Dear Diary, Farewell

Nielsen scraps paper logs in ambitious system overhaul

By Allison Romano -- Broadcasting & Cable, 7/17/2006

Nielsen Media Research is preparing to pulp the paper diaries that have long been the basis for local-TV ad sales. It plans to convert all 210 markets to electronic measurement by 2011 and begin measuring stations' usage out of the home, on the Internet and on handheld devices. While station owners welcome the improvements, they'll come at a cost.

The $60 billion TV-advertising industry hinges chiefly on Nielsen's data. Some 40% of that goes to local ads, where stations pay a premium for the data—from $50,000 a year to upwards of $1 million in major markets.

For years, local broadcasters have lamented Nielsen's shortcomings, such as low response rates. Some have dropped the service altogether; 24 of Nexstar Broadcasting's 27 stations have done just that. But Nielsen's upgrade plans could bring some back. Says Nexstar Senior VP Brian Jones, “This is a move forward to embrace technology and bring more accuracy to the service.”

Nielsen will expand its local people meter (LPM) system, which measures demographic data daily. Currently in the top 10 markets, the system will arrive in Seattle, Tampa-St. Petersburg, Fla., and Houston next year and will be in the 25 largest markets within five years. Nielsen says half the TV households in the country will be covered by LPMs when the rollout is complete.

In markets No. 26 (San Diego) to 60 (Richmond, Va.), Nielsen is developing a wireless meter—dubbed 3.0—to replace the hard-wired set-top meters that report household information in most markets. To differentiate among viewers, Nielsen is developing an electronic tag, about the size of a lighter, for participants to carry to tell the meter who's watching. If the tags work out, Nielsen may put them in the top 25.

For markets No. 61 (Tulsa, Okla.) to 150 (Terre Haute, Ind.), where diaries are the only ratings source, Nielsen is working on a mail-in electronic meter. To track who's watching, households will fill in a simplified paper log. As for the smallest, No. 151 (Bangor, Maine) to 210 (Glendive, Mont.), plans may include collecting data from cable set-top boxes and using the Internet to respond.

Jack Oken, Nielsen general manager for local services, says the improvements “will provide much richer information than ever before.” To freshen the sample, Nielsen will recruit mostly new participants in each market. A single panel will be used for reporting household and demographic TV ratings, as well as data on Internet use. Nielsen also will work with the Media Ratings Council to accredit the new systems in selected markets.

Station managers say the expanded data-gathering reflects the evolution of the business. “A significant amount of viewing is not measured,” says Gannett Broadcasting President Roger Ogden. “As we grow into new platforms, to the degree they will measure them, that is a good thing.”

But it comes at a price. Nielsen won't say how much stations will pay for the upgrades. But all 210 markets will get electronic systems, even if Nielsen doesn't turn a profit on them. Says Oken, “We know we can't be profitable in all markets, but it's important to provide the measurement.”