Opinion: Nielsen, Heal Thyself

What can be done about the Nielsen Company? That’s a question that increasingly comes up in my conversations with both broadcasters and advertisers. The level of mistrust swirling around the company’s numbers has risen to flood-condition status. Nielsen’s latest black eye swelled up on Nov. 17 when the Media Ratings Council announced it was revoking accreditation of Nielsen’s NSI service that includes 154 diary-only markets. The NSI service had been accredited by the MRC since September 1965.

The previous month, TVB got its own taste of suspect methodology when Nielsen issued a report asserting TV spot revenues were down 3.25 percent through the first half of this year.
This was wildly in conflict with every other media-research report, including Kantar data that showed revenues were in fact up by 24.4 percent. Numerous TV station groups’ public-earnings reports have indicated corporate coffers, swelled by increases in core business across the board as well as political dollars, are pacing upwards of 20 percent or more in 2010. And TVB’s private numbers (reflecting a very large cross section of local TV stations) show that no segment of the local broadcast TV industry experienced an actual decline in revenues in the first half—not by region, not by station size and not by network affiliation.

How could Nielsen have been directionally reversed—and off by nearly 30 points—from everybody else? A statement from Nielsen to Media Daily News said: “In response to inquiries from the TVB, we reviewed the work that went into the report and have not found any internal discrepancies. We continue to have discussions with the TVB to see why we reached different conclusions and are hoping to meet with them soon.”

In other words: “We stand by our numbers.”

I wonder if Nielsen executives fully appreciate the extent of the damage done to the company’s reputation over the past year. As the research head of one large broadcast group said to me, “If these revenue numbers are so far off—and we have alternative ways of knowing that they are—what does that say about the reliability of the ratings data that we get from Nielsen and have no way of verifying from other sources?”

By now, stories about the dubiousness of Nielsen ratings are legion. When the revenue report controversy hit the trades, we received one e-mail from the general manager of an ABC station that said: “For 20 years we subscribed to Nielsen, and according to them, we never had a viewer during Good Morning America.”

Then there’s the matter of how Nielsen handled its “live-plus-same-day” data stream. Last year, Nielsen said it would add this new service to its local people meter and set meter markets, replacing the live-only metric in January 2010. Then it announced that the changeover would happen in March, which it did. Then, in July, it said the live stream would return.

Nielsen’s shifting position is noteworthy. It was ultimately detrimental to advertisers, agencies and broadcasters. The company was against the live stream before they were for it. TVB’s position on live-only ratings has been consistent: live-only no longer fully represents who has the opportunity to view programs and commercials each day.

Simply put, live-only ratings miss relevant viewing. They don’t include anyone who pauses viewing for more than 25 seconds and then resumes viewing without ever fast-forwarding.

They don’t include anyone who views in a “near live” manner—20 percent of playback occurs in the first five minutes, 42 percent within the first hour and 61 percent in the same day. These playback patterns have been consistent over time.

What’s more, those who play back programs on the same day are the premium viewer segment; they tend to be younger and more affluent. Consider that 62 percent of those who play back programs on the same day fall between the ages of 25 and 54, compared to 43 percent in the live-only audience. In addition, 36 percent of the same-day playback audience hail from higher-income households: 36 percent have HHI over $100,000, compared to 18 percent for the live-only audience.

So what’s to be done about these obvious deficiencies? I suggest that there’s not only a short-term fix here, but a long-term opportunity as well. We can agree on this much: Advertisers don’t want to pay for viewers who fast-forward through commercials. And local broadcasters want credit for time-shifted viewing as agencies already credit networks. (We also want credit for out-of-home, but that’s another story for another day).

Since C3 has been in effect nationally, three days of time-shifted viewing has become the accepted norm. The local equivalent should be “live-plus-three” with an adjustment to the time-shifted viewing (currently 50 percent of viewers fast-forward through commercials). This proposal meets everyone’s needs. Agencies/advertisers will not pay for commercials that are fast-forwarded, and broadcasters will get credit for time-shifted viewing. This is the best representation of local commercial viewership with the current measurement sources we now have.

Some may argue for C3 ratings on a local basis. Nielsen has no path for C3 anytime in the future, due to technical considerations. We believe their efforts should be focused on finding an even better metric than C3 ratings through the use of set-top-box data. The DVR revolution and other factors have led me to the conclusion that we need to change the game on how local TV is evaluated. We can’t continue to just measure demographic eyeballs. We need a metric for television’s ability to drive business—a true marketing ROI.

Set-top-box data in conjunction with local-market business data will go well beyond current local and national measures. Whether the local data is from a syndicated source or client or other third party, it will be a real differentiator. Proponents of STB data are drawn, in part, by the sample sizes, which are significantly larger than current national and local samples. The hope is that larger samples could improve data stability and reduce sampling error.  In theory, large sample sizes could enable more reliable audience estimates for niche channels such as digital sub-channels, enable sub-DMA geographies to be examined and make it easier to track viewing behavior as video options continue to expand and further fragment viewing.

But the true opportunity will come when STB data is matched with other databases such as customer purchase information and consumer profile information. These measures go beyond simply identifying who’s watching to provide critical insight.

The capability is actually in place now in a very few select markets to, for example, create automotive ratings or automotive CPPs (or, for that matter, any “business” rating) based on syndicated or customer data. In fact, you could use a third party to match specific dealership data with registration information to precisely show what programming the customers of a specific dealership are watching.  

How does Nielsen fit? We’d like to see its participation in developing new metrics. But Nielsen must first get past process per se and pass the commonsense test. Trust and credibility are in short supply. Nielsen needs to move quickly to get them back.

Steve Lanzano is the president of TVB.