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Web Metrics and Grains of Salt
By: Brian Stelter, The New York Times | 21 Apr 2008 | 10:28 AM ET
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Perhaps Internet metrics should come with a warning label: “handle with care.”

Stock in the measurement firm comScore slid in after-hours trading on Thursday after Google reported surprisingly strong first quarter earnings. Why the decline? Analysts were primed for a poor performance from Google [GOOG  Loading...      ()   ] after three straight months of comScore reports showing a slowdown in paid clicks on the Web giant’s sites.

Google derives income when users click on advertisements, and the apparent deceleration — comScore [SCOR  Loading...      ()   ] projected only 2 percent growth in paid clicks in the United States, compared with 30 percent growth in the previous quarter — led many analysts to cut their estimates in anticipation of Google’s earnings news. It also prompted speculation that the economic downturn was affecting the online advertising market.

But on Thursday Google reported a 20 percent rise in paid clicks from comparable quarter in 2007. Eric E. Schmidt, the chief executive of Google, pointedly said on the earnings call that “paid click growth was much higher than has been speculated by third parties.”

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The swipe at measurement firms like comScore did not go unnoticed. Technology and media leaders have long held reservations about the data provided by the companies who serve as Internet traffic reporters. Using panels of self-selected individuals and samples of users who share access to their online activity, the companies measure page views, spending habits and advertisement engagement. Their numbers sometimes vary significantly from the internal measurements of Web sites.

Last week, though, comScore’s estimates were shown to be directionally correct. The growth in Google’s paid clicks is slowing, although perhaps not to the extent that comScore had projected. Google’s 20 percent growth figure included international traffic, leading analysts to presume that a rapid rise in paid clicks in other countries offset slower growth in the United States, where comScore’s measurements were made.

But analysts cannot know for sure because of a “dearth of public information” available about Google’s revenue drivers, said Andrew Lipsman, an analyst for comScore, in a blog post on the company’s Web site about the discrepancies.


Current DateTime: 07:02:27 25 Nov 2009
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Magid M. Abraham, the chief executive of comScore, said the company shared its paid click estimates only with analysts who were aware of the limitations of the data. When it enters the bloodstream of Wall Street, however, the qualifications are often lost. “At the end of the day, our data is really only one element for predicting profit and loss,” Mr. Abraham said, “but people become overly focused on it.”

Mr. Abraham said comScore intends to accelerate its introduction of international paid click measurement.

ComScore’s stock closed down 40 cents, or 1.70 percent, at $23.18 a share on Friday.

Copyright © 2009 The New York Times
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