A Fine Line for Nielsen

Aug 8, 2004  •  Post A Comment

Sole TV Ratings Service’s Methods Attract Criticism

By Lee Alan Hill

Special to TelevisionWeek

With consumer news outlets publishing or broadcasting the weekly ratings leaders for a populace obsessed with competition, “the Nielsens” has become part of the country’s lexicon, synonymous with TV audience measurement in the same way that people say “Xerox” to mean photocopy or “Kleenex” instead of tissue.

The difference is that Nielsen ratings are not a consumer product, but rather a wide array of research and measurement services offered to clients whose very revenue base is dependent on them. That puts the company in a very unusual position.

Nielsen Media Research, a division of AC Nielsen, which itself is a division of international media giant VNU, is a monopoly-something that frustrates both clients and certain interest groups and has led to some nasty public feuds. The most recent of these revolves around the rollout of Local People Meters and the criticism, particularly by Fox and its parent company News Corp., of the technology and its sampling methodology. That squabble led to U.S. Senate hearings.

“With the monopoly there is no need to spend more money on R&D than they deem necessary,” said Alan Wurtzel, president of research for NBC Universal. “I don’t know of another business where the system for determining the revenues of that business are in turn determined by a third party over which they have no quality control.”

Mr. Wurtzel’s counterpart at CBS Television, David Poltrack, executive VP, research and planning, agreed. “Nielsen has been a better company during the brief periods when it did have competition,” he said. “At this moment in time, there is none, and at this moment in time, Nielsen has a lot on its plate, with determining a new local metering system, finding measurement solutions for [new technologies], and more. All of this puts stress on the company. We want to be sure it won’t affect the quality of the measurement.”

To be sure, the recent flurry of questions surrounding Nielsen’s performance is subjective and lacking in hard evidence. To some, the company’s rollout of its new people metering system is a giant step forward in accurately measuring audiences.

A Nielsen spokesman, perhaps mindful of the laserlike attention being focused on the company, declined to comment for this story.

“Some of my concerns are that [Nielsen is] putting in the new Local People Meter technology pretty quickly,” said George Ivie, CEO and executive director of the Media Ratings Council, the 40-year-old industry nonprofit agency established to ensure that audience measurement services are valid and reliable.

Susan Whiting, Nielsen’s president and CEO, has tried in the past to allay those concerns. In her June 30 address at the Black Consumer Research and Advertising Summit, she called the company’s People Meter “the gold standard for television measurement worldwide.”

She also pointed out that the service was accredited by the Media Ratings Council “after the usual amount of controversy.” The Local People Meter rollout in Chicago had been delayed because the initial samples were not up to Nielsen standards, she said, but now those standards have been met.

“People Meters are not a new technology,” Ms. Whiting said in her address. “They are new for local markets.”

Mr. Ivie was not entirely convinced. “They may be walking a tightrope,” he said. “Unfortunately, the debate became not just public, but an attempt was made [by News Corp.] to influence the households in which the sampling is done. That was very wrong.”

Fox declined to comment for this report.

Those claiming to represent various segments of the viewing public believe their voices should be heard as well in the Nielsen fray.

“They need oversight,” said Alex Nogales, president of the National Hispanic Media Coalition, one of many organizations that have for years questioned whether Latino and African American viewers are properly included in the audience measure sampling.

“They often seem not interested in what they are asked to be doing-counting all the audience,” Mr. Nogales said. “Measuring of, say, the Latino audience could determine programming choices that better represent us as part of America. Minority-themed programming and the jobs that come with those are at stake. It’s also an issue of the country asking what we have to offer if we’re not a recognized entity.”

Nielsen began its audience measurement service in 1950. Arbitron, its competitor at the time, at least on the local level, began a year earlier but for the most part dropped out of TV in 1993 to focus on radio.

On the national level, there have been a few attempts by companies to challenge Nielsen. Most prominent were those in the late 1980s by AGB, which covers many of the foreign markets, and in the late 1990s by Smart TV. Each of those companies raised more than $60 million in its efforts. The Smart TV campaign was funded by the major networks, something that some say may have been a detriment, since it created unease among other categories of clients, such as advertisers.

The Bottom Line

The real reason for the demise of these competitors may have been money. Clients did not feel compelled to pay for multiple audience measurement services.

“The industry decided they wanted to pay for one local service and they chose Nielsen,” said Arbitron spokes-man Thom Mocarsky. “We were competitive. Nielsen had even pulled out of its metered service in Detroit in the early ’90s.”

“I do think there’s room for a competitor and I wish there was one,” said NBC’s Mr. Wurtzel. “There is more than $40 billion in revenues at stake. It’s absurd to have to rely on a single company to measure that.”

Both Mr. Wurtzel and Mr. Poltrack look to a variation of the European model as a possible answer. Across the Atlantic, the TV industries formed a Joint Industry Committee, which every seven years takes bids from different services and awards a contract based largely on cost, reliability and technological methodology.

“We’re really a Third World country when it comes to audience measurement,” said Mr. Wurtzel. “In many other countries there are far more elegant means of data analysis.”

Mr. Poltrack agreed that the United States has “the least sophisticated TV analysis,” adding that the JIC in Europe forces the companies to test and perfect new methods of collection before they are implemented.

“The possibility of a JIC is so attractive,” Mr. Wurtzel said. “It would foster competition. It would give the industry the ability to establish the level of technical quality.

“I’m concerned technology is outpacing our ability to measure it. And we have to ask whether Nielsen, as the only ratings provider, is up to the challenge.”