Web analytics software used to be the province of company IT departments, where it was deployed to help predict the load on internet servers. But the market has been changing, and its importance is now much broader.

"Businesses with a web presence have to handle more information than ever before," says Geoff McClure, managing director of Tahola, which specialises in extracting information from a company's data.

Companies also need to know how their internet-based marketing campaigns are working. "Marketing people are increasingly driving the need for web analytics," says John Shumway, global vice president of product management at Akamai, the US internet content delivery and services company.

One way that information can be collected is through log files. These are created by recording the information that is sent in the so-called "http headers" every time a browser requests a web pages. These data include the internet address of the computer the browser is on and the referring page.

Being lists of text, these web logs are virtually impossible to understand. So companies such as WebTrends and Sane Solutions produce software that converts the data into formats that managers can understand, using combinations of tables and graphs.

Sane Solutions says that by using its NetTracker software, it is possible to test the effectiveness of ad campaigns, see how visitors come to a site by checking the referrer pages, and track visitors' progress as they click through the site.

The software also allows reports to be compiled from logs where the website is 'distributed' or exists on several servers.

However, collecting data on how visitors use sites does not have to depend on log files. After all, many web masters may not have access to log files, especially when their site is hosted "virtually" on a server that is home to thousands of others.

For sites such as this, there are companies such as Web Tracking Services LLC, which runs two separate but similar services, Web-Stat and 123Count. The latter is slightly more expensive and is somewhat faster.

Olivier Galy, founder of Web-Stat, says its market is the small- to medium-sized site owner who does not want to be drowned in complex reports.

One of Web-Stat's main features is "referrer tracking" or recording the site which referred the browser to their current site. The aim is to produce easy-to-understand reports at very competitive rates, says Mr Galy.

As with Web-Stat, Akamai has a service that does not depend on access to web logs, but provides a managed service in web reporting, following an ASP model. The service is particularly apt for sites which run off multiple servers or have a presence in multiple locations says Mr Shumway. Busy sites often do this so that users are serviced by a server close to their location.

Rather than read the web logs that servers produce, Akamai's clients embed a small amount of code into their web pages in a language called JavaScript. This communicates data about the user back to Akamai where real-time reports can be compiled.

One technique for getting information about visitors to sites is to use "cookies", the computer code that identifies a user. It is sent back to the website as part of the http header whenever a browser requests a page. This system allows 'session tracking', that is, identifying precisely the user as he or she moves through the website.

Another advantage of cookies is that a user can be identified the next time they visit a website.

Alison Bryant, marketing director of iLux, which makes personalised marketing software and uses cookies in its product, says customers who come to a site leave an electronic footprint. This can be correlated with what they visited and therefore it is possible to market to them whether they registered with the site or not.

"The log file will tell where the customer came from, which pages were visited and where they left," says Ms Bryant. For example, one place where customers may leave is just before they have to enter their credit card details.

Cookies have received some negative publicity because some net users have been worried about privacy implications. For this reason, around 1.9 per cent of users turn them off, says Ms Bryant. However, for most, the dangers of privacy invasion seem to be outweighed by the convenience.

Guy Creese, an analyst at Aberdeen Group, the technology market consultants, says web analytics is also providing a basis for developing sophisticated applications which bring together not only data from companies' websites but also their other distribution and retail channels. This has been especially true in the area of customer relationship management (CRM). Dixit Shah, head of eCRM business development for Hyperion UK, says the company's software can quantify the value of the customer relationship and each click.

This, however, goes beyond analysis of web logs and involves understanding what the business of the customer is. "Web log data can be combined from advertisement servers, personalisation engines, profiling engines, e-commerce servers and ERP [enterprise resource planning]," says Mr Shah.