Multiple Web personalities skew registration numbers

The software engineer from San Francisco says he has two active aliases on Yahoo, plus a stack of unused ones with forgotten passwords. Then he's got a handful of discarded Hotmail names and an unknown number of accounts with Web sites that he never visits anymore.

"If you don't like (an identity) after awhile, it's like, well, I'll just go for another one," Shan said.

Such behavior may seem flaky, but there's every indication that it is widespread on the Internet--and companies such as Yahoo, America Online, Lycos, Microsoft and Excite are eager to turn it to their advantage. The supposed payoff comes when Web sites compile reports on the number of "registered users" who have signed up at their addresses, a largely absentee population that can run to the tens of millions at top-ranked destinations.

Web sites claim registered user counts are important gauges of their popularity and the loyalty of visitors. But for skeptics, the outsized numbers may more accurately reflect the Internet's hype-it-or-leave-it culture--a habit that refuses to die even as the stock market pummels blue chip Net stocks like Yahoo and AOL.

At stake is more than a tug-of-war over notoriously slippery Internet metrics. Questions about the relevance of registered user numbers hold far-reaching consequences for Web sites, which have staked much of their future on the notion that the Internet offers advertisers a better way to sell goods and services than traditional media.

Registered users are more valuable to advertisers, Web companies say, because they click on more ads, are more open to receiving direct marketing pitches, and return more frequently than non-registered users. In addition, companies can take the registration information and group users into categories based on age, geographic location or gender.

By creating specific audience categories, advertisers get ways to target their messages online better than anything available in traditional media, according to companies like Yahoo.

"The whole beauty of what we can do is to provide advertisers...the ability to deliver very targeted messages," said Murray Gaylord, director of fusion marketing at Yahoo. "When (customers) hit 'register,' they give information. By having that information in aggregate, we are able to pinpoint the advertising to those people."

The equation isn't quite so simple, however. While Web sites pump their registered user numbers relentlessly, advertisers are not yet convinced those eyeballs offer added value. More obviously, the numbers just don't add up.

According to market research company IDC, the worldwide population of Internet users is expected to reach 361 million by the end of the year.

By contrast, just a handful of top-ranked Web services--AOL, Yahoo, Hotmail, Excite and Lycos--together tout 529 million registered users worldwide.

At the very least, that means registered user numbers are wildly out of proportion with the number of people who actually use those sites as their primary Web bases. At worst, it could give advertisers more reason to take a cynical view of the Internet numbers game, leaving Web sites scrambling for new and better sales tools.

"I haven't seen any correlation of a site with more registered users to be more responsive" to advertisements, said David Dowhan, group vice president of marketing acquisitions at online credit card vendor NextCard, one of the largest advertisers on the Web. "Registered users are only a leading indicator of the size and scope of a relationship."

Behind the numbers
If free Web sites and services face an uphill credibility battle on registered user numbers, they aren't doing much to improve the accuracy of their statistics.

Many Web sites make no effort to filter out multiple sign-ups--even though people like Ben Shan help inflate the totals.

In its recent earnings report, for example, Yahoo boasted of having 185 million registered users. At the same time, the company broke out for the first time the number of "active" users of the site, defined by the number of unique logins used to access two or more of Yahoo's services within the past month. At 55 million, the figure was less than a third of the registered user count.

Yahoo isn't alone. AOL has about 25 million paid subscribers--a number it can't really fudge, since each customer comes with a unique credit card number and billing address.

For its free services, however, it reports much higher and more suspect numbers. For example, AOL claims 66 million registered users for AOL Instant Messenger and 70 million registered users for its other instant messaging product, ICQ. "Active" user counts for both services come in at just 20 million each.

Many companies publish numbers pegged to criteria that indicate actual usage, in addition to raw registration data.

Microsoft's Hotmail free email service claims 70 million registered users who've used the service in the past three months. Lycos in August reported 61 million worldwide users, with 100,000 new sign-ups per day, while Excite@Home's Excite.com reported 77 million users in July.

Most companies do not disclose what percentage of their registered users are duplicates, however.

In part, that's because they don't really know the answer. It turns out to be very difficult to link a Web user's online identity with his or her real-world identity. The closest that most portals get to pinpointing a registrant's offline identity is getting the consumer's name, ZIP code and email address. Some, such as Excite.com, ask for a user's home address as well.

This limited amount of information makes it difficult to differentiate one identity from another. Because these services are free, it's almost impossible to know if "johndoe" is the same individual as "elvis2000" unless sites ask for social security numbers. And that's a big no-no on the Web.

As a result, many analysts question the accuracy and usefulness of the numbers.

"My big question for Yahoo is how many of those users have unique DNA out of their millions of registered users?" said Patrick Keane, an analyst at Jupiter Media Metrix. "I think that a lot of people are registering a number of times, and the validity of those numbers is not accurate anymore."

While the major portals acknowledge this phenomenon, they maintain that registered user tallies are a strong indication of their overall popularity, and that the same people return to the site frequently.

"Even if someone registers twice, it means they're coming back," said Michele Turner, vice president of personalization at Excite@Home.

Microsoft also concedes that Web users do sign up multiple times on a service or sign up for many different services. The company estimates that Hotmail users average a little more than one mailbox for each user, for example.

"There are people who are going to sign up multiple times, and that's just life," said Kumar Mehta, director of marketing at Microsoft's MSN Internet service.

Since Hotmail reports only active registrations, however, it can whittle down the population of people who register and then never use the service again, Mehta added.

On target for advertisers?
Even if Web surfers are decidedly fickle when it comes to choosing Web services, there is evidence that many value the services they sign up for and eventually settle down with one provider.

Despite his history of Web portal philandering, for example, Shan has stuck with Yahoo. He checks his email, trades stocks, sends instant messages, scans news headlines, and organizes his bookmarks through Yahoo.

"It's so much a part of my thought process that I don't realize I'm using it," Shan said. "I tried those (other Web portals) out and found out I like Yahoo, so I stuck with it."

Shan's habits are what Web portals are shooting for. Very active registered users offer Web sites important advantages. For example, committed users are less likely to defect to a competitor, and in the end, that could mean more pages viewed and more ad space to sell.

The value of registered users has become a mantra for online companies.

"We do know that we're getting more and more people returning to the network, and it shows that it's a deeper level of engagement with the network," said Bob Visse, lead product manager at MSN. "The more time that someone spends with you, the more ads we can serve."

Still, companies have a long way to go in proving that what's good for portals is good for marketers. While some advertisers appear to agree that the registered user count is a good indicator of a site's popularity, many question the ultimate benefit of high registered user numbers in finding better sales leads.

Rishad Tobaccowala, president of advertising firm Starcom IP, said advertising to registered users does not guarantee success. Advertisers care about getting advertising messages to a desired audience, he said, whether or not that audience shares a loyalty to the same Web site.

"There's not a magic bullet," Tobaccowala said.

That's a problem for portals that hope to use their high registered user numbers to charge higher advertising rates.

Yahoo's Gaylord defended the higher price for what he labeled "targeted media."

"It's no different than any other media which has an ability to target a finely focused audience in an environment that they relate to, and it is important to them that can be priced accordingly," he said. "A run of the network for any media will be less expensive than targeted media."

But Tobaccowala said advertisers want to see results and don't care as much about raw user metrics. Advertisers are most willing to pay more when they see that they are gaining more customers or transactions for their merchandise, he said.

Some companies do find importance in these numbers. Advertisers such as Miller Brewing need to advertise to audiences at a certain age range and often target men more than women.

Gina Shaffer, who heads digital marketing for Miller Brewing, said the company looks at registered users to get a sense of the site's popularity. The metric is also used to target broader populations based on age and gender. But by no means do registered users provide the full picture.

"In theory, we believe we have more information about consumers and where they're going because the registration process does help add some accuracy to some of those numbers," Shaffer said. "However, in practicality, we sometimes question how the data is gathered and the techniques that are used."

That lack of confidence could have repercussions for hard-pressed dot-coms if advertisers get more serious about holding Web sites to a higher standard. But continuing doubts about registered user metrics are unlikely to motivate Web sites to voluntarily deflate their numbers anytime soon, according to analysts, particularly in the midst of the current market chill.

"These companies are watching their share prices fall significantly," said Jordan Rohan, an analyst at Wit SoundView. "They're standing by and watching the greatest destruction of wealth ever, and they're hoping to identify a usage message that rallies investors."