Net ratings dream crashes

The internet's 'growth pains' are hurting ACNielsen's website use research venture too much. MICHAEL FOREMAN reports.

Internet research company ACNielsen eRatings.com is to close its New Zealand office because worldwide revenue has failed to live up to expectations.

Pacific managing director Brian Milnes said the internet audience measurement company's Auckland office would close tomorrow with the loss of six jobs as part of a worldwide consolidation.

Last week, Netratings, which previously owned 20 per cent of ACNielsen eRatings.com, said it had agreed to buy the remaining 80 per cent of the company for $US16.4 million ($39.8 million).

At the same time, Netratings bought its main competitor in the United States, Jupiter Media Metrix, for $US71 million.

Mr Milnes said the three companies would now run their operations from major centres in an effort to match costs to reduced revenue, but the merger would not affect ACNielsen's television market research operations.

"When we started this thing up two and a bit years ago we went out and put flags up in every country we could. We were projecting a worldwide revenue of $US300 million, but at the moment it's running at about $US100 million."

"Everybody is struggling at this stage of the internet's development. I believe that it's a young industry and it's going through its growth pains but these will be overcome. All our research shows that people are using the internet more and more and they are using it to do different things than they used to."

The company's New Zealand clients, believed to number around 20, had been informed of the office closure yesterday, he said.

Its explanation to clients read: "We are reviewing the size of our global footprint and considering withdrawing from countries that appear unlikely to make a positive contribution to our profitability over the next couple of years. The list of countries impacted by this decision will be finalised in the near future."

Local clients, including TVNZ, INL Newspapers and Wilson & Horton, will continue to receive service from the Netratings Sydney office at least until April next year, when a final decision on whether the company would remain in the New Zealand market would be made.

The 3300-strong panel of local internet users whose online behaviour is monitored will also be maintained over this period.

While Mr Milnes believed the consolidation would eventually prove to be a positive development, some local customers were not convinced.

Mark Ottaway, general manager of Wilson & Horton Interactive, said he was not exactly thrilled by the news.

"We think they have taken a shortsighted view of the New Zealand market, and on the personal side we are very sad to see some very capable people losing their jobs."

Nielsen NetRatings launched in New Zealand in November 1999 promising to spend $US50 million on setting up representative panels to reflect the surfing habits of people around the world.

It said by the the end of this year a total of 250,000 panellists in 30 countries would have been recruited, collectively representing 92 per cent of the world's internet users.

The service worked in a similar way to ACNielsen's People Meter television rating system. NetRatings panellists download a Java applet that records which websites they visit and what they do while they are visiting them.

The data is then transmitted in real time to a central server in Silicon Valley, where it is collated and analysed.