Merger may mean standard measures

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Web advertising buyers and sellers applauded merger plans announced last month by Internet research rivals NetRatings Inc. and Jupiter Media Metrix Inc., saying a combined company will solve many problems associated with online measurement.

On Oct. 25, Milpitas, Calif.-based NetRatings, which provides the Nielsen/NetRatings audience measurement service with partner Nielsen Media Research, New York, said it would acquire Jupiter, New York, in a deal valued at $71.2 million.

For NetRatings, the Jupiter acquisition means growth in terms of capabilities, client base and company size, as well as access to Jupiter’s lucrative research expertise.

"We like the fact that there will be a combination of resources dedicated to addressing the

[measurement] issues," said Greg Stuart, interim CEO of the Interactive Advertising Bureau, which has been addressing online measurement issues for several years.

The IAB’s chief focus has been working with the industry to set guidelines to make online advertising easier to buy. NetRatings and Jupiter have different methodologies for recruiting panels and gathering and reporting data; the discrepancy in numbers coming from each service has caused frustration for both ad buyers and sellers looking for consistent data on which to base decisions.

"It creates one system of consistency, so now we can focus on accuracy," Stuart said.

Showing consistent data

Web publishers who use ratings information from both services to sell ads on their sites were pleased with the deal, saying it would help them show consistent data to advertisers and agencies.

"It was very difficult for even large sites to afford two services," said Cheryl Brink, VP-research and market intelligence at CNet Networks Inc., which sells heavily to b-to-b advertisers. CNet now subscribes to NetRatings for domestic data and Jupiter for international data, due primarily to existing contracts, she said.

"We hope they combine the best practices of each one," said Brink, noting that NetRatings and Jupiter have invited existing clients to discussions about the new service offerings.

One concern voiced by buyers and sellers alike is the existence of two audience panels and how the merged companies will provide data from these panels in the future.

"We’ll probably end up with a panel in each [geographic] market and pick best-of-breed," said Tim Meadows, exec VP-products and services for NetRatings.

"We want to maintain high information quality, and we don’t believe you get that through merging the panels," he said.

Questions raised

Another question raised by both buyers and sellers concerns the availability of convergence data, which would report on TV usage and Internet usage.

NetRatings, through its partnership with Nielsen, recently convened a convergence panel of 200 households, and monitored TV and Internet usage data. However, it has made no announcement about when it might be offering convergence data.

"Clearly there is still interest in convergence data," Meadows said. But he added the study didn’t provide a level of detail as "actionable" as clients wanted. NetRatings is continuing to look at convergence data as a business opportunity, he added.

Amy Vranicar, media supervisor at b-to-b agency NKH&W, Kansas City, Mo., said, "I think it will make it easier to buy Internet [advertising]."

However, she added, "With b-to-b, you’re looking for such a specific audience, numbers for broad reach are not as important. You want to look at audience numbers from each site."

Financial attractiveness

Meadows said the financial attractiveness of the deal cinched it for NetRatings.

"[Jupiter] is a company that had over a billion dollars in market cap a year ago, and now it’s $71 million," he said. "It was the best move in terms of our balance sheet we could have made."

NetRatings and Jupiter have 140 and 400 employees, respectively. What remains to be seen is how many employees will be retained once the acquisition is completed. Meadows said cutbacks are a possibility but declined to provide specifics.

"There is a fair amount of overlap in the measurement business, and since we’re trying to grow the revenue base, we’ll be cutting expense duplication," Meadows said.

Jupiter brings about 750 clients to NetRatings, doubling its client base.

Jupiter’s research capabilities, particularly in financial services, are also a boon to NetRatings. "They have industry expertise, and we can couple that with data," Meadows said.

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