Kate Bulkley, Media Analyst.

Sizing up the web

By Kate Bulkley

The Guardian

Monday January 20, 2003

The internet needs to sell itself to advertisers. And there are better ways of doing this than counting hits, clicks and page impressions

The way the world is using the internet is changing and so is the way advertisers measure its effectiveness. Where once the admen only checked hits, clicks and page impressions, in 2003 and beyond the key measurements of new media success will increasingly be more sophisticated.

And although many in the new media industry both welcome and expect the advent of this sophistication, the company at the forefront of internet audience measurement says that changes are not happening fast enough.

"The online advertising industry has got to grow up," says Bill Pulver, chief executive of Nielsen NetRatings (NNR). "It's got to stop selling itself on page views and the AOLs, the Yahoo!s and the MSNs have got to lead the way." According to Pulver, the Aussie who took over at NNR early last year, there is a "sad lack of sophistication in how to sell the internet." He adds: "At the moment the leading online companies are positioning themselves like an outdoor advertising medium. We are trying to give them the tools that give them the same stature and sophistication as the rest of the media industry."

Of course, as the head of a company that makes its money selling audience research tools, Pulver would say that, wouldn't he? But Pulver isn't alone in his critique. "There has been a polarisation in the marketplace in the last 12 to 18 months between those that get it and those that don't," says Andrew Walmsley, of specialist online advertising agency i-level.

Part of the problem with the ad men's perception of new media comes from the retrenching since the internet bubble burst; many companies that experimented with online during the boom dropped it like a hot potato. Even today the UK online advertising market is still relatively small, accounting for 1.5% of total advertising spend, but consumers are using the new medium much more than many advertisers give it credit for.

In fact, the internet's share of all media consumption by the average adult in the UK is about 7%, according to i-level. "These figures include adults who don't even have an internet connection and have never heard of the internet," says Walmsley. "That says that marketers are substantially under-investing in online."

The good news is that ad budgets are including growing amounts for online campaigns. This year, UK online advertising is expected to grow 46%, according to forecasts from i-level. So with the increase in traffic, it's no wonder that changes in measurement are inevitable.

When internet was booming, the websites and the advertising industry were both focused on traffic - how many hits the website had or how many page impressions there were. In fact, all those newly-minted internet companies liked the idea of ramping up these eyeball numbers because it was a surefire way of increasing their stock market valuations.

After the dotcom bust, it became clear that even if a site attracted a massive number of eyeballs, this wasn't enough to fulfil a business plan. In addition, there was confusion about how different new media "experts" - that is, everyone from websites to research groups to industry associations - were measuring effective internet usage.

"The days of selling online advertising because it's cool are dead," says Bob Ivins, the research director at Yahoo! Europe. "You need to be able to sell facts like 'We reach the right audience' or 'We are cost effective' or 'We can measure brand equity more accurately'."

Still, some parts of the industry are still holding on to page impressions as their key measurement tool. "Page impressions are not the only arbiter, but they do have a use and also the UK industry is saying that this is what they want right now," says Richard Foan, managing director of ABCe, a UK industry-owned electronic media auditor specialising in census-style measurement such as page impressions. "Page impression is an easy metric to grab on to and it has a comfort zone because it has the word 'page' in it, but there is a lot of sophistication behind it like the length of time between impressions."

Knowing the number of page impressions is not a bad thing, but it can distort the whole media picture if viewed in isolation, says Walmsley. "The reason people are so obsessed with page impressions is because they are implying old media metrics. It's important to know the circulation of a newspaper if you're buying an ad because you're buying the whole circulation. But it's not important for a website because you're only buying a finite number of page impressions."

Pulver's view is that the jump to measurement using large internet user panels and away from simple counting of eyeballs needs to happen now. After all, he has spent the past 12 months and $71m (44m) in cash and stock buying up his main rivals in the internet measuring business to create a portfolio of audience measurement services that makes NNR an "online solutions" company.

By March, Nielsen NetRating will launch a 50,000-household measurement panel in each of the three leading European online countries - the UK, France and Germany. This number of households is the kind of sampling size that new media measurement needs to rely on. In the UK, for example, NNR's biggest panel previously has been less than 10,000 households.

NNR is not alone in its race to change the online measurement environment - and quickly. Another American-based company, Comscore Networks, claims to have been operating a UK panel of more than 100,000 households for at least a year, mostly for US-based companies. The UK is Comscore's second largest panel outside the US and the company is set to increase its sales presence in the UK as well.

The whole new media industry knows that panel research delivers richer results such as insights into online behaviour and e-commerce patterns. Also, smaller panels used in the past have not caught the smaller websites, but the larger panels can do this and also deliver the rich material.

"You need mega panels in order to give significant data," says Pulver, "and, once we set them up, we're home from the races because TV and radio can't do these things. With a mega panel we can go in and, for example, ask extra, more revealing questions."

This can only be good news for niche websites that might have high appeal to advertisers but today are "under-measured." According to a recent PriceWaterhouseCoopers survey for the Internet Advertising Bureau 79% of online ad spend in the UK goes to only the top 10 internet sites, including the usual suspects, such as MSN, Google, Yahoo!, AOL and Freeserve. The problem is that these top 10 portals only represent about 30% of the total UK web traffic or impressions.

"You could argue that if the panels were big enough you could measure all the websites," says Foan. "The trouble is that the smaller the website, the bigger the panel you need to give statistically relevant data on the visitorship and usage of that website. So it's all very well saying you don't need census-based traffic research providing you've got panels of hundreds of thousands around the world, but at the moment they haven't."

So, as the battle of the mega panels gets under way in the UK in the next few months, this verdict will be given at least a good run for its money.


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