A Brief History
Being from the media world, it is easy to forget that not everyone knows what media-philes talk about when they say things like CPP, CPM, Impressions, etc. Likewise, it's fair to assume that not everyone understands what Nielsen does, or why they do it.
So, here is a quick definition: "Nielsen Ratings are audience measurement systems developed by Nielsen Media Research, in an effort to determine the audience size and composition of television programming in the United States." There are two methods for obtaining the information; the first is automatic and uses a device hooked to your TV. The second is what is known as the diary method...exactly what it sounds like. Families are chosen nationwide and fill out diaries regarding what they watch, and when, the process is for them to write it down. If you have never participated, it is a royal PITA (Pain In The Ass). The diary system is antiquated multifold cardboard pages, and Nielsen actually hypes the fact that this is a great system, asking viewers to write down every network they watch. If I remember correctly, one of the larger problems that we had was trying to figure out shows recorded on DVR. Did Nielsen update the diaries from the1930's, when they started? It doesn't look like it. Obviously, the diary method needs to be replaced, but for now, it's what we have.
Glitches In The Gears
Nielsen's problems stem from two main sources:
They are the ONLY game in town.
When mistakes are made, they impact the entire TV industry...from the
networks and agencies to clients.
Last week, Nielsen had another infamous "server" problem and was not able to deliver ratings for four days. So, many think "big deal."
Believe it: it is a HUGE deal. Ratings determine prices for spots. They also report how each show does on an overnight basis. Thus, when Nielsen could not provide ratings for four days last week due to a the malfunction, that left media planners and buyers with nowhere to turn for optimizing their clients TV buys, potentially hundreds of thousands of dollars worth of "unknowns. To put it into perspective, the television industry relies on $60 billion in ad revenues yearly...all depending on Nielsen.
Unfortunately, Nielsen also announced that the data provided by People Meters (hooked to TV's in Nielsen households) underrepresented the number of viewers actually watching TV.
Nielsen says it's "working around the clock" to fix things and get back on schedule, but the networks who use the numbers to help set ad rates and schedules are, not surprisingly, pretty upset. The system failure "couldn't
have come at a worse time," NBC research boss Alan Wurtzel told The New York Times. "This comes at a particularly tough time of year because all of us are making evaluations about bubble shows and time periods and so forth."
Forward on Three Legs
Improvements do not seem to be coming soon...Nielsen has been laying off employees to keep expenses low. Those jobs have been outsourced to Tata, and India-based consultancy. How Nielsen expects to fix everything that is broken with the five people still working at the company remains to be seen.
But until then, are we to take ratings with a "grain of salt?" Not only late, but incorrect?