NIELSEN AT CROSSROADS Explosion of viewing options pressures TV ratings service—long adland’s scapegoat—to adaptits system with effective cross-platform measurement or lose out to newer, nimbler rivals By Jeanine Poggi — jpoggi@adage.com

10 • DECEMBER 8, 2014 ADVERTISING AGE

MEDIA NEWSAd Age

NIELSEN’S TV MEASUREMENT first faced amajor crisis of confidence more than 20 years ago,amid surprising ratings fluctuations. “When thosenumbers became unreliable, inconsistent, inaccurate,unexplainable,” a TV researcher said in 1992, “theyjust threw into chaos almost everything we did,because they were the basis on which the businesswas built.”

There were other challenges before and since,including the controversial introduction of “peoplemeters” in 1987 and audience fragmentation stem-ming from the cable boom and the arrival of the VCR.Challengers arose, like AGB, a company that pio-neered People Meters in the U.S, as well as broadcast-ers themselves, which invested in an alternative formof measurement in the mid-90s.

The company has survived all those tribulationsand remains the primary measure by which TV adver-tising is bought and sold, a status it has held since the1950s. However, for the methodical research compa-ny, the accelerating pace of change in media may final-ly be getting out of hand.

While the decline in live TV viewership has wor-ried networks and advertisers for decades, that shiftaway from Nielsen’s core competency is increasinglypronounced: As Nielsen reported just last week,Americans watched 12 fewer minutes of live TV perday in the third quarter than they did a year earlier.

By the time Nielsen develops, tests and deploysways to measure viewing on emerging platforms, con-sumers are likely to have moved on yet again. ButNielsen argues there’s too much on the line to hoponto trends too quickly.

“We are responsible for $100 billion worth ofadvertising, so we need to be really careful with whatwe do,” said Nielsen Exec VP-Global Digital ProductsMegan Clarken.

Still, it must keep up. Over the past 18 months,Nielsen has been frantically hiring experts in digital,

product architecture, programmatic and planning.Under Ms. Clarken, the product team is restructuredevery year to align with the organization’s focus areasfor the following year. At any given time, Nielsen hasdozens of programs going on behind the scenes, fromhardware prototyping to developing open data-deliv-ery frameworks.

Ms. Clarken said the company will deliver truecross-platform measurement by the end of 2015,which to her means closing the gaps on connectedTVs, Rokus and platforms like Netflix.

Clients are meanwhile turning to competitors likeRentrak to shake Nielsen and potentially dismemberits monopoly. “Nielsen is wedded to a legacyapproach,” said Lyle Schwartz, managing partner-director of research and marketplace analysis at thead-buying giant GroupM. “Nothing they have show megives me confidence in what they can do in thefuture.”

Nielsen executives blame many complaints onpoor communication. “We have done a lousy job ofhelping the industry at large understand what can bemeasured,” said Steve Hasker, president-global prod-uct leadership, Nielsen.

GAPING HOLESClarifying what Nielsen can and cannot measure is

laborious. “There’s issues with clarity—three differentgroups tell me different things and each doesn’t knowwhat the other can do,” Mr. Schwartz said.

Nielsen can track many devices in some capacity,but caveats abound.

While Nielsen said in September it is now capableof measuring mobile devices, industry executives saidthat’s not exactly accurate. The software that must beimplemented is filled with bugs, according to theseexecutives, and tests of the system have been post-poned several times. For some networks, implement-ing the software has required hiring additional man-

power.Connected TVs and over-the-top devices like Roku

and Apple TV are also largely missing from the pic-ture.

Nielsen last month announced plans to beginmeasuring streaming-video-on-demand services likeNetflix and Amazon Prime. But it won’t report broadviewership data from those platforms anytime soon.

There’s also still no way to measure viewing thatoccurs at places like bars, airports or gyms. Nielsenran a test of out-of-home viewing in Chicago earlierin the year, but Ms. Clarken doesn’t have a timeframe on when that might be measured on a largerscale.

Still, she stands by the promise that most of theseholes will be filled by the end of next year.

That’s not fast enough for impatient TV networks,which pay an estimated $100 million annually forNielsen’s service. Those networks want Nielsen tomodernize its core measurement system.

“If you were to start over, you wouldn’t be spend-ing so much money on maintenance of the panel tokeep it up and running, you’d be trying to build forthe future,” said David Poltrack, chief research offi-cer, CBS.

A glitch in Nielsen’s TV measurement, revealed inOctober but dating back to March, irritated olddoubts. While it didn’t have a meaningful impact onratings, network and agency executives were dis-turbed by how long it took Nielsen to identify theproblem.

ALTERNATIVESNielsen’s panel remains highly regarded, but its

dominant position makes it a go-to scapegoat.“Companies have tried to challenge Nielsen, butfound they haven’t been able to do it better,” Mr.Poltrack said.

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“Media technology is moving atlightning speed, and you have to askyourself if Nielsen is up to measuring it.I mean, it took them 10 years todevelop the latest version of theirmeter. The problem is the lack ofcompetition. The only time Nielsenmoves fast to develop newtechnology is when thereis competition in themarketplace. Andright now, theredoesn’t seem to beany.”

—BRAD ADGATE, SENIOR VP-DIRECTOR OF CORPORATERESEARCH AT HORIZON MEDIA.(BROADCASTING & CABLE,FEBRUARY 2005)

AS MUCH AS THINGS CHANGE… Complaints about Nielsen aren’t new. The company has borne the brunt of criticism from TV and media agency executives for decades. In fact, if you look at many of the grievances

dating back to the late-1980s, when Nielsen introduced People Meters, through the present day, it might be difficult to decipher in just which decade the statement was made.

“Nielsen is the only organizationI’ve ever dealt with that makes ourfederal government look like a smoothand responsive operation.”

—CHASE CAREY, CHAIRMAN AND CEO, FOX TELEVISION(BROADCASTING & CABLE, JANUARY 1996)

“The fact that [incorporatingmobile viewing into TV ratings] isstill a year off shows we’re notmoving at the speed thatmarketers and consumers are.”

—DAVID COHEN, CHIEF MEDIA OFFICER, UM(VARIETY, SEPTEMBER 2013)

“ “ ““I find it unnerving. I’d like theprograms to be judged by realviewers, not by some system thatpeople find impossible to assess.People Meters are another gadgetwhich we don’t entirelyunderstand.”

—HOWARD STRINGER, PRESIDENT OF CBS NEWS (THE NEW YORK TIMES, JUNE 1987)

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Rentrak has been trying to carve out some spacewith set-top-box data from more than 14 millionhouseholds. WPP and Publicis Groupe’s Zenith Mediahave both recently struck deals with Rentrak to usethe service in planning and buying advertising.

Still, no one is expecting Rentrak to truly challengeNielsen. Rentrak doesn’t break out demographics,and there are also concerns that the data isn’t whollyrepresentative. It could be flawed, too, if set-top boxesare on but the TV is turned off, according to mediabuyers and TV executives.

Perhaps the biggest problem for Nielsen’s live-TVtracking is splintering audiences, which make it lesslikely that its representative sample of about 22,300households can correctly gauge viewership for small-er channels.

Ms. Clarken said Nielsen is working to expand thesize of the panel. The panel could eventually includeabout 100,000 households. Nielsen is also consideringhow to supplement the panel with direct measure-ment from data sources like set-top boxes, she said.

There’s an agreement that there will always be aneed for basic ratings, but TV measurement will be acombination of the panel approach and directly ascer-tained “census-level” data.

The lack of clarity about when several integralpieces of the puzzle will come together has made theindustry skeptical of Nielsen’s ability to operate in thefast-paced media ecosystem.

Ms. Clarken argued Nielsen isn’t always playingcatch up. “Sometimes we are way too early.”

ALPHABET SOUPNielsen executives point to communication as its

biggest challenge. Ms. Clarken said the company is in the midst of a

naming exercise to correct its “alphabet soup,” thestring of three-letter acronyms that define many prod-ucts. It’s also recently overhauled its communicationteam and brought in Katie Burke, an Edelman vet, toserve as exec VP-marketing.

Nielsen will roll out its first business-to-businessmarketing campaign in more than five years in early2015 to better communicate its strategy.

Perhaps more important, there’s been significantshakeup at the top over the last year as Nielsen looksto focus on digital.

Mitch Barns took over as CEO in January, and thissummer Mr. Hasker was promoted to global presi-dent, overseeing Nielsen’s business across the mediasector and leading both the audience-measurementand consumer-shopping-research segments of thecompany. Ms. Clarken assumed her current role inMay 2013.

“Their corporate culture is adapting,” Mr. Poltracksaid. “It’s become easier to work with them than 10years ago.”

Nielsen seems determined to think further aheadthan it has in the past. Mr. Hasker and Ms. Clarkenidentified programmatic advertising, wearabledevices and in-car viewing as emerging areas the com-pany is preparing to tackle.

The company is also investing in its “buy” side ofthe business, which provides advertisers with data onconsumer reactions to their campaigns.

Nielsen has realized the importance of partner-ships and acquisitions. It recently partnered withAdobe to deepen its measurement of online video,and Mr. Hasker said Nielsen is eyeing deals with big-data owners and aggregators.

But GroupM’s Mr. Schwartz contends the industrycan’t rely on Nielsen. “Either we sit here and go downwith Nielsen or the industry builds a better mouse-trap,” he said.

CONTINUED FROM P. 10

ILLUSTRATIONS BY TAYLOR CALLERY FOR AD AGE

ONE OF THE BIGGEST ISSUES with Nielsen has been simply understanding what it can andcan’t measure. While viewership on most devices can be measured in some capacity, there are plen-ty of nuances.

It’s also worth noting there are certain things Nielsen can measure, but are not eligible to be cred-ited for “C3” and “C7” ratings, which reflect the average audience of commercials within a program.As part of these rules, which were determined in consultation with the TV industry, advertising mustbe the same in all versions of a program viewed in playback up until three or seven days. The ads can-not be changed.

Here’s a look at what Nielsen can and can’t measure.

CHEAT SHEET:WHAT NIELSEN CAN AND CAN’T MEASURE

By Jeanine Poggi — jpoggi@adage.com

TVAny content that airs

on traditional, live TV,video-on-demand orthrough a DVR with thesame commercialswithin the seven daysafter a program airs.

VOD can also bemeasured beyond the seven-day window andwhen ads are swapped out, but that viewershipis not included in the C3/C7 currency.

OUT OF HOMEAll viewing taking

place outside of thehome—in bars, restau-rants, gyms and air-ports—is not beingmeasured. Nielsen ranan initial test inChicago measuring

out-of-home, but doesn’t have a time frame onwhen it will do so on a national level.

TABLETS ANDSMARTPHONES

TV content and adsviewed on thesedevices within theseven-day window andwith the same commer-cials. Mobile TV ratingswere introduced inSeptember 2014, but because programmersneed to implement software in order for ratingsto be counted, the market is in various stages ofmeasurement.

Nielsen can also measure ads that have beenchanged on tablets and smartphones both inbrowsers and apps beyond the seven day win-dow through Nielsen Online Campaign Ratings.But that measurement is not included in the C3and C7 currency.

CONNECTEDTVS/STREAMINGVIDEO ONDEMAND

Nielsen can measurea very small amount ofcontent (mostly Hulu)that’s delivered via so-called over-the-top web-connected devices andincludes a Nielsen code. But in most cases it isunable to measure viewership of content takingplace through internet-connected TVs or OTTdevices like Roku or Apple TV. Nielsen has beguntesting initial measurement of streaming-videoservices like Netflix and Amazon Prime, but is onlydoing so on a proprietary basis for clients who optin and pay for it. Nielsen intends to make syndicat-ed ratings for these devices available in 2015.

PCsContent and ads

viewed within sevendays after a programairs and with the samecommercial load. Butthat measurement isdone by tracking a rep-resentative sample,

which is limited in its ability to measure frag-mented audiences. Nielsen is working to imple-ment direct measurement for PCs in 2015.

TABLETS ANDSMARTPHONES

Nielsen does notmeasure contentviewed beyond theseven-day windowwhere ads have beenreplaced. It is planningto do so as part of

mobile digital program ratings before the end ofthe year.

CAN’T MEASURECAN MEASURE

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