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Nielsen Ratings Enter 21st Century

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3 minutes

Building on recent efforts to lug TV ratings into the 21st century, on July 25th Nielsen announced that it would include Hulu and YouTube TV in its Digital in TV’ ratings. The market research company said “eligible viewing” of programming from Hulu and YouTube TV skinny bundles would also be incorporated into its C3/C7 currency, a key metric that almost exclusively determines the cost of TV advertising.

The upgrade was a long time coming. Once the undisputed benchmark for television audience measurement, Nielsen ratings became an anachronism after the proliferation of OTT streaming. Sometime between Sheldon Cooper’s first date and Frank Underwood’s ascension to the Oval Office, ratings ceased to exist as the be-all end-all for advertisers. In the old days of linear TV, high Nielsen ratings were the epitome of television success. The ratings were heavily relied on from the 1950’s-2000’s because Nielsen’s statistical sampling revealed the viewing preferences of the average American viewer; in 2017, it only transmits part of that picture.

Even with the addition of their ‘Digital in TV’ and ‘Digital Content’ ratings, Nielsen ratings don’t adequately integrate streaming or recording options. If an episode of a TV show is recorded on a DVR it must be watched within 3-7 days for Nielsen to count the view into its ratings, which omits viewers who watch the show after the 7 day window. Conspicuously missing from ratings altogether are the biggest streaming services, namely Amazon Prime, DirecTV Now, and Netflix (which now boasts more U.S. subscriptions than all U.S. cable subscriptions combined).

Modern Metrics Need Modern Authentication Methods

Regardless of how much of the VOD (video-on-demand) market Nielsen tracks in the future, they must be careful to ensure the data they collect is authentic. For its ‘Digital in TV’ ratings, Nielsen measures total viewership, then compares metadata from each viewer’s device to Facebook information to determine which demographic the viewer fits into. Although Nielsen assured its signature panels would somehow be involved in the process, fraud is prevalent among streaming service subscriptions. Activities that enable illegal streaming such as geo-piracy and credit card fraud could call into question the validity of a subscriber’s metadata, and consequently, Nielsen’s ratings.

If even some of the metadata used to determine viewer demographics is false, then ratings are less reliable (and valuable) to advertisers looking to reach their target market. A company selling goods in the mid-western United States may not be willing to pay a premium price for a 30 second ad spot in that region if there are high amounts of fraud; after all, what good are high ratings to them if half the viewers connecting to the service from Ohio actually live in China?

If stakeholders in this scenario are unable to verify the data they collect from their customers, the value of metrics like Nielsen ratings won’t hold up in the age of OTT.

The integrity of this information is central to the value it holds for Madison Avenue. If that integrity is compromised then Nielsen ratings, once the gold standard for advertisers, could fade into irrelevance with the TV sets it’s measured for over 60 years.

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