Nielsen: Follow the Video

Ratings company switches gear for new era, pledges to dump diaries

By John M. Higgins -- Broadcasting & Cable, 6/19/2006

The mechanics of Nielsen Media's new plan to cope with the technology changes sweeping the television industry are complicated, but company President Susan Whiting manages to capture their scope in a sentence: “It's all about following television content as it moves from device to device.”

Nielsen last week detailed a new- media strategy to cope with a world that offers new ways for consumers to watch TV on everything from ipods to PCs. Previously, no one chasing those viewers—advertisers and programmers— had any good way to track what was being watched and how the audience was watching it.

Along with developing ratings services for these new devices, Nielsen is also planning a substantial upgrade of its tracking of plain-old TV, calling for the elimination of the cheap but notoriously flaky handwritten diaries in even the smallest markets within five years.

Among the elements of the new Anytime Anywhere Media Measurement plan (dubbed A2/M2):

It will create by year's end a “panel” of 400 video iPod users to track the programs they download and watch.
Nielsen will integrate its TV data with that of its 62%-owned Nielsen/NetRatings unit. Initially, the move will better measure the relationship between conventional TV viewing and Web surfing. This summer, Nielsen will “fuse” the data from the separate TV and Internet panels. By fall 2007, Nielsen homes will get meters on both their TVs and their PCs, so their broadcast-, cable- and online-viewing habits can be tracked precisely. The company says the goal is to allow advertisers “to optimize combined TV/Internet campaigns.”
A comprehensive view of online video will be delivered by major Web companies. NetRatings will also work with Web companies subscribing to its SiteCensus product and begin tracking the viewing of video that they deliver. Web companies will embed special triggers in video so that, when it is either streamed or downloaded, viewers will silently “ping” NetRatings servers.
Nielsen will track video usage on cellphones and portable gear, which presents the biggest technological challenge. There are hundreds of different potential devices and—unlike iPods—no standard software. Nielsen is working on small devices that would work with Bluetooth or even wired headphones. The devices would compare sound accompanying video with a library of “audio signatures” to figure out what users are watching.

Shredding Diaries

For TV stations, the best part of Nielsen's plan to upgrade its ratings system is a call to shred the handwritten diaries, converting even the smallest cities to some sort of electronic device to gather viewing data.

Over the past two years, Nielsen has been rolling out local people meters (LPMs) in the largest markets to measure both total audiences and their demographic makeup. But everywhere else, stations' demos are estimated by recruiting viewers to write down every program they watch for one month. Total viewers—but not the demographics—are measured with relatively simple set-top meters in approximately 80 markets. In small markets, the inexpensive—but sloppy—diaries are the only way audiences are tracked.

Big changes are afoot under the new plan:

Nielsen will put LPMs in the top 25 markets (up from 20).
In many midsize and all small markets, there is not enough ad spending for stations and agencies to justify the expensive LPM system. In markets 26-60 (San Diego to Richmond, Va.), Nielsen plans to deploy a new version of its active/passive meter. The new meter will listen for codes embedded into the audio of TV programming and prod viewers to click buttons to indicate who's watching.
Pending testing, Nielsen hopes to deploy the new meter in 2008.
In markets 61-125 (Tulsa, Okla., through Monterey, Calif.), Nielsen plans to test simple “mailable” meters. Members of Nielsen homes would put the device near their TV sets for a month and mail it back to the company, where it would download the data.
The remaining markets, down to 210 (Glendive, Mont.), are fuzzier. One tack is to work with cable and satellite companies to use data from their digital set-tops, which are capable of tracking every channel-change but offer no audience demographics. At the very least, the company hopes to switch from handwritten diaries to ones filled out over the Internet.

A shortcoming for networks and advertisers is the expense. Nielsen is not known for generosity when it comes to pricing, which is one reason that broadcasters in some smaller markets have dropped out of the ratings system entirely.

Huge Challenges Ahead

To make it all work, Nielsen must surmount huge challenges. The A2/M2 plan calls for developing new—hence, unproven—devices and ways to prod participants in the Nielsen “panels” to use them. (Recruiting and training panel members is one of Nielsen's major costs.) And delivery dates are unclear for many new elements.

“There's a new-media environment out there, and someone is going to measure it,” says Nielsen Chief Research Officer Paul Donato. “If it's not us, it'll be someone else.”

E-mail comments to jhiggins@reedbusiness.com

Tribune Family Feud

The Chandler family's distaste for TV stations is a central element of their attack on troubled Tribune Co.'s plan to buy back $2 billion worth of stock.

But it's amusing now to watch members of the Chandler family lecture Tribune Co. about unloading the company's TV stations. That's because, when the family behind Times Mirror Corp. exited the station business, their judgment proved to be horrible.

The family acquired 12% of the newspaper and broadcasting company's stock when it sold controlling interest in Times Mirror to Tribune in 2000.

The Chandlers dismiss Tribune's big stock buyback as misguided, addressing “financial structure in advance of strategy.” The Chandlers prefer to spin off the TV stations.

Tribune's independent directors countered a blistering Chandler letter to the board with one accusing the family of looking after only their personal interests.

However, their own track record selling TV stations is not great. Times Mirror unloaded its four stations in 1994 to Argyle Television, collecting $320 million and a small equity stake in Argyle. Just a year later, Argyle cut a deal to flip the stations to New World Television, for nearly double that: $716 million.

Now, Times Mirror made plenty of money on the initial sale ($131 million), including a dodgy tax benefit. But the company clearly left a couple hundred million dollars on the table.

Add to that, of course, that much of the plunge in Tribune's stock price can be blamed on the Times Mirror deal, including a surprise $1 billion tax hit and book-cooking at Times Mirror's newspaper Newsday.

Still, I agree with the Chandlers' objection that the buyback is a bad idea. And perhaps their other arguments are legitimate. But their track record puts the family in the same credibility crunch that plagued investor Carl Icahn in his similar attack against Time Warner. They may be right, but are these people whose lead investors will want to follow?—J.M.H.