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Soon to be worthless: Nielsen Net Ratings and comScore Media Metrix

Posted By Barry Ritholtz On October 8, 2007 @ 7:15 am In Data Analysis,Digital Media,Financial Press,Venture Capital,Web/Tech,Weblogs | Comments Disabled

Reuters is creating a new financial "blog ghetto."

Their business model appears to be essentially a "Seeking Alpha [1]" aggregation approach, with the added element of splitting advertising revenue with the analyst/authors. Over the summer, I was asked to participate in this. I wasn’t interested in 30% of the revenue for 100% of my content. 

Howard Lindzon [2] notes some of the more onerous requirements of the Reuter’s contract at his blog. One item in particular grabbed my eye:

"You agree to sign the Letters of Agreement assigning all key syndicated traffic
measurement firms, including but not limited to Nielsen Net Ratings and ComScore Media Metrix . . ."   
-Reuters blog revenue sharing contract

Over the past quarter, two other media outlets looking to share advertising revenue, each asked for a similar clause:

traffic to your blog will then be assigned as traffic to ________."

This is intriguing: I have now seen this or similar demands from 3 separate mainstream media outlets: A wire service (Reuters), a financial magazine, and a major newspaper. In all three examples that I reviewed, the blog itself isn’t transferred or sold to the media outlet (for examples, see Kevin Drum/Washington Monthly [3] or Andrew Sullivan/The Atlantic [4]).

Note that this is not only to measures ads, but for all traffic: While I do understand they are trying to show the collective reach of the
advertising, but that is not how it is stated in the contract. "Blogger
will assign ALL MEASURES OF WEB TRAFFIC" just seems wrong.

That is not what this about — they are merely acting as advertising
agency, selling and placing ads, and then sharing the revenue. Its one
thing if they have a specific ownership relationship (purchase,
employer etc.)

This is big business, with online advertising now $20 billion per year [5].

What does this clause actually mean — to the new measuring metrics, to bloggers, and to the Media’s push onto the web? Let’s consider the ramifications:

1) This is nothing short of a naked grab to steal Blog traffic numbers, and artificially boost MSM web traffic numbers.

The print editions of newspapers and magazines have been seeing their circulation numbers ebb, while the web versions are signficantly growing. However, trying to figure out how to "game" these traffic ratings is not exactly what "competition in the market place is all about. Imagine if Baseball teams could buy wins, if TV shows could buy ratings, if CDs could buy sales.

There is a faint whiff of desperation to this.

2) Nielsen Net Ratings and comScore Media Metrix data are soon to be — assuming they are not already –  worthless bull$h%t. If these ratings companies are complicit in this arrangement — or if they even know and  tolerate it — their business model goes kaput. Since major MSMedia are attempting to buy ratings, these rating will no longer accurately measure true traffic. I’m not saying its fraud, but it sure smells like bullshit.

What will occur instead is that Nielsen Net Ratings [6] and comScore Media Metrix [7] will actually be a measure of how many fools various publishers can get to sign documents assigning the bloggers’ traffic to themselves

Neat trick, but the data becomes meaningless.

3) This means that, very soon, web Advertisers will no longer be able to trust the data they get from publishers or these traffic rating agencies. Ad revenue rates are based on click-throughs and page-views. However, CPM rates are negotiated — not measured. Hence, I assume is that this is for setting higher CPM rates (plus bragging rights).

4) I don’t know the VCs behind the rating outfits, but I cannot believe the original pitch included anything like  "And, our ratings can be easily traded and assigned, making them essentially worthless as a web metric."

I don’t know if "Fraud" is too strong a word, but if I were them, would be very, very pissed off. Why? I will bet you that the web traffic scores will soon be as informative
and reliable as the S&P or Moody AAA ratings on sub-prime mortgage CDOs.

5) I have seen what is practically the identical proposal from several
different, unrelated media firms.

This makes me think that the same
brain trust is behind it — some law firm/think tank/McKinsey-type
group. Amusingly, it looks like the sleazy consultants/law firms sold
it over and over to different media outlets.

If their advertising model lacks ethics, do you suppose these firms have any themselves? Lesson for the media: When you get into bed with these sleazoids, expect them to try to screw you over also!

To err is human, but it takes an MBA-laden consulting firm to create a true clusterf@#& . . . .


UPDATE:  October 8, 2007 3:44pm

VentureBeat notes the ongoing confusion between advertising measures and traffic measures:

Glam to sign $1 billion ad deal — and draws critics [8]    

Numbers are being thrown around that make this all a big game of smoke
and mirrors, and every player is wrapped up in this. Note, for example,
that Sugar claims 4.5 million unique visitors a month, as reported by Techcrunch [9].
Brian Sugar tells us these numbers are based on Google analytics.
However, Comscore, which is what advertisers rely on, shows a much
lower number.


U.S. Web Ad Spending Nears $10 Billion In First Half ’07 [5]
InformationWeek, October 4, 2007 03:00 PM

A New Ratings System Stirs Up the Fall TV Season [10]   
NYT, October 8, 2007

The Battle for the Consumer Online [11] 
NYT, October 8, 2007

Extra! MSNBC.com buys Newsvine [12]   
Paul J. Gough
Hollywood Reporter, Sun Oct 7, 2007 11:52pm BST

Article printed from The Big Picture: http://www.ritholtz.com/blog

URL to article: http://www.ritholtz.com/blog/2007/10/soon-to-be-worthless-nielsen-net-ratings-and-comscore-media-metrix/

URLs in this post:

[1] Seeking Alpha: http://www.seekingalpha.com/

[2] Howard Lindzon: http://howardlindzon.com/?p=2704

[3] Kevin Drum/Washington Monthly: http://www.washingtonmonthly.com/

[4] Andrew Sullivan/The Atlantic: http://andrewsullivan.theatlantic.com/

[5] $20 billion per year: http://www.informationweek.com/news/showArticle.jhtml?articleID=202201206

[6] Nielsen Net Ratings: http://www.nielsen-netratings.com/

[7] comScore Media Metrix: http://www.comscore.com/metrix/

[8] Glam to sign $1 billion ad deal — and draws critics: http://venturebeat.com/2007/08/12/glam-to-sign-1-billion-ad-deal-and-draws-critics/

[9] Techcrunch: http://www.techcrunch.com/2007/06/26/sugar-publishing-raises-new-round-partners-with-nbc-universal/

[10] A New Ratings System Stirs Up the Fall TV Season: http://www.nytimes.com/2007/10/08/business/media/08ratings.html

[11] The Battle for the Consumer Online: http://www.nytimes.com/2007/10/08/business/media/08zuckerman.html

[12] Extra! MSNBC.com buys Newsvine: http://uk.reuters.com/article/industryNews/idUKN0727411220071008

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