Nielsen says its measurement of the amount of time users spend on websites may have been "grossly underestimated for at least the past three months," Advertising Age reports.

According to Ad Age the undercount was "due to a flaw in [Nielsen’s] system that failed to recognize long Internet addresses, underestimating "time spent" on the Internet and especially social-media sites. Nielsen is still investigating both the cause and extent of the error, but is advising clients in a letter [on Thursday, Nov. 4, 2010]  that it believes their "time spent" metrics–the amount of time visitors spend on a website or watching video–may be grossly underestimated by the current system."

Adds Ad Age, "The impact of the error, though, will be felt by the online media and advertising industries, as well as Nielsen. Nielsen data isn’t used as buying currency–like Nielsen’s TV ratings are–but it is used by agencies to plan spending and allocate dollars. Websites or video services that don’t have enough scale don’t make the plan and don’t get dollars. Now, some of them may learn that they’ve been shortchanged by the biggest brand in media measurement."

To read the entire story, including the letter sent by Nielsen to its clients about this, please click here.