Sifting the data on Web audiences
LONDON: The Web site Apple.com attracted nearly 16 million American visitors last month. Some of them got there by typing in the address directly; others used a search engine, linking to company's site via nearly 25,000 different keywords, including "iTunes," "iPod" and "iPhone."
So says Compete, a company based in Boston that tracks Internet traffic. How does it know? It has installed its software in the computers of 100,000 Americans - with their permission - allowing the company to track their every movement on the Internet. It gets additional, anonymous data on about two million American Web users from Internet service providers.
That is a lot of people, but a far cry from the total U.S. Internet population - more than 200 million, according to some estimates. Like other monitors of Internet traffic, including Nielsen Online, Hitwise and ComScore, Compete extrapolates total Web audience figures from such samples, in a system similar to the panel-based research that is used to measure television audiences.
Marketers rely on these numbers because they are skeptical about data submitted by individual Web publishers, which often seem to overstate their own audiences, at least by comparison with independent measures.
So, for all the talk of the Internet being the most measurable, accountable, transparent medium ever invented, it can still be a frustrating place for marketers who just want to know exactly how many people will see their ads.
That is why Taylor Nelson Sofres, a market research company, said last week that it had spent $75 million, with as much as another $75 million still to come, to acquire Compete.
"We are listening to our clients, who have been telling us they want more and more information on the online environment, to help them allocate their marketing budgets," said Jean-Michel Portier, chief executive of TNS Media Intelligence.
In addition to providing Internet audience figures, Compete analyzes the Web behavior of its panel members. It can spot patterns that help marketers fix problems on their sites - if, for example, large numbers of users search for air fares on one site but end up making their reservations on another.
The acquisition intensifies an arms race among market research firms and others seeking to provide this kind of data to marketers. In addition to buying Compete, Taylor Nelson Sofres last year bought a company called Cymfony, which tracks chatter about brands and products on blogs, social networking sites and other Internet forums.
Nielsen Online has been making similar moves, acquiring Buzzmetrics, which keeps tabs on where brands stand in Web 2.0 environments, and building out its Internet measurement tools.
ComScore, which remains independent, and other Web trackers have been experimenting with or adding new "metrics" to deal with the growth of online video, which could make current gauges like unique visitors obsolete.
Compete is a relatively small player, with a less than 5 percent share of U.S. spending on Web data, according to analysts at Morgan Stanley. It generated less than $15 million in revenue last year and posted a loss of $4.5 million.
It has a slightly different business model from its larger competitors, giving away some of its data free of charge on the Web, while reserving more detailed analyses for paying subscribers.
"This deal will further the competition in this already hotly contested area," said David Hallerman, an analyst at eMarketer.
With U.S. spending on Web data set to grow to $500 million in 2009 from $325 million last year, according to TNS, there is plenty of potential growth. Analysts expect TNS, based in London, to expand Compete's services internationally. And TNS, not content with existing Web measures like unique users, page views and hits, is betting that there are other ways to expand the market.
"There are plenty of metrics that have still to be invented," Portier said.
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