TV networks are mad at Nielsen. Can that company still count in the streaming age?
Since 1950, media research company Nielsen has been the scorekeeper for the TV business. Networks depend on its audience measurement data as they compete for $65 billion spent annually on advertising.
The relationship has at times been rocky. Whenever TV networks saw significant changes in the ratings — often caused by emerging technologies such as the growth of cable and DVR usage — their reactions toward Nielsen could rival tennis legend John McEnroe’s court rants at a major tournament.
Tensions rose to a new level after networks saw television viewing drop during the COVID-19 pandemic, when most Americans spent much of 2020 indoors.
Network executives believe the New York City-based company undercounted its audiences.
Nielsen relies on 40,000 homes nationwide that agree to have measurement equipment installed in their households to track their viewing habits. Nielsen uses the information from the so-called panel of homes to tabulate local and national TV ratings. However, the COVID-19 pandemic limited Nielsen’s ability to maintain that number, and media companies say they have lost millions in ad revenue as a result.
The anger has led several major Nielsen customers, including NBCUniversal and ViacomCBS, to consider competing services.
David Kenny, 60, the chief executive of Nielsen, is on the firing line and will have to prove to clients his company is evolving with the times. He cautions that building a viable competitor that would be trusted by ad sellers and buyers is not so easy. Kenny, who has led Nielsen since 2018, recently spoke to The Times about the challenges ahead.
There have been a lot of dust-ups between media companies and Nielsen. But they’ve never been more upset than they were this past year. What happened?
At the beginning of the pandemic it was very clear that governments were not going to allow us to visit Nielsen panelist homes face to face, which did affect setting up new ones and it affected maintenance. And we did everything we could from outside the home, from driveways, to continue to maintain things. And I would say in the early days the data looked pretty solid.
I think at the beginning of the pandemic, we did not expect it to last as long as it did. So over time there was a cumulative effect. I’d say by September-October (2020) we began to see some warning signals. We certainly communicated those (to clients), but we weren’t in the position to calculate exactly what would be different (other than) just to say, “It is different because it’s the pandemic.” And that was dissatisfying. And we said as soon as we get vaccinated, we’ll go back and recheck those homes. That is what we did — we checked them in March and April of 2021. The peak of the [flawed data] was in February. How off was it? The answer was around 2%.
Some clients think the company was not forthcoming enough about the problem.
I don’t think we were trying to hide it. I was just trying to be transparent all along. To try to estimate the impact I think could’ve been a worse answer.
But did alarm bells go off when everyone had to stay at home in the spring of 2020, and then television viewing went down? Did you scratch your head when you saw that?
Of course there were alarm bells, but we never recorded television going down. The fact is, streaming was going up. There was a change in behavior. There was a growing number of these streaming platforms, which we also were [measuring]. People were consuming other forms of media. Podcasting also went up. YouTube also went up. So I think all in, we did not show a decline in hours spent with media, or even hours spent with video. I think the legacy television players would’ve liked the additional viewing to come to them, but it’s not what happened given what they were doing with programming, given the lack of sports. There were a lot of factors that happened in the pandemic and they continue to happen today.
According to Nielsen data, streaming now accounts for 37% of all viewing for adults under age 55. It has disrupted TV viewing in a way that really no other shift in the media landscape has before. Do you think that networks are taking that out on Nielsen?
Totally. There have been angry spats for 30 years when there’s a major transition in the technology. And this is the biggest transition. So the other thing to remember is on December 6th of 2020 we did communicate that we were moving to time spent [viewing] and combine streaming and linear measurement. The audience was not seeing a difference, whether she watched that program on a smart TV through an app, streamed or recorded on her DVR, or live. So we believe the most accurate measure is to measure total time spent. And that is a big change for people who have relied on a schedule as their way to get a premium audience.
Where is Nielsen now in terms of measuring viewing across different streaming devices?
We’re now to the point that about half of the panel of homes has streaming meters. It’ll be all of the panel over the next year. And that’s important because that measures everything that comes in through the router. That gives us viewing on a lot of screens, because people are watching TV on phones and tablets now as well. It gives you a very different metric and we’re measuring it literally second by second. The advertiser will not just know what the program rating was, but they will know how many people saw their ad for its entirety.
How concerned are you about this call for competing companies to come up with alternatives to Nielsen’s service?
That’s not my concern. When NBC pulled together a [list] of a hundred different companies, even by their own admission there were only a handful that they thought even have a chance of doing currency [a metric that tells how many people are watching]. But ultimately, the currency has got to be trusted by the buyer and the seller as the most accurate. You still need a robust panel to validate that data. And nobody’s going to make the multibillion-dollar investment that Nielsen’s made to do that at this point, in my opinion.
Interestingly enough, digital companies have been coming towards Nielsen. We’ve seen very high [business] growth from digital platforms. YouTube just announced that they were going to measure all of YouTube on Nielsen’s ratings now. ... I don’t see anybody out there who’s got remotely the scale, the ability to do empirical evidence, or the trust factor by both buyer and seller that Nielsen does.
Some companies tell me they already can measure their own streaming data and will need Nielsen less. Are they right?
When you talk to the digital platforms who are further along on this, they would say yes, they have the data off their own services, but they don’t know what people are watching when they’re not watching them. ... So as there are multiple streaming platforms, it becomes more important to know the market. We started 2021 with 10 streaming platforms at Nielsen; we now have 17.
What have you learned on this job about the public and its media consumption?
You really see some divisions in the way people get media, largely driven by their technology access and adoption. There are a lot of young folks who have no idea what linear TV is, don’t know why there is a schedule or a guide. They just watch what they want, when they want. And they know that sports events are on a schedule and they’ll go find that. And they don’t see a big difference between their tablet or their TV screen.
You see a growing number of younger households who don’t even have a television set. But there’s a lot of folks who have decades of history with TV as they know it who are comfortable in the cable-schedule model. They’re adopting more slowly.
So you’ve got this real fragmentation based largely on technology comfort and technology access. You see a big difference based on economics. People who are really living paycheck to paycheck can’t afford or don’t have access to all the same technology. Rural communities don’t always even have broadband.
We’re in an age where it’s difficult to get the whole country to take a vaccine to prevent a life-threatening disease. Is it harder today to get into a person’s house to put in a box to measure media habits?
A little bit. We certainly continue to work on marketing. I think you want to keep the headlines positive. A lot of people care what’s popular on streaming, and they always see that Nielsen is the source on that. [The company started releasing streaming ratings in 2017.] That makes us more relevant. When we go to that home, or when we when we reach them electronically, they want to participate because they want their voice and their habits to be represented.
The real value of Nielsen is we take great care to make sure that our panel represents all demographics. Because a lot of that other data that comes in is biased towards certain populations, towards certain economics. It tends to be more white. And so we do work to make sure everybody trusts us, so that we can have the right Latino population, the right Black population in our panel.
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