Although the TV viewing habits of Americans have changed many times over the years, the statistics company Nielsen has remained a prime mover in the industry since the 1950s. The service uses various methods to measure the popularity of television shows, allowing media companies to come up with appropriate prices to charge advertisers for airtime. Each year, Nielsen provides the data that ultimately determines the allocation of more than $100 billion in ad spending.
With the rise of digital video recording and alternative platforms like Netflix and Hulu, however, many critics are wondering whether Nielsen can still be trusted to measure a show’s true impact. After all, the company primarily gathers its data from people who are watching live television, an audience that has been dwindling for years. As a result, many media companies are turning to competitors like Rentrak to provide comprehensive viewership data that includes Internet sources. Services like these sprang up as a direct response to Nielsen’s limited capabilities for measuring digital content. For instance, years ago the company announced that by 2006 it would be able to measure viewing from Internet and cellphone sources outside the home. Instead, the company didn’t develop PC-tracking capabilities until 2009 while mobile TV measurement only started to be used in September 2014.
Nielsen defends its methods by pointing to problems caused by the rapidly changing consumer technology landscape. In order to measure an emerging platform, Nielsen must spend years developing and testing the system before it is ready to go. In that time, the company runs the risk of seeing the device it is researching become obsolete. As one executive explained, if the company had made a major push into mobile two years ago, “We may have been measuring Blackberry today.” Nevertheless, Nielsen has little choice now but to invest heavily in measuring alternative platforms or else run the risk of going obsolete themselves. The company claims that by the end of 2015 it will be able to track viewing data from devices like Roku boxes, Apple TVs and services like Netflix and Hulu. If Nielsen fails to deliver once again, though, advertisers may switch the channel on them for good.
- What primary challenge does Nielsen face today?
- Are demographics important in Nielsen’s viewing analysis?