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Lycos flies on Net reach report

As the company's shares jump more than 36 percent following a report that found its reach exceeded that of rival Yahoo, questions arise once again about Web traffic and reach measurement.

Lycos shares jumped more than 36 percent today following a report that found the portal's reach exceeded that of rival Yahoo.

But the report, by New York-based Media Metrix, once again raises long-standing questions about the measurement of Web sites' traffic and reach--specifically concerning the lack of standards. As evidenced in part by Lycos's jump today, the numbers released by ratings companies such as Media Metrix and Nielsen Media Research can wield tremendous influence over a company's stock price, but their accuracy and consistency still are up for debate.

Lycos shares were up See related story:
Net traffic ratings debated 27.25 points, or 36.89 percent, to 101.13 in afternoon trading. America Online was up 8.63 points, or 6.7 percent, at 137.31; Infoseek was up 7.31 points, or 14.46 percent, at 57.88; Excite was up 3.63 points, or 2.8 percent, to 133.13; and Yahoo was up 3.56 points, or 2.08 percent, at 174.56.

"I don't trust any of [the Web ratings companies' figures] implicitly yet," said Abhishek Gami, an Internet analyst for William Blair, adding that he doesn't use the ratings when modeling a company's earnings potential.

Still, Gami said there is "real justification for looking at the numbers," as long as they are taken in context, he said. For instance, if Media Metrix's numbers are off for Lycos, they will be equally off for other portal sites, Gami said. In evaluating a company, it is useful to look at the numbers and compare them to others from the same ratings firm, rather than looking at the ratings for Lycos at Media Metrix and the numbers for Excite at Nielsen, for example, he said.

Lycos chief executive Bob Davis defended Media Metrix, noting that it has been "clearly consistent in the way they measure [reach]. It's a baseline we can all work against.

"It's not perfect, but it's the best solution that exists, and it continues to get better over time," he added.

Yahoo spokeswoman Diane Hunt pointed out that the report measured only one month. "Our belief is that one month does not make a trend," she said today. "It's simply a snapshot in time."

Aside from the issues surrounding how Web sites' reach is measured, the "quality" of the visitors in terms of their loyalty and how long they stay at a given site also is important in evaluating a company. For example, a study by research firm Jupiter Communications earlier this month found that the multimillion-dollar deals e-commerce firms had done with portals hoping to cash in on their massive traffic were not as lucrative as the merchants had hoped.

For its part, Lycos "said four or five months ago that they would exceed Yahoo in reach. A lot of people wrote them off, but they've done it--at least temporarily," Gami said, adding that Yahoo is likely to "leapfrog" Lycos once its acquisitions of GeoCities and Broadcast.com are completed.

Lycos's numbers in the Media Metrix report and its stock jump serve to legitimize the company's acquisition strategy and its follow-through, Gami said.

Lycos "did all the acquisitions and then carried on the growth," he said, contrasting Lycos's acquisitions of companies such as Tripod and HotBot to Excite's acquisition of search engine WebCrawler.

Davis said the report "adds a lot of credibility to what we've been doing over the past few years. Not just the acquisitions themselves--all the sites within the network have done extremely well."

Gami also attributed Lycos's rise today in part to "catch up" from yesterday, when competitors such as Excite and America Online saw their stock rise.