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Online advertising has always been a risky business. Ad buyers rely on imperfect data, fluctuating prices, and visitor counts to determine when and where to place their ads. Top web measurement firm comScore has recently suffered from a drop in their stock prices as data they collected differed greatly from that released by Google. As a recent Wall Street Journal article reports, “It was another reminder that the science of tracking Internet usage is still far from perfect.”

The controversy began over paid click data released by comScore and by Google. In their quarterly earnings report, Google asserted that clicks on its advertisements had increased by 20% from the same quarter in 2007. As a Google press release explains, “Aggregate paid clicks, which include clicks related to ads served on Google sites and the sites of our AdSense partners, increased approximately 20% over the first quarter of 2007 and approximately 4% over the fourth quarter of 2007.” ComScore, on the other hand, had already estimated 1.8% growth in Google’s paid clicks. That’s way too large a discrepancy to be within a margin of error, and comScore stockholders let their flagging confidence show. The firm’s stock dropped 8% and shares closed down 40 cents at $23.18.

The key to the different numbers is all in the fine print. Google’s earnings report extends to global websites and were overall figures for all partner sites. ComScore measured only U.S. clicks and did not include non-search ads. A prominently displayed press release on comScore’s website accounts for the seeming error. Bold face type explains, “The main difference between the paid clicks trends reported by Google and comScore can be traced to the fact that the comScore paid click data cited in financial analysts’ reports (and subsequently reported by the media) are U.S. data only.” The treatise also warns, “Analysts’ efforts to use comScore’s domestic data to estimate Google’s global trends were misguided…It also needs to be noted that comScore does not currently provide a measurement of global paid click data and has never claimed that its U.S. data can be used to “predict” global trends.”

O.K., so it was simply a matter of comparing apples to oranges. Why the stock scare? Why the outrage? Advertisers, as implied in the press release, use the data released by measurement firms like comScore and Nielsen to find the most advantageous spots for their ads. As the Wall Street Journal put it, “Advertisers study their [comScore’s and Nielsen’s] data - including a Web site’s total visitors or page views and time spend on the site - to try to determine which sites are popular among particular demographic groups or in certain topic areas, such as news or sports.” If advertisers see comScore’s numbers and make decisions based on those, they’re barking up the wrong tree. They must delve deeper into demographic data to find real value on the numbers. However, comScore clearly deflects responsibility back to their users, who should not rely on their data for financial reporting or decision-making.

All of this has created quite a controversy in the web measurement world, and it has industry experts and marketers alike wondering exactly how to track internet data. It’s tempting to lean towards Nielsen or comScore data as a barometer for economic growth or financial status, but it is really most useful for media and consumer research. As comScore’s press release warns, “we should all be mindful that the primary uses of comScore’s data are for marketing and media analysis purposes.”

Friday, May 2nd, 2008 You can skip to the end and leave a response. Pinging is currently not allowed.

By Haley January Eckels