Good news for Google, bad news for comScore.
The Mountain View-based search mammoth is widely expected to announce an ad planning tool for publishers and advertisers. The rumor is that Google will give away all sorts of web data (such as demographic and traffic stats) which it will collect through the Google Toolbar -- a product used by millions of people. The upshot is that reigning market research firms -- such as comScore and Nielsen Online -- are el screwedo.
"As we understand it, Google is getting data through the Google Toolbar; if they are, it may not be easy for other companies to replicate such a large install base," says Sandeep Aggarwal, a Collins Stewart analyst.
The news led to a sell off of comScore shares -- the stock fell 20 percent earlier today, in more than four times the average trading volume.
The reality is that Google can collect all sorts of data that smaller players simply can't match, even with a two-million person panel. Part of the problem with the panel methodology, say industry insiders, is that web usage is so fragmented, it's extremely difficult to draw assumptions based upon a limited pool of people.
We've certainly seen evidence that comScore's numbers can't be trusted. The group reported a dramatic decline in Google's paid clicks last quarter, which led to widespread panic that the online ad market had been slammed by a recession. (Paid click data measures how often people click on sponsored ads.) So, it was something of a surprise when Google posted much better-than-expected first-quarter results. (ComScore insists that it was right and that its data was misinterpreted.)
Adam Gerber, chief marketing officer of Quantcast, a free internet ratings service, says there are countless problems with the panel methodology used by comScore, Nielsen and others.
"For one thing, there are sample size issues -- that's why ComScore and Nielsen only report on about 10,000 or 20,000 media properties online, even though there are millions of sites -- they just don't have the sample size," Gerber says.
Equally problematic, says Gerber, is the fact that panels can't provide census-level data to advertisers.
"They can tell you if 50 percent of the people who visit a site are male and 50 percent are female, but they can't tell you in real-time who is a male and who is a female. They don't have that kind of visibility," he says.
Still, there's some hope that Google won't totally obliterate comScore or Nielsen Online in the immediate future.
"I think Google's product is going to be good, it's going to be used, and it's going to be valued. I just don't think it's going to replace comScore," says Todd Greenwald, an analyst with Signal Hill Group. "It's not so different from what Amazon did with Alexa, and I don't think comScore has ever lost a client to Alexa . . . Ultimately Google is not trying to get into the web measurement business, in my opinion, they just want a bigger piece of the overall ad pie."
We contacted comScore and Nielsen for a comment but didn't hear back.
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