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Bill Baer on...
Usage and Health Data Collection and the Session State Service Application have been provisioned on the farm.
Provisioning the Web Analytics Service Application
Open SharePoint 2010 Central Administration.
Select Manage service applications under Application Management.
Select New | Web Analytics Service Application on the ribbon user interface.
On the Create Web Analytics Service Application dialog specify the name for the new Web Analytics Service Application or accept the default name, usually Web Analytics Service Application 1.
Provide a name for the new Application Pool.
Provide the name of the default database server where the Web Analytics reporting and staging databases will be hosted and specify the desired retention period.
Click OK on the new Create Web Analytics Service Application dialog to provision the new service application.
On a single server deployment select System Settings from SharePoint 2010 Central Administration and then click Services on Server.
From the list of available services start the Web Analytics Data Processing Service and Web Analytics Web Service.
Data is logged into .usage files on the front-end Web servers where it is processed into the staging database created in the previous steps through the Timer Job infrastructure. The data in the staging database is retained for 30 days and transitioned into the reporting database for longer term retention as specified in the retention period when the service application was created. The information is subsequently surfaced through a variety of Web Parts by the Web Analytics Web Service.
If you have installed Microsoft SharePoint Server 2010 in a server farm environment with one or more application servers start the Web Analytics Data Processing Service and Web Analytics Web Service on the application server where the service will run.
Following the successful completion of the steps above you will having a running instance of the Web Analytics Service Application.
To confirm Web Analytics is running, select Monitoring from SharePoint 2010 Central Administration and then select View Web Analytics reports under Reporting. You should see a blue bar with the text Date Range 10/21/2009 - <current date -1> (UTC <time zone specifics> Change Settings.
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The common misconception in web analytics is that the sum of the new visitors and the repeat visitors ought to be the total number of visitors. Again this becomes clear if the visitors are viewed as individuals on a small scale, but still causes a large number of complaints that analytics software cannot be working because of a failure to understand the metrics.
Web analytics are the key to figuring out which marketing campaigns pay off beyond the click through and which areas of your site aren't working well.
These are all great comments, thanks!
Web Analytics is often referred to as a set of tools that can be used to track a variety of indicators and report on them to measure the success of a Web business, for example, by guiding site managers to improve their site and bottom line. With that we have two distinct tools:
Active - which are generally classified as script or markup injections
Passive - which are predominantly composed of log parsers
Other precepts include, understanding ROI on advertising initiatives, business conversion rates, who are the most important customers, what do you want visitors to accomplish, is important content easily discovered, and are my improvements working (conversion).