Now Nielsen is facing mounting criticism from TV and advertising executives who see the company’s practice of sending out 20-page timetable diaries that exclude Netflix and other digital entities as archaic.
When Dennis Cheatham received a package in the mail from Nielsen asking him to participate in their survey he felt like it was a survey method from the past. Nielsen has long been king of the hill when it comes to detailing television viewing habits of Americans. However, unless the company upgrades its coverage and methodology in a big and digital way, competitors are likely to take the lead.
“I just kind of shoved it in there and wrote Netflix wherever I could,” said Mr. Cheatham, 40, a professor of graphic design at Miami University in Oxford, Ohio. “Is Nielsen not paying attention to technology? Don’t they notice that something has changed?”
The Cheatham family has been streaming video through Netflix and other digital entities for the past five years. Despite such companies distributing movies, events and concerts to tens of millions of American living rooms, Nielsen has historically ignored them altogether in its surveys.
Programming analysts say digital revolution has transformed the way consumers view entertainment, something Nielsen’s competitors have not ignored. New competition, including the $768 million merger this week of the media measurement companies comScore and Rentrak, is forcing Nielsen to modernize its antiquated methods.
Public criticism by companies affected by Nielsen’s glaring survey shortcomings are intensifying. Linda Yaccarino, the ad sales chief at NBCUniversal, complained that Nielsen was failing to accurately measure TV and account for all of the television group’s audiences. “Imagine you’re a quarterback, and every time you threw a touchdown, it was only worth four points instead of six,” she said at the International CES trade show.
It’s no mystery why affected companies are complaining since some $70 billion in advertising dollars are traded in the United States each year based on Nielsen’s ratings. To boot, hundreds of television programs are canceled based on Nielsen’s viewership data each year.
While viewers like Mr. Cheatham and his family are streaming billions of hours of video on outlets like Netflix, Amazon and Hulu, such industry ratings are not being accurately recorded in Nielsen data.
“The TV ratings system as we know it is outdated,” said Tim Nollen, a Macquarie analyst. For their part, Nielsen executives say they are aware of the company’s need for upgrading its surveys and are ready and able to more comprehensively analyze the way people consume media. The company says paper diaries are used to measure viewing in local television markets, which account for a small part of the business and that national viewing is being measured by more sophisticated methods.
“We’re not arrogant about the landscape and about the needs of marketers and media companies and agencies to have better, more comprehensive data,” said Steve Hasker, Nielsen’s global president chief operating officer. “We’re much more focused on meeting those needs and executing against our road map than we are looking over our shoulder.”
On it’s website Neilson claims to study consumers in more than 100 countries for a complete view of trends and habits worldwide.
