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Evaluating Internet Media Concentration the Way the Feds Do May 29, 2007

Posted by David Card in Media.
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Since the FTC is a-knocking on Google’s door, it seemed appropriate to take a look at a Herfindahl-Hirschman Index for the Internet. That’s the industry scorecard that is one of the tools used by both the FTC and DoJ when they evaluate industry concentration in merger analysis. A low HHI score can come from a market with many, many players, or from one where no one has dominant share.

A quick, back of the envelope HHI for US Internet ad spending market share in 2006 (see Figure 2) produces a score of a little over 1,000, which qualifies as “moderate concentration.” Using comScore traffic data on time-spent, you get an index in the 330 range, which is “not concentrated.” That spending market share score is up from the 650 range in 2004, when last we calculated it (see Figure 1). But Internet advertising still isn’t highly concentrated.

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