Audience measurement is a critical component of the advertising ecosystem. Advertisers want to know who they are reaching when they buy advertisements, regardless of the medium. Those selling advertising space or time do not always themselves know how many users are listening or viewing. In broadcast media, such as radio and terrestrial television, the broadcaster has no way of knowing how many people are tuning into a signal once it is beamed out.

One company dominates the field of audience measurement: Nielsen. The company began measuring US radio and television audiences in the 1940s and 1950s; US advertisers still rely on the company’s metrics. Nielsen has a strong presence even in countries where audience measurement is overseen by industry bodies, such as the UK. In that country, TV ratings are managed by the Broadcasters’ Audience Research Board Ltd. (BARB), a non-profit organisation owned by a group of UK broadcasters and by the Institute of Practitioners in Advertising, an ad industry trade group. BARB contracts with several third-party research firms to perform the actual audience measurement, however. Chief among them is Nielsen, which handles ‘metering’ (measurement), data collection and data processing for BARB.

The techniques used for measuring television audiences have changed little since 1950; in some American TV markets, Nielsen’s only available data comes from paper diaries in which participants log their weekly viewing. In mid-size and large TV markets, Nielsen also uses metering technology which automatically records which station a family is viewing and in some instances who within a household is watching. Nielsen has used both paper diaries and electronic metering for decades.

The introduction of new digital mediums, such as the world wide web and mobile phones, has presented a new set of challenges for audience measurement. Nielsen has responded through a series of acquisitions, buying startups which fill gaps in its offerings. The Nielsen Online division, which tracks Internet traffic and audience behaviour, was built on the back of two of Nielsen’s acquisitions: NetRatings and BuzzMetrics. Nielsen acquired majority interests in both companies during 2006 and bought the remainder of both in 2007. BuzzMetrics tracks online discussion on blogs and message boards, while NetRatings measures online audiences. BuzzMetrics itself was formed through a series of mergers involving Israeli startup Trendum and US startups Intelliseek and BuzzMetrics.

Last summer Nielsen acquired Telephia, a San Francisco-based startup that measures the reach of mobile content, for example the number of mobile games users download or how often mobile users surf the web on their phones. Nielsen launched its Nielsen Mobile division shortly before the acquisition, and Telephia became the core of that division. Nielsen’s acquisitions continue: just yesterday the company announced the acquisition of Audience Analytics, whose software will help Nielsen measure interactive TV and video-on-demand usage on digital set-top boxes.

Which companies might pop up on Nielsen’s M&A radar in the future? Startups continue to proliferate in the audience measurement space. Last week UK-based Magpie raised €670,000 to continue development of its Brandwatch platform, which like BuzzMetrics tracks users commentary on blogs and forums. Several other startups are focusing on tracking audience behaviour in social networks: Xtract, which analyses links between users; Peanut Labs, which runs market research surveys over social networks; and Invite Media, which tracks advertising in social networks.

US-based Mochi Media has developed a metering tool for Adobe Flash files, which complements the company’s primary business as an online advertising network for casual games sites, as Flash is a popular platform for casual games development. Visible Measures, another US startup, measures the audience for online video. Last month the company raised €9.2 million from General Catalyst Partners and Mohr Davidow Ventures.

Nielsen is not the only potential acquirer of audience measurement startups, nor are trade sales the only possible exit for these companies. comScore, a venture capital-backed rival of Nielsen in the internet analytics business, floated last year on NASDAQ. comScore is much smaller than Nielsen, but has close to $100 million (€68 million) in cash on hand and a history of its own acquisitions, from market research firms Q2 Brand Intelligence and SurveySite (acquired in 2004 and 2005, respectively) to the purchase of Jupiter Media Metrix’s assets in 2002, making it a possible acquirer. Lastly, despite Nielsen’s overall size, that company does not yet dominate audience measurement for digital media. As comScore itself proves, there is still room for sizeable, independent rivals to Nielsen; perhaps a company from this latest crop of startups will be one of them.

Library House’s recently-released Q4 2007 Quarterly Briefing showed the quarter to have been a weak one for VC investment across Europe, with the lowest amount invested of any quarter in the past two years. That weakness was even more apparent in the Mediatech sector, where investment dropped a precipitous 52% between Q3 and Q4 2007. Just €121 million of VC money was invested into European Mediatech companies in the period, a stark contrast to the two-year high of €252 million euros in Q3 2007 (see Figure).

The fall in Mediatech investment in Q4 is surprising given Mediatech’s strong showing during the first three quarters of the year. Mediatech investment during Q1-Q3 2007 was up 17% on the same period during 2006. Yet Q4 was so weak that full-year Mediatech investment totals actually fell 0.9% from 2006 to 2007.

The decline in Mediatech investment in Q4 2007 was almost entirely due to shrinking investment into Content and Service (C&S) Providers – a reversal of the first three quarters of 2007. Investment into C&S Providers from Q1-Q3 2007 totaled €372 million euros, up 72% from the same period in 2006. Yet from Q3 to Q4 2007, investment into C&S providers plummeted from €173 million to €49 million – a decline of 72%.

Investment trends within the Video sub-sector are a microcosm of the wider rise and decline of C&S Providers during 2007. In Q2 and Q3 2007, Video startups pulled in several large financing rounds: Joost raised €33.2 million and VideoJug raised €22 million in Q2; and Dailymotion and Metacafe picked up €24.9 and €22.3 million respectively in Q3. In Q4 2007, however, the biggest disclosed European Video deal was RayV, a Joost competitor which received a modest €£5.7 million from Accel Partners.

One bright spot amongst Content and Service Providers which could see more attention in 2008 is Search & Directory. Investment into this sub-sector rose 211% between 2006 and 2007, buoyed by both vertical and general search engines. Some major VC deals in 2007 involving vertical search engines include: residential search engines Properazzi and Zoomf.com (from Spain and the UK respectively); German gaming search engine Wazap!; and French Enterprise search engine Exalead. 2007 also saw the funding of generalist search engines with a unique spin, such as Russia’s Quintura, which presents search results as a visual tag cloud; and the UK’s True Knowledge, whose software answers natural language queries for facts and information.

Existing power distribution infrastructure was implemented at the beginning of the 20th century when many of the technologies available today were not around, and the demands placed upon it were less than in today’s data driven digital economy. Now the concept of a Smart grid is slowly seeping into people’s consciousness, and as many lead users would assert, it is more than a concept but an inevitable development for power distribution infrastructure.

In traditional distribution networks power stations need to supply excess capacity in order to account for unpredictable variations in demand, and information flows are solely from the user consumption back to the utilities. The Smart grid allows generators and consuming loads to interact in real time, in both directions, with the aid of modern communications technology, which leads to a number of advantages. One of these includes the ability for homes to supply back into the grid, so excess energy from generators such as solar panels can be used by others.

This Smart infrastructure can act as a feedback mechanism to smooth out variations in peak demand, and provide more sophisticated pricing mechanisms that react instantly, rather than having simple day and night tariffs. It also acts to decentralise power generation which ultimately means that power will still be maintained even if major power supplies are put out of operation.

Role out of the Smart grid is likely to be a modular process with each utility company subject to its own investment decision process. But moves are already underway to make the Smart grid a reality. A Smart grid consortium in the US, established in December 2007 by Xcel Energy, plans to set-up a test bed community of around 100,000. This will involve making all the necessary upgrades to infrastructure and providing the capacity for 1,000 renewable generation sources that can be plugged into the grid.

Given the global scale in which the Smart grid has the potential to proliferate, it’s no surprise that there are a number of emerging players with enabling technologies seeking a piece of the pie. V2Green are a Seattle based company whose technology allows electric vehicles to be plugged into the grid and eliminate demand spikes by automatically adjusting load requirements to the availability of supply. The privately funded company which has collaborations with several US utilities companies announced it was fundraising earlier this month.

Just this week the curiously named Fat Spaniel Technologies closed a second round of funding of USD 18m, which they had announced to Library House they were seeking in November. The company provides what they call an Energy Intelligence Platform, which enables hosted data monitoring, management and control services so that utilities companies can more easily work with date flows from the more sophisticated grid infrastructures.

Perhaps one of the most important aspects of a Smart grid is that the infrastructure easily enables domestic users to sell excess power back to the grid, further incentivising a more widespread adoption of small scale generation technologies.

This broad reaching technology clearly has many stakeholders, suggesting many eyes will be focused on the success of pilot studies and early adopters, which will surely influence where the smart money goes.

Given the dramatic growth of Cleantech in 2007, with Library House figures showing European venture investment more than doubling in this area compared to 2006, many commentators are asking whether this growth is sustainable, or whether the Cleantech sector is destined to go from boom to bust. The schematic below illustrates some of the major forces at play:

Perhaps the most important economic force behind Cleantech investment in recent years is high oil prices. The 1970s oil crisis saw a brief period of increased environmental concern, but when oil prices dropped significantly, environmental issues were again pushed to fringe of global politics. With oil prices hitting $100 a barrel a few weeks ago, adjusting for inflation, we are back at those 1970s levels again.

Prediction for future world oil prices are complex and subject to inevitable uncertainty. Short term no price drop is in sight, however, oil prices at $100+ per barrel make it viable for non-OPEC countries to make profits producing oil – one example being Canada who has vast oil reserves, historically not viable because of the cost of extraction. Deflationary pressure on oil prices from reduced demand in global economic slowdown is another possibility in the years ahead.

Given the economics alone, Cleantech is still clearly vulnerable to drops in oil prices, but this negates the massive and increasing influence of global politics – incomparable to the situation in the 1970’s. The environment and climate change is one of the highest priorities on almost every major political agenda, and the chances are that the next US administration will pay greater attention to this. Sacrifice was a word used by one US presidential candidate, a hint that the world’s biggest power may for once put environmental policy ahead of economics.

Some have questioned whether a renaissance of nuclear energy could threaten investment returns in Cleantech. Some argue that nuclear does actually represent a clean technology itself, but regardless, the reaction to recent UK announcements has shown that the political forces are very much at play, and whilst nuclear will continue to contribute to power supplies, political pressures look set to keep its contribution limited.

This raises an important point associated with future energy provision – energy is expected to come from a more diverse range of sources in the future – the so called ‘energy mix’, and there is a substantial market even if the ultimate contribution of Cleantech is to provide only a third of the worlds energy needs.

The other major force acting in the world today is global security and terrorism. This includes threats to Middle Eastern oil supplies which will exert inflationary pressure on oil prices. One reaction is that countries are looking towards alternative domestic energy supplies in order to assure energy security, which in many cases means weaning energy supply away from oil. Both of these reactions bode well for the Cleantech sector.

There may be sub sectors of Cleantech that are subject to technical difficulties or political resistance, but the sector as a whole is pushing forward on multiple fronts and where one technology fails, another is waiting in the wings to take its share. And as investments in these areas grow, so to will the strength of groups lobbying for their success.

Overall it seems that even if some of the props supporting Cleantech are removed, sufficient support will remain to ensure some momentum in the sector is maintained. So whilst the sector may not be immune from set-backs, the chances of a bust any time soon seems hard to fathom.