Counting Clicks: Now A Mainstay
Monday, October 20, 2008
In 1999, eyeballs were all the rage.
It was the height of the frothy dot-com days, when start-up business models hinged on luring enough people to a free Web site to someday sell advertising on it. Measuring those eyeballs, no matter how much they were worth, looked like an obvious gold mine.
"A 10 percent jump in traffic would cause stock prices to skyrocket," said Magid Abraham, who took that cue and started Web-measurement firm ComScore.
Eyeballs matter even more now that legitimate companies' fortunes rise and fall with Internet traffic and the advertising it attracts. ComScore has become one of the most relied-upon barometers for online behavior. It analyzes which sites consumers are flocking to, how much time they spend there and which ads catch their eyes.
Advertisers say such data will become even more important as marketing budgets shrink in a weakening economy. Even companies such as Google, which have disputed ComScore's figures, continue to subscribe, and Abraham is sanguine about his firm's future. But although current users of ComScore's information might not drop the service, subscriber growth may not keep up its rapid pace.
"If your business involves the Internet, you're buried in data, and you can't get enough of it," said Geoffrey Ramsey, chief executive of eMarketer, a research firm that uses ComScore's data in its analysis of trends in e-commerce and online behavior. "Everyone is looking for more data and insight, and that won't change."
ComScore was one of the few local tech firms to survive the dot-com crash and now has more than 500 employees in 10 offices around the world, including a new headquarters in Reston Town Center. After leading other consumer-focused data companies, Abraham started ComScore in Northern Virginia to tap into the bustling tech scene of the late 1990s. In the grim time following the bubble's burst, he managed to raise millions of dollars in venture capital and persuaded more than 2 million Web surfers to let ComScore keep track of what they browse and click online.
The company tries to answer important questions for Web firms: Did a particular marketing campaign draw new users? Are competing sites poaching Web surfers? How are rivals attracting advertising dollars? Venture capitalists weigh ComScore's data when deciding whether to invest in a new Web start-up. Marketers are willing to spend more to advertise on a site that, according to ComScore, has a lot of viewers.
Shareholders also watch ComScore's data: In February, Google's stock fell 5 percent when a ComScore report showed paid search clicks -- the biggest source of revenue for Google -- were slowing.
Google declined to comment for this story, but chief executive Eric Schmidt told analysts at the time that the third-party data was inaccurate. Abraham defended ComScore's report in a blog entry, saying Google's own internal changes intended to improve the quality of search results "may have resulted in a reduction in the number of paid listings and, therefore, the opportunity for paid clicks to occur."
ComScore's own stock sank when analysts suggested its research figures were not comparable to those of other measurement services, including those of its biggest rivals, Nielsen NetRatings. And Abraham said his company was "hammered when Google ended up having a decent quarter."
He said that ComScore's data are not intended to affect a company's stock and that they don't indicate larger economic trends.