Internet marketing is big business – search spending alone is expected to more than double to $18.5 billion (£9.25 billion) by 2012, according to Jupiter Research, and that’s just the money businesses are feeding into search engines to get prospects to glance at their sites.

‘There’s an old adage: “I know that 50 per cent of my marketing works, I just don’t know which 50 per cent,”’ says Josh James (pictured), CEO of US-based web analytics specialist Omniture. ‘In the online world you can know exactly what is working and to what extent it’s working.’

The booming web analytics industry is not only helping businesses spend search money more efficiently, but showing them what customers do when they get onto the site. Once the domain of IT staff, modern web analytics tools have been embraced as a mainstream marketing tool and can be quite user friendly, given a bit of practice.

Free packages such as Google Analytics let you set up site monitoring quickly. You can measure the volume of traffic through each of your pages, see which products are attracting attention and which aren’t, and drill down into detail, such as which geographic region prefers which product.

One immediate benefit is being able to evaluate and optimise your online adword spend (the money you pay to search engines like Google to get noticed) by seeing which words are attracting prospects and which are not. Says James: ‘People who spend money on keywords typically have an Excel spreadsheet, and go into the Google tool saying: “I should spend four dollars on that key word, six on that one” and so on,’ he explains. ‘What is that based on?’

The CEO of online florist Serenata Flowers, Peter Ahl, used analytics to rearrange the site’s product offerings based on what prospects had shown interest in.

‘We’ve witnessed the conversion rates on some of our product category pages rise by up to 15 percent,’ Ahl says. ‘Considering the relatively low cost, we believe [analytics] offers a compelling return on investment.’

How is the internet changing and what emerging trends should businesses look out for? Click here to find out.