Another is an ASP version ($495 a month) that can track Web sites remotely.

“They take data from Overture (or Google) and combine it with what they get from the site, and they can tell whether a campaign works,” said Tim Ash, president of the San Diego search engine marketing firm Epic Sky. “They can track things all the way through and say this sale is associated with typing in these keywords. This is completely trackable down to the granular level.”

Search engine marketers initially focused their efforts on optimizing their Web sites for high search engine rankings. But Ash says advertisers are now focusing on how well their Web sites keep ahold of consumers once they get there. That includes ferreting out dead-end pages and site navigation that leads visitors astray.

“The focus is moving to how efficient the Web site is,” he said. “And that’s where these tools (from Urchin and other companies) help you.”

Google’s move comes just weeks after Microsoft announced it’s starting a search engine advertising service. As we wrote in our story, Microsoft hopes to differentiate itself from Google and Yahoo “by offering advertisers more detailed information about users who click on their ads. The company will cull this information from users who are registered on the MSN network and by observing their behavior and interests as they click from Web site to Web site.”

UPDATE: The official news release is here.