Ad Trackers: Online Is Up, No It's Down, No It's Up

by Joe Mandese, Sep 25, 2008, 8:00 AM

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A week after Nielsen released shocking data indicating that online display ad spending had eroded 6% during the first half of the year, rival TNS Media Intelligence Wednesday released figures indicating it actually has risen 8%. While the findings of the two ad monitoring services often do not agree, the variance of the fourteen percentage point plus/minus difference is so extreme that it raises questions about the overall accuracy of online advertising marketplace data.

Both Nielsen and TNS MI are highly respected research organizations, whose data are used by major marketers, ad agencies, media operators and other important stakeholders like Wall Street analysts, industry consultants, and yes, even the press, to assess the overall vitality of the advertising marketplace, and the specific media, brands and companies within it.

Part of the reason for the variance, says eMarketer analyst David Hallerman is semantics, and that the ad trackers may be including different things in their online display ad estimates.

"In summary, the difference is mainly definitional," he said.

"Nielsen measures only CPM-priced ads," Hallerman explained. "No performance-based sales, such as CPC (cost-per-click). And, as you know, performance-based display ad sales are key for ad networks and ad exchanges."

As a result, Hallerman said Nielsen might be underestimating the online display advertising marketplace more than TNS MI, which includes all display-related advertising revenues from a consistent base of Web sites.

One indication that Nielsen may have made a methodological or sample change is that when it released its first quarter ad spending figures I did not break out estimates for the Internet. Historically, when Nielsen's Monitor-Plus division withholds a category for a period of time, it indicates some kind of methodological adjustment.

Meanwhile, eMarketers' own estimates, which aggregate a wide variety of industry sources and typically adjust to the base of the Interactive Advertising Bureau's and PricewaterhouseCoopers quarterly online advertising reports, also shows the rate of the medium's growth slowing, but not as much as TNS MI's, or Nielsen's data would indicate.

During a presentation at MediaPost's OMMA Expo last week, eMarketer CEO Geoff Ramsey held firm to relatively optimistic growth estimates for online ad spending despite the broader economic meltdown that has been occurring in the U.S. economy. He said online ad spending would continue to rise at double-digit rates - albeit more moderate ones - even though overall media spending was growing stagnant or declining.

That said, eMarketer already has trimmed its forecast for online spending twice from $27.5 billion to $24.9 billion. It has also lowered its estimate for social media to $1.4 billion and revised downward its estimate for online video from more than $1 billion to $505 million (partly as a result of applying a different methodology to the category). And that was before the financial cataclysms of the last week, including the government bailouts of Fannie Mae, Freddie Mac and American International Group and the collapse of Lehman Bros. and sale of Merrill Lynch to Bank of America.

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