Google Analytics, IP Anonymization & Geo Data Quality
Privacy - it's really important. And Google Analytics has a number of features to help you enforce different privacy settings. Sometimes these features can have an effect on your data.
One such feature is the Anonymize IP address setting. This setting let's you erase, permanently, the last part of an IP address. When enabled this setting will change an IP address from XXX.XXX.XXX.XXX to XXX.XXX.XXX.0.
This actually happens with the data is in memory before it's written to a disk. It's REALLY fast.
Since IP address is used to identify the geographic location of the user this can lead to some funny Geo data. HOWEVER, in various studies it's been found that the last part of an IP address is not critical in Geo identification.
The best rule of thumb is to use the geo data as a guide and not an absolute truth when used with Anonymized IP.
Want to know more? Check out the Google Analytics help center.http://support.google.com/analytics/bin/answer.py?hl=en&answer=2763052&topic=2919631&ctx=topic