Blinkx controversy underscores online ad data concerns With a blog post titled "The Darker Side of Blinkx," an associate professor at Harvard Business School wiped a third of the value off the market capitalisation of one of Aim's best-performing tech stocks on Thursday. The company "strongly refuted" the allegations from Benjamin Edelman that it was using questionable tactics to boost viewership. But the ructions underscore questions about the quality of the data and viewers that have bedevilled the rapidly evolving business of online advertising. Blinkx describes itself as "an internet media company that connects consumers and brands through premium content online." It is tapping into one of the fastest growing parts of the advertising world. Spending on online video advertising grew 30 per cent to $5bn in 2013, according to PwC, the professional services firm. But analysts say it is often unclear quite how Blinkx - and some of its peers - make money. "Part of the problem the industry has is that it is often difficult to get clean, tangible metrics of page views and click-through rates," says Neil Campling, analyst at Aviate Global. There are layers of complexity [to these businesses] which, combined with a high valuation multiple, makes for a volatile stock. Blinkx was the brainchild of Sri Lanka-born Suranga Chandratillake, a former chief technology officer of Autonomy, the algorithm-based software group founded by Mike Lynch and sold to US group HP. This month Mr Chandratillake moved back to the UK after ten years in Silicon Valley to join venture capital firm Balderton Partners. Mr Lynch is also a non-executive director of Blinkx. According to regulatory filings last year, he was one of the largest shareholders behind BlackRock and Oppenheimer Funds, but he has since been selling down his stake. Blinkx said in its results that it has invested almost $60m in building a "patented video and advertising engine," which brings together advertisers, websites and professionally-made videos. In a statement responding to the blog, the company said it "strongly refutes the assertions" and said that the company's operational and financial performance and outlook had not changed. Blinkx also said that its trading for the fiscal quarter was in line with management expectations. Some analysts and investors have been sceptical about the company's ability to generate cash and questions were raised about the departures of key executives, including the chief operating officer and chief financial officer in 2012. But most investors have focused on the company's rapid earnings growth. Blinkx's adjusted pre-tax profits nearly doubled to $15m in the six months to September 2013, compared to the previous year, while its net cash reached $69m. Its shares tripled in value in 2013, with a particular surge in November following a "buy" recommendation from Goldman Sachs. The world of online video advertising is complex and concerns about potential fraud are a big reason why many advertisers are reluctant to shift money from broadcast television. Vindico, a technology company that says it tracks 40 per cent of all video ads served on the web in the US, found that 57 per cent of 2.7bn ads it tracked over a recent two-month period were not viewable. In other words, the majority of online video ads were not seen by a human being. Vindico recorded 217m views on Blinkx, about 23 per cent of which actually seen by people. To put that in context, CBS had 195m views and a 88 per cent of them were actually watched. Matt Timothy, Vindico president, said: "My advertisers are foaming at the mouth to make sure that their stuff has been seen. I know for a fact that anything that begins to feel dicey, and begins to feel gamed, they're going to turn away from.