NetRatings-RedSheriff merger spices up standards effort

The company said that it has paid £12m in cash to acquire a 58% stake in RedSheriff from majority shareholder Morgan Grenfell Private Equity Ltd.

RedSheriff's shareholders agreement requires NetRatings to offer to purchase all remaining shares in the company in a process expected to extend through to the end of January 2004, and which could value the total transaction at around $21m.

NetRatings said the move expands its presence into the site-centric internet audience measurement market, building on its existing portfolio of user-centric internet audience measurement and analysis services.

Australia-based RedSheriff has 63 employees, services more than 500 clients worldwide, including Microsoft, The New York Times Digital and Yahoo, and has 12-month trailing revenues of approximately $7.5m to 30 September 2003.

Meanwhile, NetRatings is poised to record revenues of between $40.3m and $40.7m for full year 2003.

"Through this transaction, we aim to meet the needs of our clients and the industry by providing a single currency in internet metrics, whether they are based on the behaviour of consumers or on the performance of websites," the executives said in a statement.

A spokesperson for NetRatings said that for the time being it will continue to offer the RedSheriff product, but that it is likely to provide some kind of integration between the two product sets in the near future, with a view to ultimately offering a service integrating both user-centric and site-centric figures.

She said one of the main focuses after the acquisition closes will be cross-training sales staff on the two product sets, adding that the current plan is to integrate all 63 of RedSheriff's employees, the majority of which are sales, into the organisation.

The acquisition could been seen as an attempt by NetRatings and RedSheriff to become the standard for internet audience measurement, as industry bodies call for one single standard.

Earlier this year, the UK's Internet Advertising Bureau (IAB) and Institute of Practitioners in Advertising (IPA) teamed up to develop an industry-wide standard for measuring web site user statistics.

The bodies said they would examine four different methods of measuring an ad campaign online - Nielsen//NetRatings, Comscore, Hitwise and RedSheriff - and derive a 'super-standard' based on these.

However, it is currently unclear whether this super-standard will simply add to the existing tools available or look to replace them. Whatever the case, by combining their offerings, NetRatings and RedSheriff are likely to carry more clout in any pitch over what measurements form the basis of the new standard.

The NetRatings spokesperson said that the company already works closely with the IAB, and that it hopes the acquisition would help to cement this relationship.

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