When it comes to online video sites, the byword is “buyer beware.”

As the television industry extends its reach deeper into the Internet each day, TV executives are quick to point out that one of the great benefits of the Internet is its accountability. During a time when TV ratings are increasingly under siege, that accolade must sound pretty good.

But advertisers and agencies-who have trafficked in Internet ad buying and selling far longer than TV networks have-say the Internet has got its own hornet’s nest of challenges when it comes to measurement. That’s because advertisers, agencies and the companies that are rushing to acquire red-hot online video sites must make sense of a swarm of data sources to determine where to advertise and what to spend-either on ads or on companies.

Questions Remain

A few recent developments underscore the need to look twice and read between the lines to understand what a site is worth.

Disney, which is preparing to launch the second incarnation of its ABC.com service that includes ad-supported, full-length episodes of the network’s prime-time shows, said that its two-month trial of ABC.com in the spring generated 16 million streams. However, one episode comprises four streams, which means the trial actually served up 5.7 million episodes because two-thirds of users watched full episodes. That complicates the scenario for ad buyers, who want to buy individual eyeballs rather than streams served.

There’s also the case of Sony’s $65 million acquisition of Grouper in August. Media reports pegged the site at anywhere from 8 million unique monthly visitors (according to Grouper) to a mere 542,000 (according to audience measurement service comScore). For its purposes, Sony said it dug deep into Grouper’s server files to get the full story on how many videos the service delivered monthly before it greenlighted the purchase.

Then there’s StupidVideos, which counted as few as 854,000 unique users in July, according to Nielsen//Net Ratings, and as many as 5.1 million according to its internal calculations. StupidVideos President Greg Morrow said that discrepancy in numbers has caused the Web site to lose out on some ad dollars.

So if TV measurement will be tough going forward as Nielsen struggles to account for growing viewership on digital video recorders and on-demand viewing, the online world may be even more challenging because there are far more cooks stirring the pot. The upshot is that measurement-either on TV or online-is going to get harder before it gets easier.

Experts don’t see any sort of all-in-one solution, so for now ad buyers and buyers of companies cobble together online snapshots from a variety of sources. They often start with online audience numbers from Nielsen and comScore. Media buyers use comScore and Nielsen broadly for planning purposes to understand the competitive landscape for various Web sites. But when agencies drill down to buy online ads, they turn to internal site metrics, their own measurement tools and third-party Web analytics firms, such as an Omniture.

That’s because Nielsen and comScore are designed to give a big-picture view of online activity. Both use an approach that’s similar to how Nielsen rates TV shows-they use a sample of viewers to infer what the general population watches. ComScore includes about 120,000 people in its online measurement panel because that size provides enough stability to measure accurately some of the smaller sites, said Jack Flanagan, executive VP of comScore.

Nielsen’s online measurement panel includes 32,000 randomly selected people over the age of 2, said Mainak Mazumdar, VP of product marketing and measurement science for Nielsen//Net Ratings. A panelist downloads the software, which then records all online activity at home and at work.

Making Headway

Then there’s Hitwise, which is also carving out a niche on online measurement. Hitwise reports market share for more than 800,000 Web sites based on a group of 10 million people in the U.S., said Bill Tancer, general manager of global research for the firm. That large number allows Hitwise to report on the percentage, or share, of a specific slice of the online pie that a site generates, such as the market share for a YouTube in the online video-sharing world.

Measurement firms provide a picture of online broadband activity and how it changes each month, said Kari Hooper, associate media director with the video investment group at Starcom. “But once you drill down to a site-by-site level, I feel there are other sources of information that can guide me to make a better or wiser decision on purchasing, such as site reports, user experience,” she said.

Other ad buyers agree. Media agency MPG, for instance, uses comScore and Nielsen data in the early planning stages and then turns to data from DoubleClick and Atlas, which serve and measure online ads, as well as its own home-grown measurement tools.

“We consider internal measurement more important and we use Nielsen and comScore as a reference or starting the process, but we don’t take action based on that,” said T.S. Kelly, VP and director of research and insight for Media Contacts, the interactive arm of MPG.

Sources Vary

Nor do investment bankers. Audience measurement is useful as an independent data source on the relative performance of sites, said Tolman Geffs, managing director of investment bank The Jordan, Edmiston Group. For making economic decisions, he looks to a DoubleClick or Omniture. “[It’s] a bit like buying a house,” he said. “I’ll read a lot of realtor descriptions, but will do my own inspection of the most interesting.”

That’s because third-party numbers tend to be “all over the map,” said Sean Carey, executive VP of digital distribution and product acquisition for Sony Pictures Home Entertainment. Besides, the numbers that mattered most to Sony when it bought Grouper were the number of videos it serves on its site and other sites, rather than traffic.

Similarly, when Viacom purchased Atom Entertainment for $200 million in August, the big media firm was interested in Atom’s revenue numbers and ad impressions rather than traffic, said Mika Salmi, CEO of Atom. “They did an analysis on our ad impressions level to our current revenue level,” he said.

Advertisers, too, are more interested in the ad impressions they can serve on a specific site, said Michael Hayes, senior VP and managing director for Initiative interactive in North America.

But the plethora of cooks hasn’t yet spoiled the broth. “At the end of the day it’s been an accepted standard practice to continue to plan and go forward. If you got stuck on numbers, you’d never go forward,” he said.

Web sites, even those that might be getting short shrift in ad dollars, agree. “We have taken it as a given part of business,” StupidVideos’ Mr. Morrow said.