Internet veterans will recall Webvan, the failed online attempt to offer home delivery of groceries. Before folding in July 2001, Webvan burned through about $1 billion in capital.

I was reminded of Webvan recently as I was reviewing Department of Commerce data for online and offline sales:

I was struck by the rapid de-acceleration in the growth of online sales since the beginning of the year, while retail sales have continued to grow at the same rate. After a little analysis, I realized what was happening. It all begins with the dramatic rise in the price of oil this year and the resulting increases in the price of gasoline and food:

These products are bought offline – which helps explain the continued growth in retail spending, but now driven by inflation. However, the price increases in food and gas have squeezed consumers’ discretionary spending and it is this discretionary spending that is vital to e-commerce. As consumers’ discretionary spending power has dropped, so has the growth in e-commerce sales.

If only Webvan were still with us to help convert some of the offline retail grocery sales into online retail growth. Obviously, the remaining web grocers have an opportunity in light of the increased gas prices. I have been cheered by stories about Peapod holding the line on delivery charges in order to build business from gas-price-stricken consumers. What better way to emphasize the convenience, time saving, and gas saving from shopping online!

I’ve run into a handful of cases lately where distinct IP Address counts have been offered as evidence that comScore’s numbers underrepresented an audience. These are very easy cases to address, but their increasing frequency made me wonder if the “Myth of Static IP” – that IPs will become equivalent to Users – was undergoing some sort of revival. I’d like to run through a few facts about what IPs represent with respect to Unique Visitors and show that IPs are a poor proxy for UVs even in a broadband world.

It's common knowledge that ISPs rotate IP addresses. The IP address I have today could be the one you have tomorrow. With a dial-up connection, you get a new one each time you connect. With “always-on” broadband connections, the IP addresses are more durable, possibly even static over long periods of time. As consumers began to adopt broadband technologies in earnest several years ago, a myth arose that IPs would soon become a good proxy for individual households.

We looked into the matter when we were researching cookie deletion in 2007, finding that fewer than half of US machines used the same IP during a one month period, and individual machines used an average of nearly 6 IPs. We asked around the industry to verify our findings and found very little surprise. The general tone of the response was: “You didn’t know that already?” We moved on with our cookie research.

But given the apparent renewal of interest in using “Unique IPs” as a measure of “Unique Visitors,” I thought it was time to update the IT research and make a few facts known. All figures are built from comScore’s research panel activity in June 2008.

US IP Address Counting Inflates counts by more than 5 Times

In June 2008, nearly 60% of all machines used a single IP address, which is slightly more than when we initially saw in early 2007. However on average, US machines used 5.7 distinct IP addresses in the month, which means that 40% of machines that change IP addresses during the month do it with great frequency. What’s most striking about these distributions is how the multiple-IP machines drown out Single IP machines. Of the distinct IPs used by US machines in the panel, just 10% came from Single IP machines. Only 1 in 10 observed IPs satisfies the Myth of Static IP.

When you break the results down by location of use, its clear that the problem is significantly less at Work where broadband is the norm. But even at work, where 75% of machines use a single IP, these single IP users account for just 28% of the total IPs that a publisher would see. If we use work to represent how IP counting would perform in a broadband world, its pretty clear that IP Counting will continue to be too fraught with issues to represent Unique Visitors.

(Note: we are setting aside for the moment the core workplace IPs problem: Multiple users appear with the same IP address to publishers. This situation presents the opposite problem for people counting IPs. A single IP represents many individuals. We’ve heard this fact cited as evidence of why IP counting is actually conservative. If anything this fact renders the problem unsolvable for publishers – there is error in both directions, but you don’t know which direction is any given case.)

Broadband Is Not Static IP

The root of the Myth of Static IP is the dawning of the broadband network with “always-on” connections. It was expected that with more broadband adoption, we would get more reliable IP counting. This assumption also falls short. When we break downthe U.S. Home total by connection type, it’s clear that only Cable approaches the static IP levels seen at work. Dial-up predictably uses piles of IPs for each machine, and DSL falls in between. Only 30% of DSL machines used a Single IP address during the month, and the average DSL machine used more than 10 IPs. Of these residential technologies, only cable is even close to living up to the Myth. But even Cable suffers from the core inflation issues, averaging 2.7 IPs per machine.

IP Inflation Issue is Amplified Globally

If you pull back and look at the IP Counting issue on a global scale, it becomes clear that the Myth of Static IP is simply not true. Outside of North America, average number of IPs per machine in a month are roughly double those in North America, ranging from 10 in Western Europe to 15 in the Middle East and Africa. Worldwide, only 4 in 100 IPs observed in June came from a Static IP machine.

As senior director in the financial services group at comScore, I’ve spent a lot of time in the past several months examining changes in consumers’ online banking and credit card behavior. Earlier this month my colleagues and I hosted a webinar entitled, “comScore Industry Insights: Credit Cards and Banking” that highlighted some pretty interesting trends we’ve been seeing given today’s economy.

Here are a few of the key findings from the webinar that I wanted to share with you all:

1. The number of online credit card applications submitted by subprime applicants increased by 30 percent while the number of credit card applications submitted by prime candidates decreased by 15 percent.

Key Takeaway:

2. Total People Searching on a ‘Bad Credit’ Related Term Grew 14% Y/Y

Key Takeaway:

If you’d like to take a closer look at some of the findings, you can request a copy of the presentation at www.comscore.com/request/cc-banking-webinar.asp. The feedback we’ve gotten from the webinar was really valuable and we look forward to hearing your thoughts, too. What trends have you been seeing in online financial services given today’s economy?

This blog post originally appeared as my column in MediaPost's Online Metrics Insider on August 19.

In my last Metrics Insider column, I wrote about the question of how advertising works. The column generated some great comments, and I got some very thoughtful responses via email; some of you even sent me papers on different components of ad effectiveness measurement. This week, I want to revisit the topic, and perhaps amplify a few points.

1. Advertising works. There are reams of anecdotal, observational, and empirical data that demonstrates that advertising does indeed work. In the late ’80s and ’90s, I remember comScore’s CEO, Magid Abraham, then President / COO of Information Resources (IRI), publishing landmark work, based on hundreds of TV ad campaigns, correlating advertising and sales in a series called “How Advertising Works.” Magid found that incremental TV weight was able to generate sales increases for CPG brands 50% of the time. In our space, my company, comScore, does a lot of work quantifying the effectiveness of online advertising.

Advertising works in many different, sometimes mysterious, ways, with many variables affecting its performance (e.g. creative, media schedule, purchase cycle, share of voice, etc.) Well-designed research can measure that performance, and the best way to do so is against the advertiser’s objective. Suppose a campaign generates robust click-through, but no measurable branding impact. Did that campaign work? Certainly that depends on whether the goal was driving click-through or building brand awareness.

2. Online display advertising works. At my company, we have done hundreds of studies demonstrating the ROI of different kinds of online advertising. In one case study recently presented, we found that, among consumers exposed to a campaign, click-through accounted for only 10% of subsequent site visits and 14% of incremental dollar sales volume; view-through — consumers exposed to the campaign but who did not click on the ads — accounted for 90% of eventual site visits and 86% of incremental dollar sales. In other words, gauging the effectiveness of this campaign based solely on clicks would have missed 90% of the sales impact.

3. Online advertising drives offline sales. Sometimes people forget that the Internet is not a self-contained ecosystem. We can’t ignore the extent to which online advertising can drive offline sales, something else that can’t be counted with clicks. Using our panel and our ability to link it to offline databases, we have been able, time and again, to quantify the impact of online advertising on offline sales. Even for search advertising, wherein one might be tempted to believe the majority of effectiveness accrues in-session and via click, we have observed that 83% of the advertising impact on sales is either latent (sales on subsequent user sessions; 20%) or offline (63%.)

4. Search and display work better together. Another thing we’ve found is that when an advertiser runs a search and a display campaign simultaneously, the impact (as measured by lift versus a control group) of exposure to both search and display is greater than the impact of search alone or of display alone; in fact, impact of search and display together exceeds the sum of the effects of search and display impact individually. In other words, there is a synergistic effect; add two and two and you get five. And not surprisingly, much of the incremental sales generated by the combined exposure group occurs offline.

5. Display ads online are at least as valuable as display ads offline. Television still commands a significantly greater share of ad dollars than the Internet, at higher CPMs. In my last column, I noted that online ads that can be empirically tied to conversion tend to have greater perceived value than ads whose primary impact is measured by awareness, recall and other brand-building metrics. So let me make this point: the impression generated by one consumer watching a given spot presented within long form online video, in full screen mode, is at least as valuable as an impression delivering the same spot to the same consumer on traditional TV. (I would argue that the online impression is probably more valuable because it is likely to also reach the kind of younger, more tech-savvy and harder-to-reach consumer that is increasingly difficult for traditional TV to deliver.)

As we develop new ways to dedicate on-screen real estate to delivering captivating, engaging ads, whether via banner, rich media or emerging formats, I fully expect online display advertising to become an increasingly important component of the media mix. We don’t require a click-through from a magazine ad or a TV ad or a newspaper ad or a radio ad, and all these impressions are valued by advertisers. Impressions online should have at least the same value, wholly independent of the direct linkage to a click. The opportunity to generate that action online is a profound value-add, but let’s make sure that we properly value the ad before we overlay the value-add. Advertising can have immediate effect, but it can also have quantifiable mid-term effect, and profoundly valuable long-term branding effect. And that is as true for online advertising as for any other medium.

Regular visitors to this particular stretch of the blogosphere may remember my first ever comScore post, which charted the influx in traffic to MLS.com following the signing of David Beckham to the LA Galaxy…

A year on and online interest in the MLS remains strong, and I am pleased to say that the league became a comScore Media Metrix client in June 2008, in a month that saw the site rack up 394,000 U.S. and a total of 500,000 worldwide visitors.

Indeed, whether you want to attribute it directly to “the Beckham factor” or not (I, of course, am inclined to do so), U.S. interest in soccer is undoubtedly picking up, as this recent analysis of traffic to UEFA.com – the official website of the Union of European Football Associations and the tournament’s organizing body - during Euro2008 shows.

* Excludes traffic from public computers such as Internet cafes or access from mobile phones or PDAs.

**Rankings based on the 16 individually reportable European countries in comScore World Metrix, + U.S. Total European Internet audience figures are comprehensive and include visitation from countries that are not individually reportable.

European traffic to UEFA.com grew 163 percent in June 2008 (Euro2008 was played between June 7 and June 29) to reach over 9 million unique visitors. Outside of Europe, the tournament also generated great interest online, with unique visitor numbers increasing 223 percent to 8.5 million.

However the most fascinating finding is that during the month in which the tournament was played, U.S. traffic to UEFA.com increased more dramatically than any of the European countries analysed (277 percent), growing at a faster month on month rate than World Cup winners Italy (253) percent, and tournament hosts Austria (226 percent) and Switzerland (198 percent). This highlights the increasing popularity of the sport in the U.S. If the sky was crying when Bex left the U.K., it is certainly looking rosier over U.S. soccer fields these days…