Digital Media

Updated 10:57 a.m. PDT with comment from MLB.com.

When is 2 million people too small a group to get a good feel for the latest trends?

When you're trying to perform the deceptively difficult calculation of just how many people visited a Web site.

ComScore, by some accounts the leading analysis firm that supplies publishers and advertisers with figures about how many people visit various Web sites, announced Tuesday a switch to a new method geared to provide more accurate Web traffic numbers. Previously the company had judged traffic on the behavior of a panel of 2 million persons scattered across the globe, but the new service, Media Metrix 360, combines that data with statistics taken directly from the Web servers that can tally visitor totals.

The hybrid approach is a big departure for ComScore, which for years has staunchly defended the panel approach. ComScore Chief Executive Magid Abraham expects the move will put to rest most complaints by publishers that ComScore's statistics dramatically underestimated real popularity.

"There is a big gap that we will rectify," Abraham said. "My personal belief and hope is it will address 90 percent-plus of the issues...Unless there is a widely different method for measurement that a publisher is using on their own, we should not really see differences anymore."

Traffic discrepancy
The hybrid approach still is fundamentally panel-based, but uses server data from participating publishers to inform the totals. ComScore expects it will estimate traffic better from computers that panels miss today: mobile phones, larger companies, cybercafes in Asia and Latin America, and public terminals at schools and libraries, Abraham said.

Measuring traffic is a long-running point of contention between publishers and ComScore; MySpace and Major League Baseball's MLB.com are among those who've objected in the past to panel-based numbers.

Torstar Digital, a division of the parent company that owns the Toronto Star, is one company that's had trouble reconciling its newspaper sites' numbers with ComScore when it came to tallying how many times visitors viewed pages, said President Tomer Strolight.

"We regularly saw discrepancies between ComScore page views and unique visitors of 3 to 1 or greater when compared with our server-based tools on those sites," Strolight said. ComScore's panel-based approach posed problems when it came to extrapolating statistics from people at work and older audiences, he said, but the new service helps.

"The discrepancy, and that ratio in particular, are not present in all sites by any means, but it does happen to affect my largest site and it is therefore very important to me that we resolve that issue," Strolight said. "ComScore's new methodology can do this."

MLB.com CEO Bob Bowman gives credit to ComScore for moving beyond just panels, but he's still skeptical, in part because of what panels miss from work users. Instead, he'd prefer to share his server log files after they'd been vetted by a neutral party.

"For our site, 70 percent of day traffic comes during working hours. Missing that is comparable to saying we built a beautiful boat--it just doesn't have a bottom yet...I reject completely that panels can ever work when it comes to what people do at work," Bowman said. "I don't know why for top-250 sites, such as MLB.com, our files just can't be audited, and (the auditors) say yup, here's the traffic."

So why does the number matter beyond bragging rights in a press release?

Money, of course. Advertisers want to know if they're showing an ad to the same person multiple times or to different people. And of course Web publishers want to know how many people really do use their site.

"A media market develops on the basis of trusted information for all the participants. The sellers and buyers have to agree the numbers are something they can live with," Abraham said.

Not as easy as 1-2-3
One might think it a simple matter to measure how much traffic a Web site gets. Just keep a log of the Internet addresses of visitors, or perhaps deliver the "cookie" text file to their browser for easier identification of repeat visitors, right?

Wrong. There's often a discrepancy between independent panel-based statistics from companies such as ComScore or competitor Nielsen Online on the one hand and server-based statistics from a Web publisher's internal logs or third-party services such Google Analytics or Omniture on the other. Here are some factors that can inflate Web site visitor statistics based on server logs:

• The same person might visit the same site from work, home, and increasingly, from a mobile phone. That's not a problem when counting total traffic to a site, but it is when trying to tally unique users.

• Sometimes people delete cookies either manually or automatically through antispyware software, meaning that a cookie might be delivered to a person who seems to be a new user but who in fact has visited a site before.

• Someone might visit the same site with multiple Web browsers or open a tab in a browser without actually making it active.

• Computer servers such as search engine indexers can visit Web sites.

These issues are diminished when users must log into a site, making it easier to track individual use, but the panel approach attempts to address the issue more broadly, consistently, and independently. Panel-based information also answers a question that an individual site cannot: how often is a particular person exposed to the same ad while browsing multiple sites on the Web?

"Ultimately, we need to report unique people, not unique machines, unique cookies, or unique browsers," Abraham said. "There is a lot of energy that goes on trying to reconcile the numbers and trying to explain to people the ins and outs and the subtleties of why this number is not that number."

Panel shortcomings
However, panel-based measurements have their own shortcomings, in part because they rely on software installed on users' machines. Thus the difficulties with mobile phones, businesses, cybercafes, libraries, and schools, Abraham said.

Cybercafes are widely used in Asia and Latin America, he said. Mobile usage for typical sites accounts for less than 1 percent of traffic today, but it's much larger--potentially more than 20 percent--for sites that appeal to mobile users such as those handling weather, stock quotes, breaking news, sports scores, local information, and social networking. And today, ComScore largely just estimates traffic from big-business users.

"It's really difficult to recruit users to participate in panels in large corporations," Abraham said. "Large businesses are in essence voted for by the medium-sized businesses, by proxy. Sometime that works, sometimes that doesn't. That's one area of improvement this (Media Metrix 360) will create."

The company has begun offering panel software to some mobile users but doesn't yet publish resulting data. "We do have that developed for a number of smartphone platforms such as Windows, Palm, and (BlackBerry maker) Research In Motion. We are working on solutions for iPhone and Android," but it's difficult to deal with the plethora of models in the market, he said.

ComScore recruits panel members by offering them free software such as games and screensavers and through incentives including sweepstakes and, more recently, an offer to plant trees in third-world countries. The panel size of 2 million people spans 170 countries, enough for global estimates and for specific measurements in 40 countries. The company also uses technology that can distinguish different users on the same machine by identifying signature patterns in mouse and keyboard use, an important factor for shared computers.

The switch to the hybrid methodology will be gradual. Publishers must add a transparent pixel to their Web sites that ComScore uses to track visitors, Abraham said, and participating sites undergo a 60-day "incubation period" to make sure data collection is working and nobody is gaming the system, he added.

"We think we'll get widespread support. There is widespread hunger for this," Abraham said. "From many people we've heard, 'What took you so long?' It's a fair question. The answer to that is it's not as easy as it first appears."

McDonald's restaurants and global Internet usage share something in common: more than 1 billion served within a month.

Global Internet usage reached more than 1 billion unique visitors in December, with 41.3 percent in the Asia-Pacific region, according to a report released Friday by ComScore.

The study looked at Internet users over the age of 15 who accessed the Net from their home or work computers. Europe grabbed the next largest slice of the global Internet audience, with 28 percent, followed by the United States, with an 18.4 percent slice.

But Latin America, while comprising just 7.4 percent of the global Internet audience, is the region to watch, noted Jamie Gavin, a ComScore senior analyst.

"The U.S. is slowing down in its growth and momentum, but Latin America, with social networking and the mobile Internet, is expected to gain momentum over the next few years," Gavin said.

He noted that while population plays a role in aiding certain regions to lay claim to a larger Internet audience, another equally important factor is the ability of the Internet to easily cross borders and take root.

A closer look at countries within the regions reveals that China accounted for the most Internet users worldwide, with a 17.8 share of unique visitors. The United States ranked second, with 16.2 percent, and Japan ranked a distant third, at 6 percent.

Across specific Internet properties, Google carried a sizable share of the global Internet market, visited by 77 percent of the worldwide audience, or nearly 776 million users.

Microsoft Web sites were used by 64.2 percent of users worldwide, and Yahoo sites 55.8 percent, according to ComScore. Sites run by Time Warner's AOL, meanwhile, were used by 27.1 percent of the worldwide Internet audience.

Here's a little statistical cheer for online retailers bracing themselves for what many have been predicting will be a dismal holiday sales season.

The latest online retail spending report released Tuesday by ComScore shows that consumers last weekend spent almost double what they spent on the corresponding weekend before Christmas last year. U.S. consumers online spent $677 million last weekend, December 20 and 21, compared to $341 million the weekend before Christmas in 2007, which was December 22 and 23.

It should be noted, however, that there are five fewer days this year between Thanksgiving and Christmas, making it harder to make perfect year-to-year comparisons. For example, the $677 million in sales last weekend--which was also the fourth weekend after Thanksgiving--is actually down 17 percent from last year's corresponding fourth weekend after Thanksgiving, December 15 and 16.

Whether you see the glass half full or half empty, the statistics suggest "that many consumers opted for the cozier confines of online shopping rather than having to brave the severe cold and snowstorms affecting much of the northern half of the country," ComScore Chairman Gian Fulgoni said in a statement. He added that the compressed shopping season probably resulted in some consumers buying online later than they did last year.

Regardless, the report is further evidence that holiday sales aren't a total disaster and might even be holding their own, which is no small feat in the throes of a recession. U.S. online spending to date this holiday season (from November 1 to December 21) totals $24.71 billion, down 1 percent from the corresponding timeframe last year.

Correction at 5:50 a.m. Monday: This story had an incorrect total for U.S. searches in November. The total was 12.3 billion.

Google grabbed a chunk of market share from rival search engines in the United States in November, new figures from ComScore show.

Google's share increased 0.4 percentage points to 63.5 percent from October to November, while Yahoo dropped 0.1 percentage points to 20.4 percent and Microsoft dropped 0.2 percentage points to 8.3 percent.

Further down the pecking order, Ask.com dropped 0.2 percentage points to 4.0 percent and AOL rose 0.1 percent to 3.8 percent, ComScore said.

The total searches performed dropped 3 percent to 12.3 billion, though, so even Google lost out in absolute terms even as it gained share. Each search holds the potential to show search ads, so the query total is financially significant.

Online video is really taking off, according to stats firm ComScore. Not that we should be particularly surprised by that assertion. But the leader in the space, Google's YouTube, during October pulled in 100 million viewers in the U.S. for a market share of almost 40 percent.

That market share is about the same as it was this spring. But lower in the ranks, there's some change afoot. Video content hub Hulu, a joint venture between NBC Universal and News Corp., has edged its way into sixth place behind YouTube, Fox Interactive Media (which owns MySpace and its MySpaceTV platform), Yahoo, Microsoft, and Viacom. Rounding out the top 10 are AOL, Turner, Disney (which owns ABC), and CBS (which publishes CNET News).

In October, 77 percent of U.S. Internet users watched online video, and the average viewer watched a whopping 274 minutes of video on the Web. That's only four hours over the course of a month, but considering how short many online videos are, it's a lot.

What'll be interesting to see: Whether this changes with November's forthcoming stats, now that the presidential election is over. Keep in mind how many people were watching political Saturday Night Live skits, campaign speeches, and that disastrous Katie Couric-Sarah Palin interview.

It wasn't a blockbuster, but Black Friday wasn't a bust, either.

ComScore on Sunday reported that online, nontravel retail sales on the Friday after Thanksgiving, traditionally a big day for consumer spending, reached $534 million. That's up from the same day a year ago, but just barely--online retail sales rose just 1 percent, from $531 million.

On Saturday, comparison-shopping site PriceGrabber.com said that Web shopping traffic on Black Friday was up 11 percent. The Nintendo Wii was the most popular item, according to both PriceGrabber and eBay.

Sales on Thanksgiving Day itself rose 6 percent to $288 million, up from $272 million in 2007, ComSore said.

But for the four weeks of November through Friday the 28th, retail e-commerce dropped to $10.4 billion, down 4 percent from $10.8 billion for the same period in 2007, according to ComScore.

For the full holiday season, even Friday's slight gain may look good. ComScore predicted that for November and December, online sales will be flat compared with 2007, coming in again at $29.2 billion.

A somewhat cheerier report Sunday came from the National Retail Federation. The NRF's Black Friday Weekend survey--covering Thursday, Friday, Saturday, and predictions for Sunday--posits 172 million shoppers visiting Web sites and brick-and-mortar stores for the four days, up from 147 million last year.

Holiday sales will rise 2.2 percent this year to $470.4 billion, the NRF projects.

"Pent-up demand on electronics and clothing, plus unparalleled bargains on this season's hottest items helped drive shopping all weekend," NRF CEO Tracy Mullin said in a statement. "Holiday sales are not expected to continue at this brisk pace, but it is encouraging that Americans seem excited to go shopping again."

The NRF put total sales for the four-day period at $41 billion, with shoppers spending an average of $372.57, up 7 percent from $347.55 a year earlier.

The retail group said that 36 percent of shoppers purchased consumer electronics. Slightly over half of shoppers bought clothing and accessories, and 39 percent bought books, DVDs, CDs, and video games.

The next big test of how online commerce is faring in a deeply troubled economy will be almost immediate: Cyber Monday, the first Monday after the Thanksgiving weekend.

"It's probable that on Black Friday consumers responded positively to the very aggressive promotions and discounts being offered in retail stores," ComScore Chairman Gian Fulgoni said in a statement, "so it will be important to see how they respond to similarly attractive deals being offered online on Cyber Monday, the traditional kick-off to the online holiday shopping season."

Purchases from the workplace account for approximately half of all e-commerce spending, ComScore said.

Update at 10:30 a.m. PST, with information from IDC holiday spending report.

The Grinch has made off with Christmas.

In yet another sign that e-commerce is taking a hit over the holidays, online sales growth projections for the critical November-December holiday shopping season were cut by more than half Tuesday in a survey released by digital marketing and media research firm eMarketer.

Online sales are expected to grow a mere 4 percent year over year to $30.3 billion during the two-month period, versus eMarketer's previous projection in May of 10.1 percent growth, or $32.1 billion.

"The weak economy is placing downward pressure on e-commerce sales this season. That pressure accentuates the already declining sales growth that is a sign of the maturation of the online shopping channel," the market research firm noted in its report.

eMarketer's decision to revise its forecast follows the release of disappointing third-quarter e-commerce sales figures by the Department of Commerce.

For the entire year, eMarketer expects 7 percent year-over-year growth, marking the first time in a decade that e-commerce sales have climbed by only a single digit. Last year, e-commerce grew by 19.8 percent.

This latest assessment of the holiday shopping season, however, is not as dire as a report released Tuesday by market researcher ComScore, which reported a 4 percent decline in e-commerce sales during the first 23 days of November, versus a comparable period a year ago. That marked the first time in history that e-commerce growth fell on a year-over-year basis.

PC and consumer electronics vendors, meanwhile, have taken their best guess of how the holidays will shape up and have shipped their products into the distribution channel for the holidays, IDC noted in its U.S. holiday consumer spending report, released Wednesday.

And based on reports from Taiwanese original design manufacturers (ODMs), the sentiment is "very weak vendor demand" for December and the first quarter next year. That will likely translate into a grim environment even after the holidays, given the product these ODMs design eventually make their way onto retailers' shelves, IDC's Randy Giusto noted in his report.

Added Giusto:

The big questions over the next 35 days are, will the holiday channel volume move? Will it require Black Friday-like sales interspersed throughout December in order to clear the inventory out? Will this holiday season be known as the great CE fire sale? Obviously, every retailer and PC and CE vendor is nervous. Consumer bargains are everywhere and new price thresholds have been established--notebook PCs for $299, 10 mega-pixel digital cameras for $129, Blu-ray players for $179, 500GB external drives for $69, 8GB SD cards for $19.99, 47-inch 1080p LCD TVs for $999, many new and attractive mobile phones for free or nearly free if purchased with two-year service contracts, and GPS units as low as $79 and now available at your local CVS and Walgreens.

The growing economic slump doesn't appear to have fully struck Web advertising.

Internet advertising revenues for the third quarter were nearly $5.9 billion, representing an 11 percent increase over the same period last year, according to the Interactive Advertising Bureau.

The bad news is online advertising appears to be slowing down. The third quarter in 2008 was up only two percent from the second quarter. For the first three quarters of the year, however, ad revenues totaled $17.3 billion, up from $15.2 billion for the first three quarters of 2007. The IAB said the $5.9 billion quarterly results were the second best ever.

Meanwhile, ComScore issued an ad-focus ranking for October. Platform A, AOL's ad platform reached 173 million Americans or 91 percent of the 190.6 million American's online. The Yahoo Network came in second by reaching 164 million people and was followed by Google's Ad Network with 158 million.

With the dour economy playing grinch this holiday season, e-commerce retailers may want to focus on offers of free shipping and online coupons, according to a recent survey by comScore.

In a survey of more than 1,000 consumers taken in mid-October, comScore found 73 percent of respondents planned to save money this holiday season by buying fewer gifts and 69 percent by buying less expensive presents, while 37 percent planned to use coupons.

comScore also found that in the third quarter, 25 million Americans visited coupon sites, up 26 percent from the previous quarter. And it's not just the low- and middle-income folks who rely on these money savers, either.

The number of users visiting these coupon sites, with an annual salary of $100,000 or more, increased by 37 percent in the third quarter, compared with the same time last year.

Electronic coupon clippers who earn $50,000 to $99,999 saw the number of users turning to such sites increase by 25 percent, while those earning less increased their reliance on such sites by 16 percent, according to the report.

"Clearly this is an activity that is coming to the online world and smart retailers will pay attention to this trend," Gian Fulgoni, comScore chairman, said during a conference call to discuss the survey results.

And in another cost cutting move, survey respondents noted that if an e-commerce site eliminated free shipping, 72 percent noted they would use another e-commerce site that did offer free shipping.

"Free shipping is a game changer," Fulgoni said, who advised e-commerce sites to find other cost-cutting means this holiday season, than eliminating free shipping offers.

And with one less weekend in the critical holiday shopping period between the day after Thanksgiving and Christmas eve, online retailers, as well as brick-and-mortar retailers, are jumping the gun in this weak economic climate. Online jewelry sites like Blue Nile greats users with snowflakes, a red ribbon and diamonds, while Amazon.com offers up a Christmas present nesting in a tree at the top of its page.

And who among the various economic groups actually plan to spend more this holiday season? Yup, those earning $100,000 or more.

The survey found that 54 percent of survey respondents in this economic bracket plan to spend more this holiday season that last year, where as 37 percent of the middle-income folks indicated similar plans and 39 percent for those users earning $50,000 or less.

Retail e-commerce growth rates climbed a modest 6 percent in the third quarter compared with a year ago--far below the double-digit growth of 18 percent to 20 percent in the fourth quarter.

In the third quarter, video games, consoles, and accessories, in part aided by strong sales of Wii and Xbox, increased a whopping 60 percent in the third quarter over last year, but consumer electronics, excluding PCs, came in as a blip with a 1 percent gain. Computers, peripherals and PDAs where flat.