Two major Web usage firms merge

Media Metrix and RelevantKnowledge, the two major Internet audience measurement companies, have agreed to merge in a bid to create a Web usage ratings service that would rival the influence of television audience assessor Nielsen Media Research.

The merger may help to standardize Internet audience measurement and result in more comprehensive and reliable measurement services. The two companies provide audience numbers to the advertising industry, media companies, and the financial sector.

Terms of the agreement were not disclosed by the privately held companies. The new company will retain the name Media Metrix.

"The merger creates a company that answers the industry's need for a single, accurate, and reliable standard in Internet audience measurement," said Mary Ann Packo, president of Media Metrix. "Such a standard is necessary, as the industry has acknowledged that audience measurement is the driving force of Internet growth."

Through the combination, Media Metrix will try to offer comprehensive coverage of all digital media, including over 15,000 web sites and online properties, with monthly, weekly, and real-time data reporting. The merged company will also have a larger and more representative sample of over 40,000 people measured at home, work, and school, according to Media Metrix.

Each company has different strengths and weaknesses, said analysts.

"[Media Metrix and RelevantKnowledge] are basically looking at the Nielsen model and seeing that it's [more effective] to have one central brand responsible for all the accounting and measurements that ad agencies, publishers, and ad buyers are going to look at," said Mark Mooradian, an analyst at Jupiter Communications.

"When you look at Media Metrix's numbers, it is always acknowledged that they seem to be weaker on users accessing the Internet from work," said Mooradian. "Relevant's numbers were weaker in getting [America Online] statistics.

Media Metrix's competitors include Nielsen's Web unit and NetRatings. Other Web usage companies have also entered the market, including PC Data.

The business of rating Web site traffic has encountered several problems since its inception. Most notably, differences in technique yield vastly varying results among the competing ratings firms.

"When we were in our final negotiations, we looked at data from both companies and tried to figure out how reconcilable they were," said Packo, who added that they found four reasons why the numbers were different.

One was the definition of the universe they were measuring. Media Metrix was measuring the Web and AOL while RelevantKnowledge was measuring the Web only. The second reason was the size of the universe. A third was the different ages, with Media Metrix including those two and older while RelevantKnowledge including those 12 and up. Lastly, Media Metrix was measuring home use only, but RelevantKnowledge was including home and office use.

"We looked under the covers and put things into apples and apples, and saw that the rating estimates were so close that we could be merged in essence," said Packo.

Packo said that the company has near-term and long-term overhauls planned for standardizing number collection. "The near-term is to merge on the backend," said Packo. "We will take raw data and will combine and adjust it so that we are using the same measures.

"Over the long-term, we are working on integrating to come up with a hybrid which takes the best features from each," said Packo. "That'll be developed over the next quarter and tested in the first quarter."

Could an initial public offering loom given some of the successful IPOs coming out the door this summer for Internet-related companies?

"That is certainly a consideration for our company in the long range," said Packo. "But that was not our immediate concern, especially considering where the IPO market is right now. We merged because it was the right move in the industry."