Nielsen 101: How One Company Cornered the TV Market
Still mourning the loss of Arrested Development? Don’t blame the American public; blame Nielson Holdings N.V. (usually just known as Nielson, or the Nielson company). Nielson is the TV data company that rates television shows based on how many Americans are tuning in. That data is turned into a comprehensive rating system and, when compared to production costs and advertising revenue, can make or break your favorite TV show.
It’s said that if you’re not paying for something, then you’re the product. This is never truer than in the case of television advertising, where Nielson leverages audience data to increase advertisement performance for some of the biggest brand names in the business. Delve deeper into Nielson’s history and learn how it gained a monopoly of TV data in a short 70 years.
Nielson Through the Years
Nielson was founded by marketing guru Arthur C. Nielson, in 1923. The company originally centered on engineering performance software, but after securing the rights to the “Audimeter” in 1936, Nielson quickly switched its focus to radio analytics. In what may have been the first example of market research as a service for businesses, the Audimeter could monitor which stations a family listened to on the radio. This provided valuable insight about who was listening, what they were listening to, and precisely when they listened.
Nielson began monitoring radio in 1942, but developed the same technology for the birth of TV in the 1950’s. By combining a TV version of the Audimeter with audience-kept journals, Nielson learned to make accurate predictions about TV viewers and their preferred programs. During the infancy of television advertisement, these insights became an invaluable way to match advertising to the right demographics based on television programming.
In 2003, Nielson advanced into the mobile revolution by introducing a “3 Screen Report,” which not only includes television preferences, but also analytics for mobile and Internet viewing. Nielson remains the most prolific audience data and analytics company.
The Nielson Effect
Today, Nielson ratings are measured through the use of a device not unlike the early Audimeter. Volunteer families hook the Nielson box to their TV, and it records what is watched. Ratings are then applied based on the percentage of boxes that record viewership for the same show. When you hear that The Walking Dead has an 8.2 for adults 18-29, it means that 8.2 percent of 18- to 29-year-old volunteers had their box tuned into a specific episode. Nielson also uses metrics like self-reporting and remotes that record when viewers are in a room or when the TV is playing to an empty room to supplement box data.
To the average TV viewer, talk about analytics and rating numbers might seem irrelevant at best. But appearances can be deceiving: Those sleepy numbers tell a tale thicker than any soap opera plot line. By measuring how many people are watching a television show, Nielson wields the power of the TV chopping block. When a show routinely gets low Nielson numbers, it means fewer audience members are seeing advertisements. And, since advertisements are what keep the lights on at any television network, low ratings almost always result in a show getting canceled.
High ratings can elicit a bigger payday from the top brands that utilize Neilson TV data to make advertorial purchasing decisions (Coca-Cola, Nestle, NBC, and Proctor & Gamble are all Nielson clients) so big ratings mean big money. Nielson can also offer insight into viewing demographics, so brands are able to pinpoint ideal customer profile and market toward those most likely to purchase their products.
Nielson may have a monopoly on TV viewer data, but it’s not a perfect science–yet. After 50 years of fairly similar audience habits, changes in the way the public experiences TV in the last decade have skewed Nielson results. While Nielson can measure TV watched on some mobile devices and even DVR, it cannot measure mobile TV watched outside of the home and DVR programs watched after a 7-day viewing period. Shows watched on a television streaming device, such as Apple TV or Roku, are also left uncounted.
Even with its limitations, however, Nielson data is highly prized and extremely valuable to networks and brands alike. Getting insight into who is watching (and when they watch) means getting the most out of marketing spend and ensuring that a network’s programming lineup is on-point for what viewers want. Detailed reports are sold to clients to help make programming decisions, which makes the difference between your favorite TV show getting canceled–or surviving for one more season.