Nielsen Tightens the Rules

Jul 21, 2003  •  Post A Comment

An effort by Nielsen Media Research to assert greater control over how its data is processed and manipulated by others is raising some big concerns, particularly among ad agency research and planning departments.
The initiative targets so-called third-party processors-software companies and systems providers that handle much of the actual ratings data crunching for Madison Avenue. The effort started as a means for Nielsen to get a handle on how such companies are using its data and to develop ways for Nielsen to get compensated fairly for its use.
However, the strong language used by Nielsen in the initial drafts of its new third-party processor agreements has sparked a debate over what constitutes fair use of Nielsen data and has triggered concerns that the move may restrict some creative applications of data such as ratings and demographic information. Third-party uses include integration and fusion with other popular media planning research.
Most alarming of all, some ad executives say the new policies may violate trade secrets by requiring processors to divulge confidential information from advertisers and agencies.
Any move that discourages agencies from using third-party processors could have dire economic consequences for Madison Avenue, according to Tony Jarvis, senior VP, director of consumer insights, at MediaCom Worldwide. That’s because the processors are a more cost-effective way for agencies to develop software and systems than building those capabilities internally, Mr. Jarvis said.
Most executives say they agree with Nielsen’s right to gain better control and insights over how the more than 100 third-party processors access, process, manipulate and disseminate Nielsen data. They also agree that in many cases Nielsen deserves some incremental compensation when its data is reused and resold in ways that have nothing to do with its original client agreements.
Executives also agree that Nielsen should have some say over how its data is manipulated to ensure it remains credible. But the restrictive language contained in some of those new agreements has erupted into a major new intellectual property debate among processors, within Nielsen parent VNU and inside the influential Media Research Committee of the American Association of Advertising Agencies.
“Basically, they’re reminding us that they are the owners of the data and that they should have some say over how it is used,” Susan Nathan, senior VP and director of media knowledge at Universal McCann and a key member of the Four A’s committee, told TelevisionWeek. “I really can’t argue with that. That being said, there are some real concerns over how much we have to share with Nielsen about how we handle our business. The way it reads now, if we come up with some innovative way of processing or using their data that is proprietary to us and our clients, we have to share it with them. But right now, there is nothing to stop them from using it internally or sharing it with others.”
For example, ad executives say they are concerned about one of Nielsen’s VNU sister companies, IMS (Interactive Market Systems), which is a top developer of media planning software that competes with many of the systems and service providers used by Madison Avenue.
Ms. Nathan believes Nielsen should be required to sign nondisclosure agreements to ensure it does not divulge competitive information or processes Madison Avenue considers trade secrets.
Nielsen executives maintain it is not their intention to expose any trade secrets, but that it is essential that the company have access to any reports generated from its data to ensure the data is used correctly and within the bounds of Nielsen’s licensing agreements. “Where it’s appropriate and where there’s a mutual disclosure, Nielsen has always signed NDAs,” said Terrie Brennan, senior VP of new business development for Nielsen Media Research. She said Nielsen is in the process of revising the language of this aspect of the third-party agreements to clarify its position.
“We are not interested in trade secrets or proprietary information,” she said. “All we want is to understand how our data is being used and to ensure that it is being properly labeled.”
Ms. Brennan acknowledged that Nielsen needs to establish “firewalls” to ensure that proprietary insights from clients and third-party processors do not fall into the wrong hands inside or outside the organization. But she maintains that Nielsen has the right and need to understand how people are using its data. “What we are looking for is sample reports or examples of how our data is being used. We don’t need to see the underlying algorithm or number that led to an innovation or proprietary idea,” she said.
Meanwhile, another aspect of the new agreements-one that would restrict how and when Nielsen data is integrated with other databases-has others concerned that it will stifle some promising new applications of the data.
Database Fusion
“Basically, fusion is dead,” said the head of a small third-party processor who asked not to be identified because he is in contract negotiations with Nielsen. “Fusion” refers to a process that fuses two disparate databases into one. The approach, which itself has been hotly debated on Madison Avenue, is regarded by some as a breakthrough means of combining media and consumer research data to glean better media planning insights.
The approach is routinely used overseas but has had relatively limited application in the United States. Ironically, Nielsen has been one of the first to test the waters in the United States, via a joint venture with Kantar Media Research that fused its pharmaceutical study with Nielsen’s TV data.
“The way it stands now, we wouldn’t be allowed to do a data fusion with Nielsen data unless we do it through Nielsen,” said MediaCom’s Mr. Jarvis. “As far as I’m concerned, we’ve licensed the data and we should bloody well be allowed to do what we want with it.”
Mr. Jarvis said these Nielsen efforts are especially troubling because Nielsen attempted to develop a new business that would handle some of the work for which Madison Avenue turns to third-party processors such as Donovan Data Systems and Datatech. That enterprise, which was named New Millennium, was soundly rejected by the ad industry, mainly because ad executives feared Nielsen would gain too much control over their business.
Nielsen’s Ms. Brennan, who headed the New Millennium initiative, said clients have misunderstood this aspect of the new agreements. “If people want to combine our respondent-level data with their own proprietary data or with other syndicated data, that’s absolutely their right. We just want to know what they’re doing and make sure that any time our data is used it is labeled and sourced properly,” she said.
Ms. Brennan said this is consistent with a clause in all client contracts, which require advertisers, agencies, networks, processors and anyone citing Nielsen data to review it with Nielsen. She also said she is continuing to work with processors to revise the language of these agreements and plans to make a presentation to the Four A’s research committee.
“In the past we had no qualification. Anybody could come to us and say they were a third-party processor and we would give them the data under an existing agreement. Now we have a qualification for it,” Ms. Brennan said. While the agreements enable Nielsen to charge these processors new fees, she said, those fees are relatively small. The real issue, Ms. Brennan said, is Nielsen’s desire to control how they are using Nielsen data and to make sure they are not misusing it.
Joe Mandese is a longtime editor and writer on the advertising business. He is a former media editor of Advertising Age and a former senior editor of Marketing and Media Decisions.