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| UPDATED: 2006-12-04 |
 Is The Web Bubble Back? Ask Hitwise 
By: Mathew Ingram 2006-12-04 From the London Telegraph comes a rumour that Hitwise - one of the half a dozen web-traffic measurement companies... ...whose stats show up in press releases, and are used as fuel for takeover rumours - is itself the subject of takeover talks, with the price tag reportedly an eye-popping 180 million pounds or about $350-million (U.S.). Link: a rumour that Hitwise Joe Duck says this sounds about right if Hitwise charges its 1,200 or so clients an average of $2,500 a month for access to its data. I'm not sure where Joe gets those numbers from, but let's assume he's right. That works out to annual revenue of about $36-million, which makes the rumoured takeover price between 9 and 10 times revenue. Joe says that's "not outrageous" for an established and growing Internet company, which leads me to believe one thing - no, not that Joe is on crack, but that he has a very high threshold for outrage. I think between 9 and 10 times revenue is bubble-type math. And yes, I know that Google sells for 15 times revenue; in fact, that actually helps my case. Obviously, traffic measurement is a hot area right now, primarily because advertisers are desperate to find a way of deciding where to put their money, and websites are desperate to find a way of proving they are the right place to put it. Using page views as a metric, as Steve Rubel notes, is broken. But then, the different standards used by Hitwise and comScore and Nielsen and Alexa aren't much better. As Matt Marshall pointed out, website measurement as a whole is a train wreck. Alexa only measures users who install a browser plugin and is biased towards the U.S.; comScore uses a piece of software that has been accused of being spyware; Nielsen phones people and asks them what they do; and Hitwise uses ISP log files. What you typically wind up with is half a dozen measurements that all say something different - in some cases, one firm will show a website falling in popularity or flat, while another shows its traffic zooming. Is Hitwise any better than its competitors? Who knows. But any way you slice it, 9 or 10 times revenue is a boatload of cash. Comment Tag: Hitwise Add to  Del.icio.us |  Digg |  FurlView All Articles by Mathew Ingram About the Author: Mathew Ingram is a technology writer and blogger for the Globe and Mail, a national newspaper based in Toronto, and also writes about the Web and media at www.mathewingram.com/work and www.mathewingram.com/media. |
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