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  • Nielsen’s Grip Over TV Ratings Loosens Amid Streaming Boom

Nielsen’s Grip Over TV Ratings Loosens Amid Streaming Boom

Mandy Macintyre September 7, 2021 9 min read
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The TV ratings that Nielsen delivers every year are the basis of the television industry’s business plans. While they can be used to gauge audiences’ interest in certain shows, Nielsen is the only person in the industry able to make such judgments. But over the last few years, the television industry has been looking for ways to get around Nielsen’s data. It has found one with the help of new technologies like cable and broadcast DVRs. These devices can record programs and skip commercials, and with the help of new streaming services, they can also deliver shows in real time.

Nielsen Holdings N.V. (NYSE: NLSN) is the world’s leading source of TV ratings data, and its dominance in this space has provided the company with a trove of information about consumer habits. But the company has struggled recently to keep up with changes in the media landscape, and this weakness has cut both ways for the company. Nielsen’s TV ratings have largely underperformed in recent years, both in terms of aggregate performance and rate of change, but the company has turned itself around in the past year.

With almost everyone in the media industry in a state of uncertainty, the Nielsen Company’s grip over television ratings has become tenuous at best. This is especially true when it comes to measuring online activity, where its customer-facing metrics are widely panned, but its digital platform ratings are taken much more seriously.

For decades, Nielsen has been the industry giant, but the move toward streaming is upsetting its economic model, forcing ad buyers and sellers to seek for alternatives.

Nielsen Holdings PLC has been associated with measuring TV ratings in the United States for years, providing audience estimates that networks use to sell commercial time and convince advertisers that they received what they paid for.

However, Nielsen’s grip is slipping as streaming grows in popularity and conventional broadcast and cable television loses viewers. In recent years, the New York-based business has developed measurements for streaming, but it is just one of several competitors in this area. Furthermore, trust in its legacy TV measures has weakened, partially owing to undercounting of viewers due to the epidemic. A monitoring organization withdrew its certification for Nielsen’s national TV ratings last week due to the company’s recent difficulties.

Nielsen requested the Media Rating Council to suspend certification for its national TV rating service, which was one of the company’s failures. Instead, it was halted by the council last week.

KRIS TRIPPLAAR/SIPA USA/ASSOCIATED PRESS PHOTO

Nielsen has admitted that its system has flaws and said that it is trying to fix them. The firm promises a new simplified method that will be launched in 2022 and finished by 2024 to evaluate both conventional TV and streaming. Some TV network clients claim Nielsen’s services are outdated, and the company’s development is too sluggish, so they use other methods to track streaming viewing.

“To be the currency of choice, our offering must evolve,” said Nielsen Chief Executive David Kenny. “Do we need to spend hundreds of millions of dollars on technology infrastructure, operations, and ad streaming meters to build this product?” Absolutely. Is it possible for small businesses to do the same? No.”

The estimated $60 billion to $70 billion spent on TV advertising in the United States each year, as well as the tens of billions spent on internet video and streaming ads, are at risk.

Alternative measures are being sought by television networks.

According to executives at many major TV networks, other techniques and data sources are increasingly being utilized for measures needed to negotiate streaming video ad agreements.

Starting in autumn 2022, one big TV firm intends to depend on so-called demo guarantees—a standard metric based on broad age and gender demographics—for agreements that account for roughly 65 percent of its committed streaming ad income. Nielsen measures are used for the overwhelming majority of demo assurances. According to the source, that percentage is down from 75 percent this season and 83 percent previous season.

According to this individual, the business utilizes a mix of technology and data sources for the remainder of the streaming agreements, including data from the ad-server company that inserts the advertisements, owned subscriber data, and data from the client or a startup measurement company.


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If a client just wants to know how many people are seeing their advertisements, they will consult the server data. Customer or credit-card data may be required if the client wishes to target particular groups, such as young affluent individuals seeking to purchase a vehicle.

Nielsen is used by another major TV firm to support approximately half of its streaming ad transactions for one of its TV networks—for advertisements displayed on the network’s Roku app, for example—especially when offering advertisers packages that contain both conventional and streaming TV advertising. According to the executive, Nielsen measures are used for fewer than half of the agreements for advertisements that appear on a separate, streaming-only site.

Despite Nielsen’s criticisms, several major media firms continue to pay the company more than $100 million each year, with yearly increases incorporated into multiyear contracts. In the second quarter, Nielsen recorded $629 million in sales in the audience measurement category, up 4.3 percent year over year.

Nielsen’s edge is eroding as a result of the streaming explosion.

Nielsen’s broadcast and cable TV ratings are based on a panel of around 40,000 homes that allow the firm to monitor their viewing habits. In recent years, the firm has developed devices that measure streaming using a variety of techniques, including equipment that measures watching by comparing material on a television to a library of content gathered by Nielsen.

“Nielsen always had an edge because they had the data and the means to gather the data,” said Jane Clarke, CEO of the Coalition for Innovative Media Measurement, which includes media, advertising, and measurement firms but not Nielsen. “However, in this new environment, they don’t control the data.”

Nielsen started providing statistics this year on how many Americans watch conventional TV vs streaming on their sets. According to the company, viewers watched cable TV 38 percent of the time in July, 28 percent of the time they watched streaming services, 24 percent of the time they watched broadcast TV, and 10% of the time they were doing something else on the TV screen, such as playing video games or watching DVR content.

The number of people watching live streams is likely to rise. According to research company eMarketer, ad spending on internet-connected TV sets, where most streaming happens, is projected to grow to $13.4 billion this year, up 49 percent from last year, and to $25 billion by 2024. Hulu, Roku, and YouTube are examples of ad-supported streaming platforms, as are network-owned streaming services.

A fresh drive for alternative measurement may continue to erode Nielsen’s hegemony, emphasizing the ad industry’s impact on the increase in streaming viewing.

“Competition is beneficial. Mr. Kenny said, “It always makes us stronger.” “This is a period of change for the whole industry. I think we should compete for it and make investments in it.”

Nielsen Holdings’ chief executive, David Kenny.

Photograph courtesy of Paul Miller/Bloomberg News

Other companies that track traditional and streaming TV viewership include Reston, Va.-based Comscore Inc., which measures traditional and streaming TV viewership using data from millions of cable set-top boxes rather than a panel of households, as well as startups like VideoAmp, 605, iSpot.tv, and Samba TV.

According to a source familiar with the situation, OpenAP, a platform established in 2017 by major TV networks to assist marketers utilize data to find the appropriate content for their advertisements, is investigating collaborations with suppliers such as 605 and iSpot.tv that can help measure ad campaigns. On OpenAP, both Comscore and Nielsen are available as choices for establishing ratings objectives and measuring campaigns.

Television networks are likewise investing on their own measuring systems. According to a copy of the document obtained by The Wall Street Journal, Comcast Corp.’s NBCUniversal recently issued a request for proposals to measurement suppliers, including Nielsen, to assist the business in developing a new measurement framework. However, it remains to be seen how much marketers would want to depend on media firms’ own analytics to measure their own performance.

The legacy products of Nielsen are facing difficulties.

The criticism of Nielsen’s measures isn’t confined to streaming; the company’s conventional TV ratings have also come under scrutiny. The Media Rating Council, the industry’s measurement watchdog, said on Sept. 1 that it had chosen to suspend Nielsen’s national TV ratings service’s accreditation rather than accept the company’s request for a proactive pause. For the first time since the 1960s, Nielsen’s main product is without a stamp of approval. The MRC suspends certification of services that it considers to be unreliable.

After concerns were made regarding difficulties maintaining Nielsen’s panel system during the Covid-19 epidemic and other issues that resulted to an undercounting of viewers, the suspension may further undermine the trust of Nielsen’s TV network clients and advertisers. Nielsen acknowledged that its panel had issues and said that it was trying to resolve them.

Media executives have renewed their demands for reform as a result of the undercount.

Discovery’s chief executive, David Zaslav.

Photo courtesy of Reuters/Danny Moloshok

On an earnings conference in August, Discovery Inc. CEO David Zaslav stated, “I don’t have a lot of optimism for Nielsen.” “I believe we’re going to have to work our way out of it as an industry, from a technological standpoint, and leave them in the dust because they can’t get it together.”

Mr. Kenny said he stood behind the company’s choice to leave its sales and maintenance personnel at home for safety concerns during the pandemic, a move that had an impact on viewer counts in part because some of Nielsen’s equipment in panel homes didn’t get routine maintenance. He agreed that Nielsen’s offerings needed to be modernized and that the company’s techniques needed to be more open.

Concern is expressed by a news organization.

Media agencies have a stake in the TV ratings process since they are required to establish objectives and provide their marketing clients the outcomes.

In June, GroupM issued a letter to its marketing customers warning them not to depend on Nielsen’s Digital Ad Ratings tool for ad campaigns across computer, mobile, and internet-connected devices, which counts digital ad views and demographics reached. According to a letter obtained by The Wall Street Journal, GroupM, which houses WPP PLC’s media-buying agencies, raised concerns about the product’s suspension from the MRC, Nielsen’s measuring methods, and an effort to increase prices for the product. Clients could explore collaborating with alternative players like advertising technology firm Innovid, which was established in 2007.

“Is the other option preferable? Mr. Kenny said, “I don’t believe so.”

Even though buyers and sellers of advertisements have concerns about Nielsen, many media executives believe that abandoning the firm due to its size and influence is a pipe dream for the time being.

Ms. Clarke of the Coalition for Innovative Media Measurement stated, “They’re so entrenched in the ecosystem.”

Alexandra Bruell can be reached at alexandra.bruell@wsj.com.

Dow Jones & Company, Inc. All Rights Reserved. Copyright 2021 Dow Jones & Company, Inc. 87990cbe856818d5eddac44c7b1cdeb8

In order to sell Nielsen NLSN.PK’s stock, Nielsen has been frantically spinning its revenue growth as well as the company’s engagement with the metrics that have been their bread and butter for years – namely, its television ratings. Unfortunately, Nielsen’s ratings have been steadily declining, and the company knows it needs to spin this decline as a positive. To do so, Nielsen’s CEO, a well-known strategist named David Kenny, has been pointing to the potential for streaming services to disrupt television ratings as the reason the decline should be viewed as good news.. Read more about nielsen ratings this week and let us know what you think.

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Mandy Macintyre

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