Nielsen Tries To Keep Pace With TV's Evolution
For decades, the way the TV networks and advertisers worked together was simple. A lot of people watched TV, the Nielsen company estimated just how many, and the advertisers paid for airtime based on the Nielsen ratings. Now, the TV industry is changing and Nielsen is trying to keep up.
RENEE MONTAGNE, Host:
Now to your viewing habits. Keeping track of who watches what on television has been going on since TV networks began broadcasting. And for years the Nielsen Company held a monopoly on that TV ratings business. Now with hundreds of channels to choose from and various ways to watch the programming, the business of monitoring viewership is in a state of upheaval. NPR's Kim Masters reports.
KIM MASTERS: For many decades it seemed the Nielsen pretty much ruled the media world. Television shows lived or died by the ratings, which advertisers used to decide where to run their commercials. Of course, there were only three big networks in those days, which made it a lot easier for advertisers to get their tag lines and jingles into the national consciousness.
(SOUNDBITE OF TV COMMERCIAL)
U: Where's the beef? Hey, where's the beef?
(SOUNDBITE OF TV COMMERCIAL)
U: He likes it! Hey, Mikey!
(SOUNDBITE OF TV COMMERCIAL)
U: (Singing) Plop, plop, fizz, fizz, oh, what a relief it is.
MASTERS: Nielsen enjoyed such a monopoly that it didn't necessarily worry about whether its customers - that is, advertisers and television networks - were particularly happy with the company's services. But thanks to the digital revolution, Nielsen has had to rethink everything.
Susan Whiting runs the ratings service.
MONTAGNE: We really have changed our view of the world.
MASTERS: In the past couple of years, she says, Nielsen has branched out to measure viewership across three screens, as the company puts it - television, the Internet, and cell phones.
MONTAGNE: A lot of the research we're doing, it will be the first time someone's looking at an area or an issue.
MASTERS: That's all well and good, says Tracey Scheppach. She's with Starcom, an agency that advises advertisers on how to reach customers. Nielsen may need to measure viewership on new screens, she says, but the company hasn't even kept up with the original screen, still the most important one, and that would be television. Nielsen still determines ratings by tracking only about 12,000 households, she says. And that isn't nearly enough at a time when many homes have more than 300 channels. In fact, she says, Nielsen's small sample may be the reason your favorite show went off the air.
MONTAGNE: There are programs that are being canceled because the panel really is not large enough to tell the true desires of the U.S. population in terms of programming.
MASTERS: A customer like Scheppach is not likely to stay loyal to Nielsen at a time when advertisers have a much better tool than the ratings. CBS executive David Poltrack says the key to the future is that set top box that's probably already in your home. It keeps track of everything.
MONTAGNE: Now instead of relying on a Nielsen sample, you'll be able to say of the million households in this cable system, 400,000 of them were watching this program.
MASTERS: And that's not all. It's possible to take the data from your box and match it up with information about what you bought at the grocery store when you swiped your shopper card to get six cents off that bar of soap. And then, Scheppach says, advertisers won't have to guess whether their commercials work.
MONTAGNE: What that allows you to do is say did you buy my product after watching my ad. And that gets to the holy grail of measurement, because I can tell a dollar invested in television, does it pay off. What is my return on investment?
MASTERS: In theory, advertisers won't be able to identify consumers by name.
MONTAGNE: All they know is household one, two, three bought Skippy and watched "American Idol."
MASTERS: This kind of information is becoming available even as we speak. And where does that leave Nielsen? The cable and satellite companies control those set top boxes and the information inside.
MONTAGNE: So it's the first time in decades that we've seen competition in television audience measurement. Competition is necessary to drive innovation, which has been lacking from this space for decades.
MASTERS: Tracey Scheppach says all sorts of competitors are getting into the game - TNS and TRA or Google. It's a stiff challenge for Nielsen, but not necessarily one that the company can't overcome. A top executive at one of the big four networks thinks Nielsen will do just fine.
I hate them, he says with a sigh, but what can I do. His company only has so much money to spend on research and Nielsen is still the industry standard. Getting the networks and advertisers to change? He doesn't see that happening anytime soon. In the midst of the revolution, Nielsen's best friend may be inertia.
Kim Masters, NPR News.
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