Who Needs the Ratings Services?

This Newsweek piece raises an interesting question. Is there even a need to develop the 'Nielsen Ratings' of the Internet? If you ask a TV, radio, or print advertising person this question, the answer would most likely be yes. How else would you know what your ad inventory is worth? If you ask an online marketing person this question, the answer might be different. In a day and age where the traditional media businesses are in turmoil over the loss of their control over the time and place of content distribution and consumption, add ratings services like Nielsen and comScore to the list of media businesses with endangered models. The reason for this difference is based on the fact that the dominant forms of online advertising are performance-based. The ability to measure the effectiveness of one's ad buy in virtual real-time obviates the need for a predictive rating service. While the demographic and psychographic overlays in the Nielsen are interesting and somewhat useful to publishers, they have arguably little utility to advertisers online. Advertisers are monitoring impressions, clicks, click-through, conversion, sales, and contribution margin on every impression of every ad (if they're doing it right). In conjunction with standard analytics packages like Omniture or Google Analytics, the online media planning and buying process works quite well in the absence of any Nielsen ratings. They're superfluous.

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