NetRatings Results Reveal Plenty of Net, Income

Media research services can be healthy, high-margin businesses, but online audience researcher NetRatings' 2006 earnings results go a long way toward explaining why research giant Nielsen Co. opted to acquire the balance of NetRatings.

During 2006, NetRatings took in $81.8 million in revenues--up 20% from 2005, and reflecting the overall momentum of the market it measures. But as good as its overall revenue growth has been, NetRatings became even more profitable in 2006 as its expanding customer base of Web publishers, agencies and advertisers offset the relatively fixed costs of its online panel research and software meters.

During 2006, NetRatings generated gross profits of $59.0 million--up 30% from 2005. In other words, NetRatings' gross profit margin rose to 72% in 2006 from 67% in 2005.

That's impressive--considering that unlike most other media where a single audience research provider dominates, or monopolizes the medium, NetRatings competes aggressively with comScore Media Metrix in the online industry.

NetRatings' fourth-quarter and full-year 2006 results, released on Friday, may be one of the last public glimpses of the researcher's profitability. It is scheduled to merge with privately held Nielsen Co. in the next couple of months.

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