Chen-Hsuan Kuan (Editor: Stacy Walter)

According to Forrester Research, Web-based revenues have been growing very quickly. They will grow from $74 million in 1996 to more than $2 billion by 2000. However, online advertisers still do not know how many people are actually seeing the advertisement banners and other visual gadget they are spending on promotions. These advertisers are demanding a more accurate and standardized measure to audit the "click rate" of the online ads.

The audit tool is a kind of software, which may contain only tracking and counting functions or contain additional analyzing and reporting services. Whenever a visitor comes to a Web site and requests a document, a record of the request is written into a log by the server. As the server dutifully provides this document, the information including each transaction, such as page accessed and the date/time, as well as data about the visitor, and from which the visitor accessed your page is tracked and recorded. Therefore, advertisers or Web site publishers can use the software to measure how many times the ads were viewed, how many times the links were followed to the advertiser’s site, and the percentage of clicks per impression.

Some audit software also provides complete standardized auditing reports such as demographic information for advertisers. The log-file analysis software gulp down the prodigious amounts of data and tally it by categories, spitting the information out in the form of reports which summarized the results (Busch 1997). In addition, the procedure of tracking and auditing should be used to ensure anonymity. Publishers initially will not know who is visiting the Web site, but they can still get enough demographic information to learn whether their content is attracting interest from their target markets.

Some companies need very accurate measurements and complete analysis; they may hire a professional and independent auditing firm to audit their Web sites. Internet Profiles Corp. (I/Pro), Digital Planet, and the Audit Bureau of Verification Services are these kinds of auditing firms, providing complete services from tracking and collecting data about page visits, lengths of visits and click-through rates, to analyzing and converting this data into tables, charts, and graphs—making useful reports so that customers can improve their sites. For instance, I/Pro, the market leader, has an extremely complete system to run their auditing business. The I/Pro system has six tools as following (Murphy 1996b):

Table 1: The Tools and Functions of I/Pro System

While many advertisers or Web publishers employ independent auditing firms to audit their web sites, others use a different approach: providing their software products and allowing customers to track their own site traffic by themselves. For example, Inters Corp. is marketing its product as simpler and more flexible than public-domain counters such as I/Pro. With Inters’ auditing product, Inters Market Focus, customers do not have to share their data with an outside auditing bureau. In other words, they can keep their data on their servers. In addition, Inters also provides basic analysis tools to help customers create graphs, tables, and charts easily. This kind of product/ service is more secure and less expensive (Carl 1995a).

TRACKING TRAFFIC ON A WEB SITE’S SERVER V.S. TRACKING USAGE ON A SURFER’S PERSONAL COMPUTER

Most auditing software serve to track ad-banner traffic on the Web site. However, some software such as NPD’s PC-Meter are installed on a user’s personal computer, and they can still monitor the moves of potential Web-ad consumers (Murphy and Forrest 1996b). PC-Meter tracks all the files it finds open on a computer, as well the time that the user spends with each file.

PRICE

Following is the price list of the audit tools provided by the major companies in this market.

Table 2: The Audit Tools and Their Price (1997)

The price of each audit tool is very different depending on the company. Low-cost tools are available that may suit the needs of small businesses that can slide by with bare-bones reports and limited capacity. More advanced analysis software is priced in multiple thousands of dollars; however, larger organizations that require this kind of horsepower will likely see these costs as a drop in the bucket—and well worth the price of crucial information they provide (Busch 1997).

THE MARKET

The business of the audit tool for online advertisement is new, as of April 1998. The first auditing firm, I/Pro was founded in June 1994 (Carl 1995b). Therefore, this business is only about four years old. The companies running this business are also relatively few.

In early 1997, the market leader, I/Pro experienced turmoil as it laid off close to half its staff, customers complained about late deliver of reports, and CEO Mark Ashida resigned. I/Pro has not been the only measurement company to experience problems. One of its primary competitors, NetCount, in August 1997 also announced that it was laying off twenty workers and was looking for additional financing. These situations may show that it is difficult to make money in the measurement business. One of the possible reasons is that of nearly 1,000 sponsored sites on the Web, only 18 percent used the auditing service (Murphy 1996a). This is because many Web site publishers may think that measuring services or software are additional expenses and they are not willing or are not able to afford them.

In addition, the competition in the market is extremely fierce. Every auditing firm endeavors to ascend to the throne. In order to ensure their positions in this market, many auditing firms have teamed with other organizations. For instance, in 1995, I/Pro had alliances with Nielsen Media Research to protect its position of the market leader. Inters Corp. also gained a key ally in late 1995 when it formed an alliance with Arbitron, the ratings organization that competes with Nielson Co.

MARKET STANDARD

Several sites have used more than one auditing service at the same time. For example, CNN, Lycos and Yahoo! have used both I/Pro and Audit Bureau of Circulations (ABC). The reason is that various kinds of counting software produce multiple and incompatible results, so the advertisers need to compare various site’s traffic numbers. Each auditor has its own auditing system and defines fundamental terms such as ‘hit’ and ‘visit’ differently. In late 1995, the Coalition for Advertising Supported Information and Entertainment (CASIE) issued ‘Guiding Principles of Interactive Media Audience Measurement,’ which tried to establish definitions of such fundamental terms as:

Hit: A hit is the most basic traffic measurement; it simply means that a Web server transmitted a requested file. A hit can be a page, or any element on that page, including a graphic, video audio, a Java applet, an ad or a script, among other things.

Visit: A visit represents consecutive file requests all made by one visitor at one Web site. If that visitor stops requesting files for (generally) 30 minutes, then starts asking for files again, a new visit is tallied for that site.

Impression: Impressions represent the number of times an ad banner is seen.

Click: A visitor actually clicks on an ad banner.

Click through: A visitor clicks on an ad banner and actually gets the advertiser’s Web page (Murphy and Forrest 1996a).

Once the standard ways to measure online ads was set, the business can has its own accountability and we can start to regulate it.

SOME FACTS ABOUT THE CLICK RATE

According to a Nielsen I/Pro study, the click rates varied from 2.4 percent to 17.9 percent, depending on the advertiser’s banner. The average ad click rate was 7.9 percent. A few simple banner changes can increase the click rate by 200 percent. Therefore, the advertiser can raise the click rate greatly by redesigning the ad banner.

THE ADVANTAGES OF AUDIT TOOLS

By using audit tools, the advertiser can know ‘5W’: Who is visiting the Web page, What pages receive the most hits, when the Web site is most popular, where visitors are coming from, and why do visitors turn to the Web page for information in the first place (Busch 1997). After interpreting the information about the ‘5W,’ advertisers will know the defined audience more clearly and can measure and serve advertisements with great specificity. The ‘5W’ information can also help advertisers make better decisions about where to place ads and how to plan a Web site’s promotion campaign. It can also let advertisers evaluate their current and future investments more accurately.

HOW TO CHOOSE AUDIT TOOLS?

There are many kinds of audit tools with different functions and prices in this market. To determine which tool will be used, advertisers and Web publishers should consider the following two questions:

• Who is going to use the data? Will reports be sent to system administrator who may just need raw figures or may prefer professional reports for the marketing department?
• How much flexibility do they want in the reports? Do they want to look deeper into the data to find interesting trends, or are standard high-level reports useful for their needs (Robertson 1996))?

THE PROBLEM

Privacy could become a big problem in the audit tool market. Although the auditing firms guarantee they will provide sites only with a user’s anonymous profile, which does not include name, street address, e-mail address, and so on, surfers still think this is a big threat to personal privacy.

OPPORTUNITIES AND PROSPECTS

At a minimum, advertisers need to see data about page visits, lengths of visits and click-through rates. For now, though, most businesses do not need perfect auditing systems, but they can at least insist on them. Requiring the use of auditors will encourage competition among tracking software vendors and prevent a monopoly. The idea of auditing tools is very likely to become a part of the industry environment.

Busch, D. (1997) ‘Count your blessings’, Internet World Magazine, June.

Carl, J. (1995a) ‘Rushing to fill gap left by hits’, Web Week, August.

Carl, J. (1995b) ‘Union between Nielsen and I/Pro: synergy was too good to pass up’, Web Week, October.

Murphy, J. and Forrest, E. (1996a) ‘Hits, views, clicks, and visits: web advertisers face data jungle’, The New York Times, 26 May.

Murphy, J. and Forrest, E. (1996b) ‘Who’s doing all this measuring?’ The New York Times, 26 May.

Murphy, K. (1996a) ‘ABC unveils audit service’, Web Week, June.

Murphy, K. (1996b) ‘Net genesis tool to track site usage’, Web Week, February.

Robertson, N. (1996) ‘Stalking the elusive usage data’, Internet World Magazine, April.

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