The advertising and media industries have traditionally relied on Nielsen for national and local television audience measurement as currency for the buying and selling of commercial time (and for evaluating the video landscape). Now it seems that several forces are at work conspiring to have this tradition come to an end – most notably, Comcast-owned NBC Universal, a long-time Nielsen critic, which recently issued a request for proposals to more than 50 companies (including Nielsen) to “build a new measurement ecosystem for us that reflects the future.” They believe, as do many others, that current research methodologies are not able to fully measure viewers in an increasingly splintered video environment, and a single source or single metric is no longer viable.
Whether NBCU or the other media conglomerates want to actually replace Nielsen, or develop systems to operate alongside Nielsen is unclear. But it should be clear that no advertiser or media agency in their right mind is going to accept a measurement service where the sellers have oversight into how their own audiences are measured. There will still need be a third-party independent measurement, and Nielsen will likely continue to be a major (if not the only) player.
Before I get into a brief history of TV audience measurement and some of the issues involved, here are some basic points worth noting.
- There have been more changes to the video viewing landscape in the past 15 years than in the previous 50. Since 2005, there has been a sea change in what, where, how, and when consumers could access video content – from the introduction of Apple’s first video iPod, to the widespread use of DVRs, to the rise of social media, to the first smartphones, to the availability of multi-media devices, to the launch of multiple streaming services. It’s hard to believe Netflix’s first hit series debuted just eight years ago. These changes have been rapid and constant, and are making measuring video viewing and audience behavior more complex.
- Research is traditionally slow to change and adapt to shifting marketplace conditions. Before people meters brought the first major change to TV audience measurement in 30 years, the 3-network, 15-channel, one-screen, live-viewing TV world did not require much change in how viewers were counted. This enabled Nielsen to continue trudging along without needing to innovate too much or pivot too quickly. More than 20 years separated the two fundamental changes in national TV audience measurement (aside from sample-size increases) – the introduction of people meters in 1987 and the shift from program ratings to average commercial minute ratings (C3) in 2009.
- Nielsen is an industry-mandated monopoly. There have been several attempts by various companies to compete with Nielsen (which I discuss later in this report). Except for ComScore, none have managed to pose any real threat to Nielsen’s dominance. While they have served to pressure Nielsen to make improvements to its own service, the industry (both buyers and sellers) has balked at funding two audience measurement companies that would essentially provide the same thing. While everyone likes to complain about Nielsen, so far few have wanted to spend the money required to really do much about it or foster any real competition.
- Does anyone really want the most accurate ratings possible? Advertisers obviously should, but I would argue that neither buyers nor sellers do. Sellers want higher ratings, buyers want stability – accuracy is conducive to neither.
- Sellers want higher ratings – you never hear any network complain that Nielsen is overcounting their audience (although for years it did). Back when we were evaluating AGB, as soon as I saw that they were not producing higher ratings than Nielsen, I knew that network support would fade. And why have some networks pushed so hard for viewing in bars and restaurants to be included in currency measurement? Certainly not because they provide an accurate portrayal of commercial exposure. Higher reported ratings.
- Buyers want stability – accuracy is fine, but stability is required to be able to project future performance. Anyone who was in a media agency research group when the industry switched over to buying and selling based on C3 remembers the chaos that ensued during the upfront and for much of that year. There’s a reason that what was supposed to be a “one-year band-aid” is still being used 12 years later. Moving to more accurate commercial measurement would require not only additional staff, but would result in significantly less stable and projectable ratings.
Here’s a brief look at some of the issues the industry has been grappling with for years…
Current Measurement is Not Nimble Enough to Handle Rapid Change
Until the early 2000s, the pace of change to how and where viewers received content was relatively slow, enabling cumbersome media measurement conglomerates to trudge along with serviceable audience measurement.
It’s hard to imagine now, but before people meters debuted in 1987, the national Nielsen television sample was only 1,200 homes, and demographic data was only available 36 weeks of the year. In a three-network, one-screen, single platform, 15-channel, live-viewing world, this was acceptable. People generally had the same access to the same channels and devices, and as cohesive groups of people aged, their media habits were largely predictable.
Here’s a brief look at how the video media landscape has evolved since then:
- During the late 1980s, VCRs started to become prevalent, eventually being owned by 90% of U.S. TV households. Watching pre-recorded videocassettes became the first major new use of the television set since videogames. This contributed to the broadcast networks giving up on original scripted series on Saturday nights (which was now the biggest movie rental night). They subsequently cut back on airing made-for-tv and theatrical movies as well. Time-shifted viewing, now possible for the first time, remained relatively minor (about 5% of overall primetime viewing).
The home VCR became the fastest growing electronic device since television itself, and caused real problems for audience measurement. It marked the first time Nielsen had to admit it couldn’t measure an element of television viewing. It was able to capture VCR recording, but playback among individual people remained beyond its scope.
- In 1990, the average home could still only receive 33 channels. Viewing habits remained relatively stable, and aside from VCR usage, there weren’t many major challenges to audience measurement. During the early-to-mid 1990s, as cable and satellite television expanded, and phone companies were allowed into the TV business, the number of channels available to the average home began to rise sharply.
- In the late 1990s, DVRs became a reality, but growth was considerably slower than it had been for VCRs. It would take another decade before DVRs were even in 20 percent of the country and needed to be addressed in developing television samples for audience measurement.
- Prior to 2005, changes to the media landscape – what was available to view and how it could be viewed – were gradual. Most people wound up getting the same access to almost everything. The slow pace of change made predicting consumer television viewing habits relatively simple, and slow-to-change research companies didn’t have to pivot too quickly, nor innovate too often.
- Since then, rapid change has been the norm – from the introduction of Apple’s first video iPod in 2005, to social media led by Facebook and Twitter in 2006, to the first iPhone in 2007, to the launch of Netflix and Hulu in 2008/2009, to the first iPad in 2010.
- Netflix’s first original scripted hit (House of Cards) debuted just over eight years ago, in 2013. Prime Video released its first original scripted series the same year (Alpha House and Betas). Hulu debuted its first successful original scripted series in 2013 as well, with the teen drama, East Los High. Other subscription video on demand services followed. CBS All Access (now Paramount+) debuted in 2015. In late 2019, Disney+ and Apple TV+ joined the mix, followed by HBO Max and Peacock in mid-2020. The eight major streaming services are now spending at least as much on original programming each year as the five broadcast networks combined. There are also several niche streaming services available to viewers. Today the average home can receive more than 200 channels and subscribes to three or four streaming services.
Can Samples Even Measure the TV Universe Anymore?
Unless they are representative of the total U.S. population based on subscriptions to individual streaming services, and combinations of streaming services, Nielsen samples can’t accurately measure TV viewing anymore.
The whole purpose of a TV sample is to be representative of the total U.S., with the idea that you and your demographic cohorts have similar viewing habits. Your cohorts are determined based on characteristics that Nielsen has determined impact viewing behavior – such as age, sex, race/ethnicity, presence of children, income, education, language spoken at home, etc. Also important is whether or not you have cable/satellite/telco (i.e., pay TV services) or DVRs.
In the past, broad platform mattered more than individual platform. In other words, whether or not you have cable does not require the sample being representative of every cable system, because that does not significantly affect viewing choices or behavior. Nor is it important to know what type of DVR you have, since that will not substantially impact your viewing behavior and how much you fast-forward through commercials.
Whether or not you subscribe to streaming services, however, is not the same. If you only have Netflix, the programming available to you, and your actual viewing habits, will be dramatically different than if you only subscribe to Paramount+. Likewise, if you bundle Disney+, Hulu, and ESPN+, and add HBO Max, your viewing habits will be different than if you have Netflix, Amazon Prime Video, Peacock, and Apple TV+. And there won’t just be differences in what you stream, there will be significant differences in your linear TV viewing as well. The only way to have a meaningful television sample, is to accurately represent the total U.S. based on every possible combination of streaming service and cable/satellite/telco subscriptions. This means that the make-up of Nielsen’s national and local samples could need to change dramatically every year. The days when all Nielsen needed to worry about was cable and DVR penetration are gone forever.
Why Virtually All Attempts to Compete with Nielsen Fail
Over the years, there have been a number of unsuccessful attempts by other companies to compete – both on a national and local basis – not because Nielsen did anything in particular to impede them, but rather because the industry didn’t provide support long enough for them to be viable. The most common result has been to pressure Nielsen into making improvements to its own methodology and increase its sample size.
Here’s a brief look at the most notable previous attempts to compete with Nielsen.
- In 1985, after more than 30 years of being essentially unchallenged in the national TV audience measurement arena, British company AGB entered the game and posed the first real threat to Nielsen’s dominance. It had been using something called people meters in Europe, and saw an opportunity to expand into the U.S. market. AGB had the advantage of actually using a better methodology than Nielsen’s antiquated meter/diary approach.
AGB spent nearly two years testing its people meter in Boston before trying to roll it out nationally. Nielsen responded by launching its own people meter, and increased its sample from 1,200 to 2,000 homes (to match the size of AGB’s sample). The following year Nielsen increased its sample to 4,000. As a result, AGB was only able to sign up one broadcast network (CBS, which had long been a Nielsen critic) and a few ad agencies. I remember one of my first major decisions as Manager of Broadcast Research at a major ad agency was whether to continue supporting AGB (we had paid the first-round ask of $25,000, but balked at the second-round request). Without widespread industry support, AGB ceased its U.S. operation in 1988. The main problem was that ad agencies were not willing to pay for two identical national measurement services, and the networks were not willing to support a new ratings system that did not report higher numbers than Nielsen.
- In 1987, D. Percy & Co. developed a passive meter, which used a heat-sensitive, infrared device to detect when someone was in front of the television set and when someone left the room. But when people found out that the heat sensors could be thrown off by the presence of a large dog, jokes ensued, and any potential support fizzled. Nielsen announced its own plans to develop a passive meter, which never came to fruition.
- In 1991, Arbitron’s ScanAmerica was way ahead of its time as it tried to marry TV viewing to product usage (sample participants were asked to run a “scanner wand” over the product code on each store-bought item). This single-source approache seemed to be what advertisers had been seeking. Once again, CBS was the first broadcast network to support an attempt to compete with Nielsen. Unfortunately, no other network, only one ad agency, and just a handful of advertisers, were willing to provide funding – a lack of belief in the methodology, the limited number of “scannable” items, and an unwillingness to invest in an unproven system, were cited as the main reasons. Without industry support, Arbitron could no longer afford to continue with the system, and ScanAmerica shut down in late 1992, only a year after being introduced. Had ScanAmerica come along a few years later, when the economy was back on track and other viewing sources were cutting into network ratings, it might have received more interest.
- Arbitron, which had been competing with Nielsen for four decades in collecting local TV ratings (in roughly 200 markets) canceled the service in 1993. Local stations, which had been forced to subscribe to both Nielsen and Arbitron to accommodate advertisers and their agencies, who were more or less equally divided among the two services, were under increasing economic pressure from cable and other competition. It no longer made financial sense for them to support two essentially identical rating systems. Nielsen, which already had a lock on national TV measurement, won the day. Nielsen acquired Arbitron (renamed Nielsen Audio) in 2013.
- In 1993, the broadcast networks tried to develop a rival rating service, SMART (System for Measuring and Reporting Television), with a new people meter provided by Statistical Research, Inc. (SRI). But they couldn’t get the necessary ad-agency support and it never got beyond the “media lab” stage (I thought at the time SRI did great work and provided valuable insights). It folded in 1997.
- erinMedia’s plan to launch a new national ratings system to collect and process viewing data from set-top boxes was derailed in 2005 when Nielsen announced it was forming a new unit to essentially do the same thing (which caused erinMedia’s funding to disappear). erinMedia filed an anti-trust lawsuit against Nielsen Media in 2005, which was confidentially settled in 2008.
- In 2009, NBC was the driving force behind a consortium of companies, which included the four major broadcast networks, some large cable companies, along with several big advertisers and media agencies, in an effort to back a potential new competitor to Nielsen. I don’t recall specifically what happened with this effort, but no new Nielsen rival emerged – although it did contribute to Nielsen finally measuring DVR homes, more screens, and commercial minute ratings (C3).
So, when it comes to national television audience measurement, Nielsen remains a virtual monopoly, albeit an industry-mandated one. Nielsen ensures its monopoly status, with its clients’ approval, by continually signing long-term staggered contracts with networks and media agencies. This means any fledgling measurement company cannot actually replace Nielsen, but must operate side-by-side (at least for several years). Since the industry has long been loath to support two essentially identical rating services, particularly for national currency measurement, Nielsen has continued to operate virtually unopposed.
Today, ComScore, which merged with Rentrak in 2016, stands as the only real competition to Nielsen – primarily with local TV stations. Most major media agencies, networks, station groups, and streaming services subscribe to some level of ComScore data. And given the current situation (outlined below), the company is probably feeling good about the possibility of expanding its footprint.
The MRC Suspends Nielsen Accreditation: So?
This should be a very big deal, but so far the industry isn’t acting that way. While researchers are familiar with the Media Rating Council (MRC), until fairly recently, most of the folks who actually buy and sell media had little contact with or knowledge about the company. The MRC was formed at the behest of the U.S. government following the 1950s quiz-show scandals. It conducts audits of companies that measure media to basically determine whether they do what they claim to do and are in compliance with industry standards.
Even before the pandemic, and the VAB’s (the TV network industry trade group) claim that Nielsen was dramatically undercounting television usage, I had written about how the rise of multiple streaming platforms and the fact that the average home subscribes to at least three streaming services, resulted in Nielsen no longer being able to capture the full scope of television viewing.
Combine this with clear examples of problems related to the COVID-19 pandemic, when Nielsen field agents could not enter its 40,000 national television homes to conduct regular maintenance of its sample. The VAB claims this resulted in significantly lower reported total weekly reach levels than pre-pandemic (from 92% to 87% - which is an unprecedented single-season drop when not changing measurement methodology), and major viewing declines among the TV networks, (in the neighborhood of 20%). Neither seems reasonable at a time when virtually everyone was confined to their homes.
The VAB asked the Media Rating Council (MRC) to suspend its accreditation of Nielsen’s TV data. Nielsen, in a curious move, said it wanted a temporary “hiatus” from MRC accreditation so it can better “focus on innovating our core products, continuing to deliver data that the industry can rely on and ultimately creating a better media future for the entire industry.” This seemed designed to avoid getting bogged down in a process that could only provide negative publicity for Nielsen, which hoped to distract the industry into focusing more on such things as wearable portable meters, as well as its new Nielsen One service, which promises total cross-platform measurement.
It would be far worse for the MRC to independently revoke accreditation than for Nielsen to voluntarily suspend it on its own. The MRC responded saying that a company needed its approval to suspend accreditation, and that this issue was so serious that it “requires further consideration by the full MRC board.” It also noted that Nielsen’s National Television Service had some “deep-rooted ongoing performance issues” that threatened it accreditation status even before the pandemic. As I was writing this, the MRC announced that it was indeed suspending Nielsen’s accreditation.
This won’t necessarily have much impact on whether the industry continues to use Nielsen data, but it does open the door to other companies, such as ComScore, to argue that Nielsen is no longer the “gold standard.” ComScore has reportedly asked the MRC to move its own upcoming audit for its service from early 2022 to October 2021.
More importantly, it lends credence to the idea that transparency, innovation, and new measurement yardsticks are urgently needed in an industry that has been traditionally slow to make any substantial change. The switch from meter/diary to people meters and the shift from program ratings to C3 were more than 20 years apart. The next five years could see more innovation in TV/video currency measurement than the past 50 years. Nielsen will certainly have a major role in this, but not the only role. On the other hand, we’ve heard talk like this before. Let’s see what happens when buyers and sellers have to agree on not only what needs to be changed, but how it’s going to be funded.
What the Industry Needs to Do to Improve Audience Measurement
The first thing that needs to be done is to get a handle on what current rating services can and cannot accurately measure. While this might sound logical and simple, I can’t remember this ever being done (outside of the old telephone coincidental days). Even when the industry took the major step of moving to commercial minute measurement (C3) in 2009, there was precious little analysis done into the methodology Nielsen uses to calculate these ratings.
The only good attempt to get some of these answers was in the Council for Research Excellence’s (CRE) landmark Video Consumer Mapping Study in 2007-08. I was co-Chair of the CRE’s Media Consumption and Engagement Committee, which commissioned the study. One of the lesser-known findings was that Nielsen’s overall usage levels of households and broad demographic segments, such as total viewers and adults 18-49 were remarkably similar to the observed viewing behavior in our sample. Once you started to look at narrower age groups, however, the reported Nielsen data started to stray significantly from the observed viewing data. And this was just overall TV usage levels, not individual program ratings (and was 13 years ago, before video viewing was nearly as splintered as it is today). DVR penetration was barely 20% of the U.S., and there were no streaming services. At the time, I suggested we replicate the study every five years, but that never happened – primarily because it was so expensive, and the CRE had other priorities.
It is actually not that difficult to figure out how accurate current TV measurement is. When I was on the CRE, I proposed a methodology for gauging how accurate Nielsen was at measuring an increasingly fragmented video viewing environment. Nielsen didn’t want to have anything to do with it then, but the industry should consider it now.
Here’s what you need to do:
- Develop a sample of 100 or so of the top researchers in the industry (buyers, sellers, advertisers), who are adept at detailed work and understand how audience measurement works. Nielsen (and others) would meter their TVs, DVRs, smartphones, and any other video viewing capable devices they own. They would also be given portable meters to measure their exposure to out-of-home video and audio.
- Set up several different viewing scenarios for what and how each participant will view video content and commercials during a single day.
- Participants would then log in their video and advertising viewing (down to the second).
- Compare their actual viewing to what the meters report. We would then be able to see and address weaknesses in audience measurement, see how much real-world viewing is not being captured by current methodology, and gauge the differences between such things as exposure (the opportunity to view) and actual viewing, and between individual commercial viewing and C3.
This will tell us what the industry needs to do next. It would be a good idea to have Nielsen, ComScore, and a few other companies involved. The project could be overseen by a group of retired research executives or some well-respected company with no current skin in the game.
Until something like this is done, all this talk will be little more than the sellers trying to get higher ratings, or moving away from just measuring eyeballs to the even more difficult to measure behavioral and attentiveness data (which everyone has been discussing for years). There has always been a tendency to start focusing on the next shiny object before actually fixing what is still the biggest piece of the pie – in-home viewing to video screens. But if we don’t get that right, measuring real cross-platform viewing will remain out of reach.
We should be clear about one thing, however. Despite claims to the contrary, neither buyers nor sellers have traditionally wanted accurate audience measurement. Sellers want higher ratings and buyers want stability (so they can project future performance). Accurate ratings are conducive to neither. Anytime you really improve audience measurement, the highest rated vehicles tend to decline and the lowest rate tend to increase. And when you get more granular data, it will tend to be less stable from day to day or week to week. Individual commercial ratings will almost certainly be less stable and projectable than C3.
You only need to look at what happened with C3 ratings to understand what’s going on. The stated goal of advertisers and agencies has always been drilling down to actual commercial audiences. The reason why average commercial minutes were used as a surrogate was ostensibly because the computer systems that processed Nielsen ratings for pre- and post-buys (at the time, Donovan Data Systems and Datatech) were unable to report actual minute-by-minute ratings.
Implementing C3 instead of actual commercial or commercial pod ratings was a good excuse for agencies, which would have needed to hire extensive additional staff to deal with reams of more granular data, with little stability in reported numbers (making projections of future performance much more complex). It was a good excuse for advertisers, who otherwise might have the creative execution blamed for poor individual commercial ratings. It was also a good excuse for sellers, since we all did extensive research that indicated C3 ratings, as measured by Nielsen, would not be far off from the live program ratings it had previously reported (which, of course, is logical hooey – there is no way you can tell me that viewers are watching just commercial minutes, even over three days, at the same degree as those watching the actual program at the time it airs – that would mean most DVR users are not fast-forwarding through commercials, which is ridiculous).
C3 was planned as a one- or two-year band-aid until the industry’s pre- and post-buy systems were able to process more granular data. I worked with both Donovan and Datatech, and they had this capability the following year. That was 11 years ago.
So What Happens Next?
That’s a good question. I doubt whether the industry will follow my proposal to discover the actual weaknesses in current audience measurement techniques. That would require fixing them, which would be expensive, time-consuming, and not necessarily supply the answers anyone wants to deal with. So, if past is prologue, we’ll probably see more talk and several new proposals on how to “better” measure video and cross-platform viewing. New companies will come in with innovative techniques for measuring the video landscape (or portions of it), but won’t get the funding they need to go through the year-long (or more) scrutiny the industry will require. Nielsen will make some changes to how it operates – and possibly re-submit for MRC accreditation (unless the advertisers strangely continue to not be bothered by any of this). If the media conglomerates sign long-term contracts with Nielsen during the next round, we’ll know most of this was just talk. If they take a page out of the NFL’s playbook, and sign a one-year deal, making a measurement service prove itself, then maybe real change will happen.
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