Jupiter Media Metrix

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JUPITER MEDIA METRIX

Jupiter Media Metrix is a leading market research and consulting firm that reports on the impact of the Internet and new technologies on commerce and marketing. Jupiter Media Metrix was formed in September 2000, when Media Metrix acquired Jupiter Communications for about $350 million in stock. The company's five business units were subsequently organized around its core competencies of measurement (Media Metrix), analysis (AdRelevance), intelligence (Jupiter Research), and events (Jupiter Events), with an international division (Jupiter Media Metrix International) focused on global expansion.

Jupiter Media Metrix provides audience measurement reports for Internet usage that are based on data collected from panels. The company's panels are randomly selected personal computer users, including at-home and at-work users, who are selected by random digit-dial telephone calls and direct mail. As of late 2001 the panel consisted of 50,000 individuals in the United States and another 50,000 located outside the U.S., all of whom were under continuous measurement. Through a proprietary metering system, the activity of each panel member's computer operating system and Web browser is monitored on a second-by-second basis.

The company's audience measurement database is then used to create a wide range of reports and services designed to help companies make intelligent business decisions regarding electronic commerce and the use of Internet and related technologies. A Key Measures report covers visitors and visitor demographics, among other measures, for all reportable Web sites by category. The database also tracks national and local market reach to show how national and local Web sites are performing within each of the top 38 local markets.

Other reports include the Q-Metrix Report, first introduced in 1999, which provides data on consumer media habits, product and service usage, lifestyle characteristics, and demographics. Among the specific areas covered in Q-Metrix Reports are banking and credit card activity, Internet shopping behavior, television viewing habits, and hobbies. The company's Online Shopping Report covers more than 500 Internet sites and the AOL Shopping Channel.

Another group of reports analyzes and reports on computer ownership and usage. The HardScan, Soft-Scan, and SoftUsage Reports produced by Jupiter Media Metrix cover hardware ownership, computer peripheral ownership, branding information, installed applications, and system software, including Internet browsers and the use of software applications. The company's Linkage Reports and its U.S. Consumer PC Report analyze the relationships between computer hardware, software, media, ownership, and usage.

In addition to publishing reports, Jupiter Media Metrix provides its clients with research services to help them make business decisions about Internet commerce and consumer and business use of the Internet and related new technologies. Using a wide range of data-gathering tools, Jupiter Media Metrix provides research services and products to help client companies set business and strategic goals, identify revenue opportunities, formulate and evaluate business models, develop and analyze marketing strategies, and determine which technologies and vendors are best suited to their needs.

Through its Jupiter Events division, Jupiter Media Metrix conducts numerous conferences and expositions focused on electronic commerce and new technologies for business. These two-to-three-day events provide the company with an opportunity to showcase its latest research and measurement products for clients and potential clients.

Jupiter Media Metrix operates globally. It maintains measurement panels and produces research products and services in nearly 15 countries in North and South America, Europe, and the Pacific Rim.

MEDIA METRIX AND JUPITER COMMUNICATIONS

Jupiter Media Metrix was formed in September 2000, when Media Metrix acquired Jupiter Communications. Established in 1986, Jupiter Communications was one of the first research firms to report on the dynamics of electronic commerce over the Internet. New York-based Media Metrix established itself as a leading measurement service for Internet usage in 1996, when it was spun off from market research firm the NPD Group. Media Metrix, which was originally named PC Meter, employed metering software to record the computer activity of its panelists. In 1997 the company changed its name to Media Metrix.

In 1998 Media Metrix acquired a major competitor, Relevant Knowledge, to form a comprehensive single source for reporting and analyzing Web usage. At the time Media Metrix was collecting data from about 30,000 panel members, while Relevant Knowledge had about 9,600 panelists. The two companies employed different methodologies, and Web advertisers hoped the merger would result in a single standard measurement system for Internet usage. Following the acquisition, Media Metrix had offices in New York, Atlanta, and San Francisco, and about 90 employees. The company built a client list of about 250 major companies and could measure 15,000 Web sites. Its major shareholder was the NPD Group.

Media Metrix went public in May 1999 with an initial public offering (IPO) that raised $51 million. During the year its client list grew to 500 companies, including major Internet players such as America Online and Yahoo!, large advertising agencies, and Wall Street firms. Media Metrix was a well-known brand and was frequently cited as a source of information on Internet usage and Web traffic. Following its IPO, Media Metrix sought to expand globally. With the help of local partners, it began supplying data on Internet usage in France, Germany, and the United Kingdom, to be followed by Australia, Japan, and Canada.

Media Metrix's primary competitor in 1999 was Nielsen/NetRatings, a joint venture formed by TV ratings giant Nielsen Media Research and NetRatings, an Internet research company spun off from Hitachi in July 1997. With a client list of 150 companies and some 33,000 panelists, Nielsen/NetRatings lagged behind Media Metrix, even as it attempted to distinguish itself by measuring ad banner traffic in addition to Web site usage. At the time Media Metrix was the only Internet measurement service that tracked Internet use in the workplace as well as at home. It was also the only service that tracked AOL subscribers. Toward the end of 1999 Media Metrix added the capability of measuring online ad traffic when it acquired AdRelevance, a research firm that tracked the results of online advertising.

MEDIA METRIX ACQUIRES JUPITER COMMUNICATIONS

In June 2000 Media Metrix announced it would acquire Jupiter Communications, an Internet research and consulting firm, for $414 million in stock. Following the announcement, however, Jupiter's stock fell by more than 8 percent, while Media Metrix's stock lost more than 17 percent, reducing the value of the stock-for-stock acquisition to about $350 million. The new company, called Jupiter Media Metrix, had more than 730 employees and 1,700 clients worldwide. Following the acquisition Jupiter Media Metrix reorganized into five divisions: Media Metrix, Ad-Relevance, Jupiter Research, Jupiter Events, and Jupiter Media Metrix International. In addition to offering Internet audience measurement, the company also provided analyses of Internet trends and forecasts. Its consultants worked with clients to develop business models based on emerging trends in electronic commerce and Internet usage.

As it was for many other Internet companies, 2001 was a difficult year financially for Jupiter Media Metrix. The firm saw its stock decline to less than $1 a share by late 2001, down from $17.85 when Jupiter Media Metrix began trading as a single company in September 2000. The firm's long-time CEO, Tod Johnson, stepped down in March 2001. He was replaced later in the year by Robert Becker, an executive formerly with Infosis and the Thomson Corporation. Johnson remained as the company's chairman. In April the company laid off 18 percent of its staff and reported a net loss of $54.2 million for the quarter ending March 31, followed by a net loss of $48.2 million for the quarter ending June 30. It had to take a $25 million loan to remain in business while it sought a source of permanent funding. In October the company said it would eliminate another 180 workers, or 30 percent of its workforce, as part of its effort to trim $40 million in operating expenses. During the year Jupiter Media Metrix was also involved in patent infringement disputes with PC Data Online—which Jupiter won—and then with NetValue USA. While Jupiter Media Metrix added new services and enhanced existing ones in 2001, it was hard hit by the downturn in the Internet economy. By trimming its workforce and cutting costs, the company hoped to achieve profitability in the future.