Will Web mergers lead to better ratings systems?

The Nielsen NetRatings alliance, announced today at @d:tech's fall conference in New York, follows the marriage between Web audience measurement leaders Media Metrix and RelevantKnowledge two weeks ago. Financial terms of the agreement were not disclosed, but Nielsen will acquire a "significant" equity share of NetRatings, executives said in a conference call. NetRatings will continue to operate as an independent company, but will work together with Nielsen to develop reliable measurements of at-work traffic. Workers' Net time is a black hole of information in the industry, because most corporations do not allow the software to be installed onto their computers.

The executives denied that their union was a knee-jerk reaction to the Media Metrix/Relevant Knowledge deal, saying they had been in negotiations "for months." The companies expect to report data jointly by first quarter of 1999. Also, both companies will continue to pursue their own paths.

"By combining the expertise of our two companies, we're creating the leading source of information on Internet usage," said John A. Dimling, president and CEO of Nielsen Media Research. "Today's announcement moves the entire industry closer to the day when strategies for using the Internet can be based on accurate, reliable and consistent information."

Pressure from advertisers
The consolidations followed advertising industry pressure from two advertising organizations, the Internet Advertising Bureau and the Advertising Research Foundation, to create voluntary Web traffic measurement guidelines made public this summer.

"I think the consolidations we're seeing here are the results of two forces. One that there is a demand from advertisers for more consistency for traffic measurement, and two, I don't think the business was enough to support four companies," said Chris Charron, an analyst at Forrester Research in Cambridge, Mass.

Before the consolidations, advertising media buyers who rely on the traffic numbers as one indicator of an appropriate buy, complained that traffic statistics from firm to firm could be double or triple that of another.

Unreliable numbers
"A lot of different numbers are floating around there," said Rich Lefurgy, chairman of the IAB in New York this summer. "The Association of National Advertisers did a survey (of media buyers), and they said that a lack of reliable measurement was the No. 1 reason why they didn't buy on the Internet."

Web buys make up a mere 0.3 percent of all advertising spending, Charron said, and that won't increase dramatically until advertisers feel more comfortable with the traffic statistics.

Nielsen began tracking Web users earlier this year, and NetRatings launched less than a year ago. Each has clients of their own, but no clients for the combined effort. Plans are under way to unveil the fruit of their combined efforts.

Together, the two will use Nielsen's panel of Web users and a modified version of NetRatings' tracking software. Conversely, Media Metrix and RelevantKnowledge merged both, doubling their panel size to about 15,000.

Martha L. Stone teaches New Media & Technology and Interactive Marketing at Roosevelt University in Chicago. She is a regular contributor to ZDNN.