Soon to be worthless: Nielsen Net Ratings and comScore Media Metrix
Reuters is creating a new financial "blog ghetto."
Their business model appears to be essentially a "Seeking Alpha" 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 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:
"All 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 or Andrew Sullivan/The Atlantic).
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 $20 billion per year.
What does this clause actually mean -- to the new measuring metrics, to bloggers, and to the Media's push onto the web? Let's consider the ramifications:
1) This is nothing short of a naked grab to steal Blog traffic numbers, and artificially boost MSM web traffic numbers.
The print editions of newspapers and magazines have been seeing their circulation numbers ebb, while the web versions are signficantly growing. However, trying to figure out how to "game" these traffic ratings is not exactly what "competition in the market place is all about. Imagine if Baseball teams could buy wins, if TV shows could buy ratings, if CDs could buy sales.
There is a faint whiff of desperation to this.
2) Nielsen Net Ratings and comScore Media Metrix data are soon to be -- assuming they are not already -- worthless bull$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 and comScore Media Metrix 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
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. Brian Sugar tells us these numbers are based on Google analytics. However, Comscore, which is what advertisers rely on, shows a much lower number.
>
Sources:
U.S. Web Ad Spending Nears $10 Billion In First Half '07
Reuters
InformationWeek, October 4, 2007 03:00 PM
http://www.informationweek.com/news/showArticle.jhtml?articleID=202201206
A New Ratings System Stirs Up the Fall TV Season
BRIAN STELTER
NYT, October 8, 2007
http://www.nytimes.com/2007/10/08/business/media/08ratings.html
The Battle for the Consumer Online
RICHARD PÉREZ-PEÑA
NYT, October 8, 2007
http://www.nytimes.com/2007/10/08/business/media/08zuckerman.html
Extra! MSNBC.com buys Newsvine
Paul J. Gough
Hollywood Reporter, Sun Oct 7, 2007 11:52pm BST
http://uk.reuters.com/article/industryNews/idUKN0727411220071008
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A few people wrote in to ask me about yesterday's Nielsen/Media Matrix rant. -Some pointed out (privately) the flaws in these systems, noting they have been very error-prone in other media -- radio, television, newspapers -- for years. -A few told me I... [Read More]
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Tracked on Oct 10, 2007 11:45:42 PM
» Traffic measurement: an alarming trend (The Big Picture) or business as usual (Valleywag) from Blogcosm
On Monday, Barry Ritholtz sounded the alarm at The Big Picture:
[Soon to be worthless: Nielsen Net Ratings and comScore Media Metrix](http://bigpicture.typepad.com/comments/2007/10/soon-to-be-wo [Read More]
Tracked on Oct 12, 2007 9:28:16 AM
Comments
Good Rant !!
Laughed out loud at the S&P, Moody's comment -- a great start for a Monday AM.
--Ken
Posted by: Ken M. | Oct 8, 2007 8:48:42 AM
Barry,
Isn't this just like buying gross sales numbers? Big fish buys little fish sees growth in sales...
What's the big deal? If you start blogging for Reuters, shouldn't they see an increase in web traffic?
~~~
BR: In all three examples, the blog isn't transferred or sold to the media outlet -- they are merely acting as advertising agency, selling and placing ads, and sharing the revenue.
Its one thing if they have a specific ownership relationship (purchase, employer etc.) -- but that is not what this about.
For examples, see Kevin Drum or Andrew Sullivan.
I'll add this up top, so as to make the point clearer . . .
Posted by: jb | Oct 8, 2007 8:49:40 AM
The concept of this approach shows that the people trying to boost their traffic numbers to increase ad revenue don't understand how online advertising is evolving. Who in their right mind would buy ads on a CPM model these days? I'm sure there are some ways it could work but they would be the exception.
The whole inflated web traffic ruse to sell ads had been around a long time. Many people buying the ads don't understand the basics of site traffic analysis and end up paying for things that don't exist (I'd call that fraud). It wasn't too long ago that people were still bragging about their site "hits" when selling ads. Ask them for their unique visitor numbers and they would change the subject.
I don't think they give courses in site traffic analysis at Harvard B-school.
There are vendors out there who will try to tell you they can estimate the site traffic numbers for industries and for individual websites. I've looked into their methods and I've also tested them against some of my own client sites (they didn't realize I had access to the real site traffic numbers from the log files). I have yet to see anyone come close to being accurate in estimating the site traffic if they don't have the log files. I have been in many meetings with marketing groups and been asked, "can you figure out how much traffic our competitors are getting?" My answer was always that there was no way to do that legally.
Basically if you have legit site traffic, you can make money and don't have to try to pump up your numbers. For most recent example check out this story.
Whateverlife.com generated a million dollars in revenue last year and is on track to do the same this year. Already, Qualls has turned down outside funding for her site and a verbal offer from someone willing to pay $5 million to buy her company.
Posted by: 12th percentile | Oct 8, 2007 9:06:01 AM
A lot of publishing companies believe that the future of what we now call "newspapers" is a "blog ghetto", where readers can access various bloggers' pieces on one centralized website (e.g. everything is one click away). What they fail to recognize is that Microsoft inadvertently created a blog ghetto years ago. It's called your Favorites Center and it comes with Internet Explorer.
Now, I can see how a publishing company can benefit bloggers like Barry by concentrating on acquring advertisers and maintaining IT, allowing the blogger to focus on more and better content. That said, those services are worth nowhere near 70% of advertising revenues. 15-20%, tops.
Posted by: Adam | Oct 8, 2007 9:22:36 AM
Nice article, Barry.
Welcome to the record biz. When SoundScan (also a Nielen commodity) was getting started, it provided joke fodder for months. Everything they claimed SoundScan would fix actually got worse.
Posted by: Mike Nomad | Oct 8, 2007 10:57:25 AM
Why don't they just ask the FED to bail them out? Fuck they are making more speeches lately than the preacher at The Dallas First Baptist Church...
Posted by: Justin | Oct 8, 2007 11:08:48 AM
This is a pretty common practice, even among big sites. I used to work for ESPN.com and they roll up traffic from a host of partners in order to maintain their number 1 position in uniques. It often was simply enough to have our headlines showing up in front of unique eyeballs, not just ads.
And the comment above about CPM ads being stupid is a bit off the mark. PPC models makes sense when your ads are directly about selling something or making a sale, but brand advertising (look how cool you'd be if you used Nike) is still about getting in front of eyeballs...
Sujal
Posted by: sujal | Oct 8, 2007 11:55:08 AM
No, Barry, I think this is precisely what today's "economy" and other social interaction are increasingly about -- managing perceptions and bullshit preferrably without contributing net value.
Posted by: cm | Oct 8, 2007 12:17:37 PM
And the comment above about CPM ads being stupid is a bit off the mark
I didn't say it was stupid, more that it is crazy. I'd prefer to build the brand AND make money. I don't believe those two are mutually exclusive. But if all you want to do is put ads online that no one will click on, I'm sure there are endless opportunities for you to spend your budget and build your brand.
Classmates.com is a good example of a company that built a brand online with massive sustained online ad buys. Of course they also have a good product and people click on the ads and go to their site.
And FWIW, Nike is spending at least some of their budget on a CPC basis.
Posted by: 12th percentile | Oct 8, 2007 12:26:28 PM
Barry,
Watch out! Maybe this will give Street.com ideas for their own financial blog ghetto.
Posted by: Christopher Laudani | Oct 8, 2007 12:46:57 PM
I've asked Erwin Ephron for a comment on this. I hope he'll show up.
Posted by: Hans Suter | Oct 8, 2007 12:54:33 PM
Geez, the Internet was so much more fun before business got involved in it!
But then, I've been playing on it since it was the ARPAnet, so I'm a bit spoiled....
Posted by: donna | Oct 8, 2007 1:16:04 PM
I believe George Carlin said that our biggest industry is the manufacture of bullshit.
(Unfortunately for me, I'm not getting accustomed to the smell.)
Posted by: wunsacon | Oct 8, 2007 1:17:14 PM
Adam, I don't think part of the deal is IT or support for the blog. Just "assign us all your traffic" (even if most people continue to read it here at bigpicture.typepad rather than reuters.com). That's where the scam comes in.
Posted by: paul | Oct 8, 2007 1:36:00 PM
I am looking at two different measures: if you want to see how many times an ad is served or clicked, that's one specific, easily quantifiable metric.
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.
Perhaps I am uncomfortable with the "Network" conceit. Its a distributed ad network, not a true broadcast network. Perhaps its because I rely on metrics to measure specific items like Inflation (CPI) or Employment (NFP)
Posted by: Barry Ritholtz | Oct 8, 2007 1:47:20 PM
The story of Glam.com- aka "Boo.com 3.0" to some people- will give you some ideas of where this strategy is supposed to lead. Read this:
http://www.techcrunch.com/2007/08/12/is-glam-a-sham/
And then this:
http://venturebeat.com/2007/08/12/glam-to-sign-1-billion-ad-deal-and-draws-critics/
It's not a bad thing to build a network- porn-hocking guys like me do this for both SEO and to create more targeted and direct marketing efforts. And the "network effect" seems to be a real phenomena.
But what Barry describes here is just MSM trying to go down this road using their pre-existing corporate weight and by slipping these clauses into their contracts in an underhanded way. That will just add to major advertiser's distrust in internet advertising due to the lack of concrete effectiveness metrics.
Posted by: Sherman McCoy | Oct 8, 2007 2:02:16 PM
Online advertising continues to be plagued by bad press; from click fraud to spyware and now the reliability of traffic data is coming into question. While online ad spending is improving, trust in online ads and online advertising doesn't seem to be.
Posted by: Jason Barnes | Oct 8, 2007 2:41:27 PM
The point here is this is a crap form letter by a major news source.
Any true intentions fromreuters would have easily been covered in a two line letter saying we like your stuff, we should talk about opportunities. This is just a spam letter to all financial bloggers fishing for traffic.
Posted by: howard lindzon | Oct 8, 2007 2:48:47 PM
Thanks Barry & Howard, interesting stuff.
They're getting desperate. Obviously a sucker deal as many at Howard Lindzon's site have already pointed out.
It's all about getting on the bandwagon for them. MSM wants blog-like features and credibility, hence the recent huge deal with MSNBC and Newsvine. If they can get it for peanuts, even better, right?
Posted by: David | Oct 8, 2007 4:32:24 PM
Is Comscore still completely dependent upon their browser plugin - aka, it is still 1997?
Posted by: ostiguy | Oct 8, 2007 8:03:38 PM
Great blog. I agree with you. Theses traffic
assignment clauses became common since the late 90s; you would be surprised how many sites cave into this demand by the party offering millions of eyeballs.
Posted by: Adam | Oct 9, 2007 5:42:08 AM
Barry barry barry - don't ya think that assigning traffic to nielsen/comscore is worth being able to monetize your site? you will never be able to get advertisers like reuters can w/o building a large sales team. i think you are missing the 'big picture'...
Posted by: dumdum | Oct 9, 2007 10:31:40 AM
I guess I don't see why one would expect better behavior from the same folks who bring you:
-- Sweeps, where standard programming is replaced by specials, yet ad rates are based on the numbers.
-- PBS pledge periods, where standard programming is replaced by specials to boost membership.
Nobody "in the know" believes any of the numbers. Nobody "in the know" cares -- they are just raking off a percentage of other people's money (in this case, the companies placing the ads).
Posted by: Jim Bergsten | Oct 9, 2007 11:53:06 PM
"Blogger will assign ALL MEASURES OF WEB TRAFFIC" just seems wrong.
_______________________________
Sure does, and the reason may be your omission of the word SYNDICATED. My guess, based on the language above, is that when I go to bigpicture.typepad.com, the click goes to you, whereas if I go to bigpicture.reutersuberalles.com, they get the click.
Posted by: John F. | Oct 11, 2007 8:36:12 PM
"Blogger will assign ALL MEASURES OF WEB TRAFFIC" just seems wrong.
_______________________________
Sure does, and the reason may be your omission of the word SYNDICATED. My guess, based on the language above, is that when I go to bigpicture.typepad.com, the click goes to you, whereas if I go to bigpicture.reutersuberalles.com, they get the click.
Posted by: John F. | Oct 11, 2007 8:37:20 PM
