By SETH SUTEL, AP Business Writer, NEW YORK - Online advertising jumped 25 percent this year, raking in a cool $20 billion, but Internet executives say that figure could have been even higher if advertisers had reliable and consistent ways to measure online audiences.
Unlike traditional media, where each format has one main ratings provider — The Nielsen Co. for television, Arbitron Inc. for radio and so on — there are many sources of data on online audiences. And they frequently conflict.
Disagreement also continues over which criteria best gauge users' potential interest in a product or service. And the resulting data aren't easily comparable to ratings in other media anyway.
It's a "problem of plenty," as Manish Bhatia, president of global services for Nielsen Online, a unit of The Nielsen Co., told a recent conference on online audience measurement.
Web publishers are frustrated that the lack of cohesion is holding them back from capturing more of the $250-billion-a-year U.S. advertising pie, especially given the huge amount of time people spend online.
"This industry looks like it can't get out of its own way," said Steve Wadsworth, president of The Walt Disney Co.'s Internet group. "We need measurement of the audience and their use of the system that's clear, simple and actionable for a marketer. You need comparability with other media."
As Internet executives hash over clickstreams, page views and user panels, 2008 is sure to see even more evolution of the way online audiences are measured. Other media — including TV, radio and billboards — also are revamping the way they calculate ratings in response to pressure from advertisers trying to measure how effective their ad dollars are.
David Hallerman, senior analyst at research company eMarketer Inc., said many large advertisers remain shy of the Internet because of confusion over audience measures. Some also want to stick with video ads, which are still in their early stages on the Internet.
The Interactive Advertising Bureau, which represents more than 300 Web publishers, has called for Nielsen Online and comScore Media Metrix to undergo audits by the Media Rating Council, a process that is still under way. ComScore and Nielsen both still use panels, while Quantcast Corp., a relatively new agency, combines panel and Web-based data to produce ratings.
Resolving what to measure is as complex as deciding how to measure it. Some sites produce their own ratings based on internal server logs, on the theory that panel-based data understate traffic. But comScore says internal logs can overstate traffic when users delete identifying files called cookies from their browsers because servers think they're seeing a "unique visitor" each time that user arrives.
Counting unique visitors can also be challenging — and lose meaning — when an individual logs in to several different computers, or a family of six all use the same computer. "Page views," once a key indicator, haven't been since Ajax software let people view different elements on one page instead of going to a new page for each one.
From any vantage point, there's still no clear equivalent for reaching a potential audience of 18 million people around the country at the same time with a single ad on "Desperate Housewives."
"There aren't well-established, tried-and-true standards in the industry, which need to be worked through," said Jeff Marshall, senior vice president of digital marketing at Starcom USA, a major ad-buying agency. "The concerns are escalating as more and more of our clients are shifting significant amounts of money into the space."
Traditional measures may not even apply to the Web, some executives say, because the benefits the Web offers — most notably, the opportunity for users to click right through and buy the advertiser's product — aren't comparable to other media.
But Web publishers want to give advertisers some basis for comparison.
"Advertisers want to be able to understand that their online spend got this reach, and their offline spend got that reach," says Jim Spanfeller, president and CEO of Forbes.com.
Or, as Randall Rothenberg, CEO of the Interactive Advertising Bureau, put it: "Marketers want to know, If I take $10 out of TV and put it into online, am I getting $10-plus back?"
Peter Daboll, a research guru at Yahoo Inc. who holds the title Chief of Insights, acknowledges that it's still a "challenge" to work through the various kinds of online data.
"We're not dealing with a perfect science here," said Daboll, formerly chief executive of comScore. "What we're trying to do with our advertisers is take some of the mystery out of this."
Indeed, advertisers are demanding just that.
Bob Liodice, CEO of the Association of National Advertisers, said corporate leaders have been ratcheting up the pressure on marketing departments to justify their ad budgets with hard proof they are generating business.
In response, TV broadcasters this fall started counting how many people watch commercials during a show. Radio ratings company Arbitron Inc. is rolling out a new electronic measurement system that uses a portable device to capture what stations people actually hear, instead of what they recall hearing. The system is running in Philadelphia and Houston, with nine more markets to be added in September.
And the outdoor advertising business will replace estimates of vehicle and pedestrian traffic in front of billboards with a measure that takes into account how visible a certain billboard is. The new measure will also include estimates of demographic data, something other media already provide.
Advertisers seem fed up with the adage that half their ad spending seems to work, they just can't tell which half.
"CEOs finally said, enough is enough," Liodice said. "We have to know with greater specificity what comes out when something goes in."
By SETH SUTEL, AP Business Writer, NEW YORK - Online advertising jumped 25 percent this year, raking in a cool $20 billion, but Internet executives say that figure could have been even higher if advertisers had reliable and consistent ways to measure online audiences.