Actually, we don't know the answer to this one. We know what web analytics is - and it is basically analysing what's going on on your web site. But it does seem to be something of an odd term to have gained such popularity.
Your web site - if you use it correctly - is a source of very rich information about your customers and, just as importantly, your potential customers.
The term should therefore be more to do with 'customer' or 'market' analytics - neither of which is particularly in vogue.
The problem is that the term has to indicate somewhere that this subject area purely relates to the niche of activity represented by the web site and the merry band of customers who are 'connected' and use the internet as one of their main sources of information.
We think this is navel gazing blindness. If you still think that the web is not already mainstream - then you're what marketers used to call 'laggards' in terms of the diffusion of innovation model. And you're not only not visionary in your thinking - you're positively medieval.
Think on this. With the exception of large retail chains, if you are a reasonably successful business, your web site is almost certainly referred to by your customers, potential customers, suppliers, the press, advertising organisations, competitors, researchers, students and just about anyone you can think of. In other words, more people see your web site than your brochures, vans uniforms or mailings. In the business-to-business field, your web site is your front door.
'Market analysis via web' is a slightly more clumsy - but more descriptive term of what we are talking about.