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OCTOBER 13, 2000 VOL. 26 NO. 40 | SEARCH ASIAWEEK


Lucas Oleniuk for Asiaweek.
ACNielsen's Didier tallies up traffic for websites and advertisers.

Scorecards for the Net
Web-rating firms keep dotcoms honest and advertisers interested
By BELINDA RABANO Hong Kong

The phone calls to Netease started in mid-September, soon after Internet measurement firm iamasia announced that Netease's portal, 163.com, was the top-ranked site in China. The findings — the first independent market research on China Internet use — stunned the Web community, since rival portal sina.com had been voted the most popular site in three consecutive government-run opinion surveys.

"After this research ran, more and more [advertising] agencies came to see us," says Netease chief operating officer Susan Chen. Previously, the website's third-place ranking in polls by government-backed Chinese Internet Network Information Center was not enough to get Netease noticed, especially since the government surveys had been tainted by allegations of irregular voting. Now, an independent researcher gave Netease an enviable 51% reach among China's home users compared with Sina's 43% — a turnaround that could well spell the difference between a soaring stockprice or a quick decline for the Nasdaq-listed Netease, which like all portals depends heavily on advertising for revenues.

Whether Netease and other Asian portals can reach profitability before their markers are called in remains an open question. But some of the elements that may allow survival are beginning to fall into place. Online advertising, while still an untrusted option to many ad agencies and their big-spending corporate clients, is becoming a medium that at least can be measured. Upstart Web traffic researchers such as Hong Kong-based iamasia, as well as globally known players like ACNielsen, are setting up shop in the region, promising to make the banner ad less a badge of faith and more a legitimate marketing vehicle. "We give our clients the tools so that they can make less risky decisions," says Darlene Lee, Asia president and chief executive of NetValue, a French Web-ratings company moving into Asia. "We're here to take a lot of the guessing out of [online advertising]."

Excluding Japan, online advertising expenditures in Asia last year totaled a paltry $67 million, less than 0.5% of total advertising across all media, according to market research firm International Data Corp. (IDC). Besides a relatively small potential audience, Internet advertising has also been held back by the lack of credible, consistent data on the volume and type of traffic websites attract. The absence of independent measurement agencies meant the dotcoms themselves supplied advertisers with numbers, and many suspect that traffic figures are routinely inflated. "Most advertisers and agencies state that lack of usable data is the number one reason why they have not fully leveraged online advertising," says Richard Robinson, chairman of the Internet Advertising Bureau (IAB) in Hong Kong, who is also vice president for sales and marketing at Chinese portal renren.com.

Independent traffic-measurement companies say they can help keep dotcoms honest, at the same time supplying advertisers with data to help gauge the effectiveness of ad campaigns. Web-rating firms such as iamasia and NetValue monitor the surfing habits of a group of individuals chosen to serve as a proxy for Internet users as a whole (the techniques used are similar to the way ACNielsen rates TV programs by tracking the habits of "Nielsen families"). Meanwhile, independent auditors such as PriceWaterhouseCoopers certify site traffic numbers supplied by dotcoms themselves. Outfits such as Doubleclick were established to assess ad performance by tracking online behavior of visitors to specific sites.

Taken together, the services are providing advertisers with increasingly sophisticated data on Internet audiences and their surfing habits — statistics that are needed if the Internet is to compete with print, radio and TV for the huge pool of advertising dollars. IDC projects online advertising in Asia will grow to $1.15 billion by 2004.

Although most of that revenue is expected to flow to larger websites, niche dotcoms that serve specialized audiences may also benefit as the science of Web audience measurement improves. Better numbers will be "a tremendous boon for smaller websites," says iamasia's marketing and communications director Stephen Yap. He notes that vertical portals in the U.S. such as women's website iVillage and heavily male-oriented sports sites have thrived due to their focused audiences, which are an attractive selling point for certain advertisers. Nevertheless, the mega-portals are expected to continue to garner the bulk of advertising revenue. According to the IAB, the top 10 web publishers in the U.S. took 75% of all online ad spending last year, while the top 50 accounted for 90% of expenditures.

The arrival of Web-rating agencies in Asia won't transform the dotcom business into an overnight success. Measuring the Internet is still a very young science, and universally accepted standards have yet to emerge. Confusion reigns over almost every aspect of the counting of Internet "eyeballs," from discrepancies over how many sample surfers it takes to accurately project the behavior of an entire Web population, to disagreement over the best way to estimate audience numbers. For example, the industry has for several years disagreed over the accuracy of estimating viewership using software that tracks "page views" — essentially, counters that tally how many times individual webpages are accessed — versus programs that measure "hits" — registers of every mouseclick within the site. The differences can be telling: China's government rating agency estimates Internet users at 16.9 million as of June, while iamasia sets it at a much smaller 12.3 million.

There's also debate over whether rankings should be based on a single website or a collection of commonly owned websites. In August, iamasia recorded 500,000 unique Hong Kong visitors to MSN.com, while 1.2 million keyed into one of Microsoft's various web presences, including microsoft.com, hotmail.com, moneycentral.msn.com and others.

Besides the lack of universal standards, Web-rating companies in Asia don't yet measure people who access the Net from work, a potentially large group. Netvalue estimates that in Taiwan and China, workplace surfers comprise 45% of all online traffic. That means financial websites and others that tend to see a lot of traffic between 9 a.m. and 5 p.m. are likely getting shortchanged.

Industry executives acknowledge these shortfalls, but say these are teething problems of a rapidly evolving business that will eventually be settled. In the meantime, as international and local web measurement companies jostle for business in Asia, competition will intensify. "There's probably not enough room for the current players to exist," says NetValue's Lee.

So far, smaller, more nimble players like iamasia and NetValue have moved ahead quickly, in the last several months debuting surfing stats for China, Hong Kong and Korea. Although they may not have the global presence of the likes of ACNielsen, they claim to have a better feel for Asia's Web preferences.

ACNielsen eRatings.com, a joint venture between ACNielsen and NetRatings, has adopted a go-slow approach in the region by zooming in on more developed markets such as Japan and Australia where Internet audiences have started to reach critical mass. So far, eRatings.com has released Singapore numbers, but Hong Kong data won't be ready until this month and China will wait until early next year. Media Metrix, another dominant U.S. firm, is active in Japan and Australia, and plans to move into Korea by year's end.

Forrest Didier, executive director for ACNielsen eRatings.com in North Asia, says he's not worried that faster-moving rivals appear to be covering more of the region as a whole. He cites a key advantage in ACNielsen's 77-year reputation in the media ratings business, adding that the joint venture plans to operate in 30 countries by the end of next year. "The real value that a lot of multinational clients are putting on [our] Internet services is the ability to have a consistent, standard approach" across geographical regions, he says.

While the industry gropes for consistency, the dotcom world reaches for revenues that continue to largely be beyond its grasp. Proving that there is an Internet audience is just the first step in convincing advertisers that cyberspace can be an effective medium for their messages.

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