Slashdot Mirror
Economic Predictions Using Web Usage Data
Makarand writes "The Chicago Tribune has an article on the claims of ComScore Networks Inc., that it can predict major economic
trends by tracking the online activity of 1.5 Million people.
The company gains access to people's Internet travelogues by giving
them free security software and programs that speed up their connections. Economists say that
the company's models need to be tested over several years
before they can be considered accurate."
Firm tracks Web activity to predict economy
By Rob Kaiser
Tribune staff reporter
Published November 30, 2002
Investors are always scavenging for data that could indicate the market's direction. Changes in everything from cardboard box orders to hemline lengths have led to stock market bets.
Now upstart ComScore Networks Inc. is claiming it can predict major economic trends by tracking the online activity of 1.5 million people.
While using Internet data to gauge the entire economy remains unproven--and economists are skeptical--the possibility highlights the Internet's unique ability to capture how people spend their time and money.
"It's a heck of a lot easier to watch somebody's online behavior than to follow everyone around in their daily lives," said Brian Wesbury, chief economist with Griffin, Kubik, Stephens & Thompson Inc. in Chicago. "So the more things we do online, the easier it is to track our behavior."
ComScore gains access to people's Internet travels by giving them free security software and programs that speed up their Internet connections. With its capacity to download 18 billion Web page views annually, ComScore expects this year to capture 800 million Internet searches and 5 million online transactions.
The question facing the 3-year-old company is how to use all this data.
So far, ComScore has gone in several directions, publishing rankings of the most-visited Web sites, tracking the success of online marketing campaigns and predicting the results of e-commerce companies such as Amazon.com prior to the companies' earnings reports.
Now the company is launching its boldest initiative, betting it can extrapolate what is happening online to the offline world. ComScore says it can determine spending, employment, automobile sales and other economic measures by comparing prior government data to levels of Internet spending and traffic on certain sites during the same period.
"I've been in the research business for a long time, but this is blowing my mind," said Gian Fulgoni, ComScore's chairman. Fulgoni, formerly the chief executive of market research firm Information Resources Inc., is based in ComScore's Chicago office. The company is officially based in Reston, Va., where its president is located.
To estimate employment levels, ComScore looks at visits among the people it tracks to more than 1,000 sites with job listings. It estimates how many of those visitors are unemployed by looking at whether the searches are being conducted at home during normal work hours and how often they visit the sites.
Research tool
"Consumers use the Internet today more than any other medium to research important decisions," Fulgoni said.
ComScore tries to predict the government's overall retail spending figure by looking at online buying activity.
"It mirrors it enough that you can predict if spending is going to be strong or weak in a month," Fulgoni said. "I'm not saying it's a perfect correlation."
As a second gauge of spending, ComScore also looks for trends in the credit card statements that about 30,000 of its panelists view online.
ComScore charges $50,000 for an annual subscription to the economic data. So far, Fulgoni says, a few customers have signed on to receive the information.
The company is also selling its data to an upstart hedge fund for a reduced price in return for a percentage of the fund's gains.
David Nuelle, a founder of the Arcanum Fund, said he will use ComScore's data to make investment decisions in e-commerce companies and offline firms, such as Southwest Airlines, where customers often place orders via the Internet.
"You can get a strong sense of the revenues" of companies that do business on the Internet, Nuelle said. "It'll be the strongest data point we will look at."
ComScore, which has 200 employees, has enjoyed some success at predicting the results of e-commerce companies.
Last month, the company estimated that Amazon.com would report third-quarter sales of between $839 million and $851 million, exceeding analysts' consensus estimates of $807 million. Two weeks later Amazon.com announced third-quarter revenue of $851.3 million.
Still, predicting the results of individual e-commerce companies is a far cry from being able to provide a new window to the direction of the entire economy.
"To make money off this thing you have to be better than the Blue Chip consensus," said Anil Kashyap, an economics professor at the University of Chicago Graduate School of Business. "There's a long way between saying we can predict and making money."
Testing needed
Kashyap and other economists said the company's models need to be tested over several years before they can be considered accurate. Also, the company will have to learn how to account for a general increase in Internet use and sales as well as seasonal factors, they said.
A more proven area of ComScore's business is showing companies whether their online advertising is sparking offline sales. ComScore gathers grocery store scanning data for 60,000 of the people it is tracking to watch their buying habits.
Nestle Purina Pet Care has used this service to determine if its Web site and online ads are prompting additional sales.
"We don't have that closeness of data with any other medium," said Michael Moore, director of Purina Interactive in St. Louis.
Copyright © 2002, Chicago Tribune
Reading their privacy statement it should be noted that they are an incredible security risk and this company should be treated with the contempt that they deserve, the information they take is everything from emaills to SSL traffic and should put a chill through anyone.
What information is collected?
During the initial registration process, we request certain information, such as name, address, e-mail address, and education, about you and other persons who live with you or have the same mailing address as you (collectively, we call this your "Household"). After you register, our Network then collects additional information about your Household's Internet behavior and that of any other computers used by members of your Household that you have configured to use the e-Trends service. This information is then combined with other e-Trends member data and other information to create an aggregate view of Internet e-commerce. e-Trends monitors your surfing, essentially logging information about the web pages that you visit and the actions that you take, such as the purchases and transactions you make. e-Trends can only monitor the Internet behavior and activity of your Household's registered and configured computers. As a member, you therefore control which computers the e-Trends service is available on. e-Trends monitors both the normal web browsing you perform, and also the activity you may have through secure sessions, such as when filling a shopping basket or filling out an application form. e-Trend's proprietary and patent pending technology allows us to see the details of secure pages while protecting such content from parties other than the site to which you are connected. We monitor these connections so we can accurately and anonymously model not only the browsing habits of Internet users, but also their shopping, registration, and other interactions as well. Although we generally monitor your Internet behavior as part of this service, e-Trends does not examine, use nor keep any instant messages or examine or use the contents of any of your e-mail messages, except to perform specific functions necessary to provide you the e-Trends service (such as scanning your e-mails to effectively search for viruses), and as a quality assurance check against and method for verifying information on the surfing and buying behavior of e-Trends members.
Quite simply they read all your internet traffic
These companies should be illegal and the quicker someone sues them to oblivion the better,
but i see that handily Comscore have this e-trends as a subsidiary company just in case someone does that it wont affect the parent company.
buyer beware