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    .COM – LIVE

    Hosted by Leslie Walker
    Washington Post Columnist
    Thursday, July 29, 1999 at 1 p.m.
    Leslie Walker
    ".com" columnist Leslie Walker

    Welcome to ".com - Live," a real-time, moderated discussion with people shaping business strategies in the era of electronic commerce. My guest this week is Jim D'Arcangelo, senior vice president of Media Metrix, Inc., a leader in measuring how people are using the Internet.

    Media Metrix's reports have become a standard in the Web rating wars, helping to set advertising rates by estimating how many people visit each site and how long they spend there.

    The company installs patented metering technology on a representative sampling of more than 50,000 computers at people's home and offices to monitor their Internet usage habits.

    Founded in 1996, Media Metrix merged with its chief rival, Relevant Knowledge, last November. It sold its first stock to the public in May — 3 million shares or an 18 percent stake.

    D'Arcangelo was online live Thursday, July 29, to discuss how Web surfing has changed since the Internet went commercial four years ago, what the data shows about today's Internet audience and highlight other Web surfing trends emerging today.

    Transcript Follows

    Leslie Walker: Hello folks. Welcome to everyone, especially our guest, Jim D'Arcangelo. We're glad you could be here to tell us about the Internet audience.

    Let's start with an overview. Media Metrix has been chronicling a huge story--the rapid growth of the Internet audience, which went from being a male--dominated, gearhead-type group in 1997 to a more mainstream crowd in 1998. Now the Net increasingly reflects the demographics of the overall population, with people using it for basic aspects of daily life--chatting, shopping, dating, scheduling appointments.

    Media Metrix's latest report, for June 1999, showed about 63 million Internet users in the United States, up a little more than 1 percent from May. The average person went online 12 times in June and spent an average of 38 minutes each day. Overall, the average user spent nearly 8 hours online in June. Big numbers indeed.

    So Jim, could you tell us some of the trends you see in the Internet audience. Both in terms of audience demographics and growth rate. How fast is the Net audience expanding, and is it changing much?

    Jim D'Arcangelo: Leslie, clearly the merging demographics story is a big one. women on the Web equalled men for the first time, by our measures, in Feb. This has huge ramifications in a number of aspects on the Web. For example, shopping. Not from a stereotypical way, but perhaps due to factors such as being more time pinched than men, women have become a signigicant force in online shopping as many ecommerce sites' transactions are being driven by women in the majority.
    Overall, growth of Web traffic continues to be strong. There have been stories of the end of the growth of Web usage. What we see is the typical seasonality that hits all media and has hit the Web during our three years of measuring the space. The fact is that people go outside and spend more time outside during the spring and summer than they do during the winter. Just like TV realized decades ago when programming schedules were set for repeats in the summer and new shows in the fall.

    Leslie Walker: Last summer you reported that community sites--such as home-page builders Geocities, Tripod, Angelfire--were the fastest growing on the Web. Yahoo, Lycos and other big portals promptly snapped them up at expensive prices. Now what category of Web content seems to be growing most rapidly? E-commerce? Chat?

    Jim D'Arcangelo: On a broad level, commerce is the fastest growing. I say broadly because areas like auctions are included in this realm. There are many tiers of ecommerce that become more and more apparent as we analyze our database of clickstream data from our 50,000 person panel.

    Branching out from my ecommerce statement above, we see significant increases in many areas, some partially defined by your perspective. For example, the portal sites are still doing quite well, but their definitions are obviously changing significantly. Chat areas are growing as well as they become more targeted and better defined to meet the needs of specifically targeted or self-targeted areas. Look no further than the importance being placed on personal messenger services.
    From a growth percentage basis new applications that use streaming media and media applications like MP3 are growing quickly.

    San Jose, CA: To what extent to you measure AOL member's habits--how much inside and how much outside AOL's own proprietary area? Do AOL members' online habits differ much from the rest of Web users?

    Jim D'Arcangelo: We fully measure AOL users both on the Web and in their proprietary network. They are particularly strong during "non-working" evening hours. Their users are very loyal. in certain applications, they have a very high propensity to make purchases.

    Newport RI: What does your measurement technology reveal about usage of streaming media--especially video? Can you tell us how fast it's growing and what percentage of sites offer it?

    Jim D'Arcangelo: Streaming media is growing incredibly quickly from a percent age basis and even raw usage basis. We've seen several multiples of growth in the past year. As an example related to the space, a number I have at my finger tips here so I'll site it, MP3 file users were over 3.8 million in June 1999 versus a few hundred thousand in Jun 1998.

    Arlington, VA: Speaking as a marketer looking for ways to reach his audience... I find the whole web rating thing a bit silly. It's nice that all those people are visiting a site, but does that mean that my banner ad is doing me any good there? I do some banner ads but when trying to reach my b-to-b, narrowly defined audience, I'm finding direct mail FAR more effective... and banner good only when they are direct calls to action -i.e. step one of a permission building relationship, a la Seth Godin's thinking-. I'm curious about your thoughts on this...

    Jim D'Arcangelo: We see the web value story moving from just traffic to traffic plus leads plus transactions-driven mode in the future. Sites will be paid by their propensity to drive all three. Our look-to-book ratios for sites driving audience versus shoppers versus transactions is starting to show this.

    Bethesda MD: What do advertisers consider the most important audience metric--number of people visiting a site, number of pages viewed, length of time spent there, or what?

    Jim D'Arcangelo: This entirely depends on the company, the product being promoted and the campaign's goals. For some products, reach or audience matters as awareness is what they're after, especially for anew product. For others in the direct marketing mode, clickthrough on banners matters most. For others, time spent and loyalty/repeat visitors to dive site stickiness is key. It really comes down to the individual campaign. The beauty of the Web isagreements that it gives marketers much more flexibility than most fairly rigid traditional media.

    Sacramento, CA: Are you planning to measure usage outside the USA any time soon? If so, where and how will you measure it?

    Jim D'Arcangelo: We have agreements signed to measure France, Germany, the UK, and Sweden. Japan and countries like Canada, Australia and parts of S. America are in the works. Our goal is to provide global measures, national measures, local market measures for the Web and all "digital" media.

    Leslie Walker: What are the key differences you note in Web surfing from home and work--and which is the bigger audience?

    Jim D'Arcangelo: For all "digital" media (the Web plus proprietary networks like AOL, Juno, Prodigy Classic, etc.), home usage is stronger than work still in terms of unique visitors (UVs).UVs for home were 61.8M in May, versus 22.3M for work. In terms of usage days, however, work had 13.1 avg usage days in May versus 11.6 for home.

    Leslie Walker: What are the key differences you note in Web surfing from home and work--and which is the bigger audience?

    Jim D'Arcangelo: The key differences are significant, but many stem from some fairly predictable patterns. I mentioned AOL's unique strength among home users - Yahoo is strong during work hours. Shopping is very strong at home, but often more buying is is split more evenly. Home usage is very strong during evening and, to a lesser degree, weekend hours. Audience shift in day parts (morning versus afternoon versus early evening versus evening versus late night as examples) varies significantly by site as well. News sites, for example, get a lot of morning traffic.

    Leslie Walker: Researchers at Xerox did a traffic distribution study about a year ago, looking at 120,000 Web sites. They found traffic followed the so-called universal power law—-a small number of sites getting the lion’s share of traffic. In their sample, the top 5 percent of sites got 75 percent of the traffic.

    Does Media Metrix data confirm a similar trend?

    Jim D'Arcangelo: We see a similar trend but not nearly so strong. More like the 80-20 rule. But even this varies significantly by site and by user. As more and more sites are added and more and more people go onto the Web and digital media services, this may become more watered down. Obviously the sites which make up the 80% are adding more and more features to combat this.

    New York NY: What kind of interesting facts have you detected about Web transactions? Do you know which sites complete transactions at the highest rate? What are the key measurements you look at among the commerce sites?

    Jim D'Arcangelo: We track transactions by and by category. Tracking transactions has shown some amazing trends and differences that are not so apparent from audience reports. We track, for example, audience versus shoppers versus buyers by site, loyalty rates, repeat rates, etc.

    Overall, interesting factors that we've seen show that overall shopping is approx. 20% higher now than in the vaunted Dec. 98 holiday season. Transactions in many categories are consistent with that as well. The most successful sites get 80% of shoppers to the shopping areas of their sites within four clicks and within three minutes.

    Clearly some categories and sites within them are leaders in driving shopping transactions. I don't want to name names here, but the clear leaders in categories like apparel are strong markets across the board - offering strong promotion, good products and prices, easy transactions modes, and sites which are clean and are ecommerce oriented.

    Largo, MD: Are reports on the use of the internet for pornographic purposes overblown? Do you have any statistics that would tend to support or minimize this concern?

    Jim D'Arcangelo: Reports of the Web being dominated by adult-type sites early in the Web days had a lot of credence. This is much less so now as the Web has a much wider audience and much wider set of value propositions for those more diverse users. That AOL, Yahoo!, Microsoft, Lycos, etc. etc. (to name just a few) consistently show up in the top "sites" speaks to the issues of pornography not driving the Web.

    Austin, TX: Can you tell us which couple of sites people spend the longest amount of time visiting on the Web? And how much time is the average visit there? I would guess Ebay because auctions are time consuming, but who else?

    Jim D'Arcangelo: AOL proprietary, ebay, Hotmail are just a few of the to sites in average usage spent per usage day, with each of these sites holding users more than 15 minutes per usage day.

    Leslie Walker: There is a debate in the Internet industry over how big and persistent the audience for portals like Yahoo and Lycos will be. Some think that over time, as Internet users bookmark their favorite niche sites, they won’t need to spend as much time on the portals, whose main function has been to help people find sites. Does Media Metrix have data to support this idea that the portals’ overall share of Internet traffic/usage is increasing, declining or keeping pace with the Net’s growth?

    Jim D'Arcangelo: The portals are keeping pace with the Web's growth as they add features like auctions. What the portals are, generally speaking, is smart marketers who watch the research to see where traffic is going and what the trends show in areas where they do not have offerings. A prime example is auctions. Our shopping reports show that auctions are extremely strong areas for time spent, for loyalty, and for purchases driven. It is no wonder that Amazon made it the first category it moved to after books/music/movies. These sites, via our shopping reports, are coming to understand the similar powers of categories like travel.
    They'll move quickly where they need to to compete and succeed. The Web is a "build and they will copy medium." have this

    Washington DC: Will we see ad targeting broken down into ever smaller pieces? For example, will we be able to specify that ads should run only for women, ages 20-30 who make a certain salary, and who spend x amount of dollars in on-line commerce? Will advertisers be able to do that?

    Jim D'Arcangelo: I strongly believe so which is why companies oriented this way are doing well. Specific audience reach, timing by day parts will evolve as the Web moves from its still nascent marketing mode. The linkages of (online and offline) shoppers and buyers driven will become factors as well.

    Frederick, MD: Do you see ad clients demanding trend data in addition to site-owned monitoring tools -or a 3rd party traffic monitoring application-? In other words, trend data plus actual traffic reporting.

    Jim D'Arcangelo: Yes - we've seen it already among different sites. trends for seasonality, day parts, month-by-month, even trends for events (like snow storms for weather sites) are key - beyond historic audience trends.
    Third party monitoring is always a criteria for any area which desires to become a real ad medium. Site owned monitoring tools are valuable, but consistency in measures, definitions, etc are all very difficult to achieve as we have worked with a number of clients in this general area. Every site counts things differently.

    Elkridge, MD: How has the ratio of Internet users to number of Web sites changed in the last two years? And how does this change -if any- affect new Web sites' potential readerships?

    Jim D'Arcangelo: From our estimates, the ratios of users to sites remains fairly consistent. The challenge to new sites is the relative, and I do mean relative, maturing of the Web (it;s still extremely early). But clearly, there are major players with major audiences, major capital and major resources at their disposal. As time passes it gets more and more difficult for a site to come out of the blue and succeed - much more so than a few years ago. I guess like any gold rush....

    Leslie Walker: That’s it for today, folks. Thanks to all who sent in questions, and thanks especially to Jim D'Arcangelo for taking time to give us a glimpse of how the Internet audience are growing. We will be back in two weeks for another look at business strategies on the Web. Hope to see you then.

    © Copyright 1999 The Washington Post Company

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