Media Metrix to Measure Its Investor Audience

Feb 25 1999

Online ratings leader Media Metrix has joined the ever-growing list of highly popular, money-losing Net firms that will go public.

In a registration statement with the Securities and Exchange Commission on Wednesday, the firm filed for a public offering to raise as much as $48.3 million. The number of shares to be offered has not yet been determined.

A merger last October with No. 2 ratings firm RelevantKnowledge made Media Metrix the leading provider of independent Web audience data, primarily used by Web sites and advertisers to buy and sell online advertising. Media Metrix reports a broad client base of over 300 customers, including all of the top-20 digital media properties, major advertising agencies and marketers. Client retention was 95 percent from 1997 to 1998. The firm reports that its audience estimates were cited in more than 400 print and online news sources during January 1999 alone.

Despite its popularity, the firm remains unprofitable. Statements show the merged firm recorded a net loss of $16.2 million based on revenues of $8.1 million during 1998. Independently, Media Metrix would have reported a net loss of $7.5 million on revenues of $6.3 million, and RelevantKnowledge would have reported losses of $6.3 million on revenues of $1.9 million for 1998.

Original Media Metrix execs Tod Johnson and Mary Ann Packo will remain chairman-CEO and president-COO of the firm, respectively. The cofounders of RelevantKnowledge will remain on the board of the public firm but may not be long for the company. According to the SEC filing, Tim Cobb was terminated on January 31 and is now an executive consultant. Another RelevantKnowledge cofounder, Jeff Levy, will remain director and vice-chairman of the merged firm, but according to the SEC documents, "the term of his [employment] agreement is the shorter of 15 months from November 5, 1998 and six months after this offering."

Part of the funds raised in the IPO will be used to finance international expansion and new product development. Documents indicate that patent applications for their metering methodology are pending in Europe, Australia, Brazil, Canada, Japan, Mexico and Norway.

Though NetRatings, PC Data and AtPlan also provide forms of Web audience tracking, Media Metrix is the only service that measures, using real-time tracking software, both home and work surfers, as well as proprietary online service traffic. A merged Web measurement service from NetRatings and television ratings giant Nielsen is set to debut in the next couple of months. Announced in November, the merged service may be the only serious competition on the horizon.

Another significant threat is the Web's gradual shift from ad- to commerce-based revenue streams, leaving the future demand for ad-buying services like Web ratings in question. However, in December, Media Metrix announced plans for a service to track e-commerce later this year. SEC documents show the name E-Trends as one of their registered trademarks.