How Nielsen Is Shedding Old Perceptions, and Building New Businesses

CEO Mitch Barns leads evolution at research giant

Two weeks ago, Nielsen began phasing out its paper TV ratings diaries for the 140 local markets in which the antiquated system is still active. By the middle of next year, Nielsen says, it will provide electronic measurement across all of its 210 designated market areas.

How big a deal is that? Well, that depends on your point of view.

All told, Nielsen data underpins and informs a staggering $70 billion in annual ad sales, but these days the paper diaries account for less than 5 percent of the company's TV business. Nielsen's national ratings system and most of its local DMAs long ago adopted set-top-box data and other modern methods to calculate viewing numbers.

Given those parameters, industry watchers like Pivotal Research Group analyst Brian Wieser believe that Nielsen's move to trash its remaining logbooks "wasn't very important, considering how little of their revenue was associated with diaries." But others maintain the symbolic significance is profound, as pulping the diaries marks a key break with Nielsen's analog past and another stride toward its pervasively digital future.

Mostly, it's a matter of perception. Nielsen is often criticized as slow to change, sluggish to adapt its processes to suit the complex needs of clients across a media and marketing landscape in constant flux. The continued use of paper journals by any portion of Nielsen's 40,000 viewing households (encompassing 100,000 viewers) hurts the company's image. Indeed, a New York Times story reminding readers of the existence of the diaries this past February unleashed a fresh wave of scorn in the marketplace.

Nielsen CEO Mitch Barns believes such attacks are unfounded and ignore the sweeping transformation of the 93-year-old company under his guidance. Nielsen has built out its business in bold new directions, he says, offering increasingly sophisticated analytics and measurement tools to help media and marketing players compete at scale. "If you look at our business right now and at the markets we serve, they're changing at a faster pace than what has previously been true in our history," says Barns. "And so we've had to keep pace with that."

    

Nielsen's evolution is twofold, encompassing both sides of the company's operations: "Watch" and "Buy." Watch is the better known of the two, tracking media consumption in 45 markets and covering 80 percent of media spend worldwide. Flying somewhat under the radar is Nielsen Buy, which provides market analysis, retail measurement and sales insights to the packaged-goods industry in 106 global markets, representing 90 percent of the world's GDP.

Some might be surprised to learn that Buy is larger than Watch, and that's been true for quite some time. In the first half of 2016, Buy revenue was $1.65 billion, up nearly 4 percent, while Watch tallied $1.44 billion, a 6 percent gain. (Total revenue in 2015 was $6.17 billion.)

Barns views the continued growth and, to an extent, the convergence of Watch and Buy as essential to Nielsen positioning itself as an indispensable corporate partner, helping marketers boost sales and setting a new industry standard for determining ratings and ad prices.

What's more, he foresees increased automation driving that process. "As we continue to leverage technology in a bigger way … we move much more to a data-as-a-service and software- as-a-service model," he says, much as Adobe evolved from selling software in a box to providing a cloud-based suite of tools and services. Nielsen's implementation of this concept is called Nielsen Marketing Cloud. Launched this past spring, it is based in large part on technology and expertise the company gained from last year's acquisition of eXelate.

Nielsen Marketing Cloud gives the company's clients faster access to data and analysis, which helps them make more informed marketing and media decisions. The system facilitates cross-channel planning by letting clients connect in real time to mobile, online, over-the-top TV, video, social and other platforms. It lets them analyze how advertising and content mold consumers' purchase decisions. That means advertisers can see which platforms or specific types of media are doing best with their target audiences at any given moment and shift ad dollars accordingly. "It takes different product capabilities, connects them all into this interoperable system," says Barns. "It's off to a great start in the U.S., and we also, just in the summer, launched it in Europe."

The company is exploring other new frontiers, with wide-ranging efforts to diversify. One example is Nielsen Consumer Neuroscience. Launched through the 2015 purchase of Innerscope Research, the practice explores the subconscious responses that drive consumer behaviors.

Then, there's Nielsen Innovate, an early-stage investment fund that focuses on areas of client interest. In just two years of operation, the fund has backed 19 startups. Such efforts, according to John Burbank, Nielsen's president of strategic initiatives, ensure that the company "is prepared for a future in which our clients are going to be facing challenges from new types of competitors and new interests from consumers."

Evolution