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The big excitement in the web analytics world this week was Google’s announcement of the changes that took place to their Analytics Software recently.

You can read more detail in some of the posts that have since spawned here and here.

What’s most interesting about this is how the big guys must be shaking in their boots. Let’s not forget, Google is still free. With these enhancements – especially the advanced segmentation features (I’m drooling), suddenly Google has just entered the major leagues.

Analytics tools like Omniture and Web Trends have been charging tidy sums of money for these kinds of services for years and now they are free.

Let’s not forget that the ability to custom reports, more complex data extraction (API) and fun “dancing” bubble charts have always been the claim to fame for some of these companies. It’s been their unique and differentiating factor from Google. They could give us something Google couldn’t. And implementing these things were so complex that they required huge internal tech team coordination and support staff/client care reps whose job it was to keep you so confused that you didn’t think you could live without paying for their services.

Now don’t get me wrong, I’m not saying the pay-for analytics models don’t have a place or that they aren’t any good. In fact, many of these tools still have their own unique factors and still offer much more robust services than Google does – which for the biggest of biggest clients – is definitely required.

But these companies will need to get better at explaining why it costs so much for their services and why you need them vs. the freebie.

For companies – it will become increasingly important to create vendor RFPs designed to understand and evaluate which service or company can best deliver on your analytics objectives and needs.

Looks like times are changing – and with the current economic crisis, I’m inclined to think a lot of the small-mid sized companies are going to be looking long and hard at which analytics system best fits their needs.