This column doesn’t discuss video audience measurement by Nielsen — or anyone else for that matter — very often, but I read a Forbes article recently that got the brain cells working.
In “Why VideoAmp Thinks It Can Bust Nielsen’s TV Ratings Monopoly,” Matt Craig chronicled the rise of VideoAmp as a national competitor to Nielsen.
Nielsen has an excellent track record for fending off competitors. When I first started in the ratings business in the ’80s, a British company, AGB, was trying to move into the U.S. with a radical device called a “peoplemeter.” You may have heard of that technology before.
At the time, Nielsen was measuring national television viewing with a combination of set meters and TV diaries, using two panels to create estimates. The set meters yielded household numbers and overnights, but there were no demos. Demos were added later by integrating the separate diary panel.
AGB’s solution was to bring the peoplemeter to the U.S. so that the networks could have fast demo data and avoid the issues with the diary and separate panels. I’ll spare you all the details, but my impression was that the three-and-a-half networks (Fox had just started) wanted AGB to enter the U.S. marketplace, if for no other reason than to put downward pressure on Nielsen’s pricing.
While everyone said they were interested, only CBS was willing to write a check. Nielsen brought in a peoplemeter of their own, AGB lost a truckload of money, and left the U.S.
There is a thread that connects that story to today’s news. AGB was purchased in 1988 by Pergamon, which was owned by the late Robert Maxwell. His daughter, Ghislaine Maxwell, is currently in a U.S. jail and is at the center of the Jeffrey Epstein saga. And oddly enough, the remnants of AGB, through any number of mergers and purchases, eventually became part of Nielsen.
More recently, comScore has taken on Nielsen. The company was one of the first to use “big data,” specifically return-path data from cable boxes, satellite dishes, and later on, smart TVs, which, when modeled, can create local and national audience estimates. Full disclosure: Bill Livek, comScore’s former CEO, was CEO of Birch/Scarborough when I worked there in the early ’90s. comScore has had some financial issues but continues to fight on.
More recently, VideoAmp has entered the picture. Per the story, VideoAmp started as a method for advertisers to determine how well their ads were working. Eventually, the company moved toward challenging Nielsen in the national marketplace.
While I don’t have experience with the national TV services, the article notes that VideoAmp’s billing system is different. With Nielsen, you’re going to pay a big wad of cash regardless of how much you use the service or how your numbers turned out. With VideoAmp, you apparently pay a far smaller upfront fee and then pay a percentage of transactions based on their estimates.
The article goes on to talk about the differences between VideoAmp and Nielsen and how VideoAmp has apparently shown larger audiences for some broadcast programs. As we know, bigger is better.
To prove that point, when I was a young operations manager at WSPA-FM in Greenville/Spartanburg in the early ’80s, I conducted a mail survey of other easy-listening stations around the country. While I can’t tell you the exact numbers, this was during the time when Birch was challenging Arbitron in the radio ratings market. I put in the following question (not word for word—my memory isn’t that good):
If Arbitron and Birch reported different results for your station, which one would you believe?
The choices were:
- Arbitron
- Birch
- Whichever one had higher numbers for my station
- Neither one of them
Guess which answer won a majority response? You’re right: whichever one had higher numbers for my station! Paraphrasing, bigger is righter!
My point is, if Nielsen faces stronger competition in the video space, this could affect the audio service as well. I’ve noted before that Nielsen is owned by private equity (again), and the goal is typically to squeeze every last dime out of a company and prepare it for a profitable sale some years down the road.
The national TV service is the “big kahuna” in audience measurement, both for dollars, assumed profitability, and prestige. I believe that radio brings in more dollars than local TV. This was stated at an all-employee meeting soon after Nielsen took over Arbitron, so I can’t guarantee the accuracy today, but with the current state of local TV, it wouldn’t surprise me.
If Nielsen loses some national TV clients or is forced to lower rates in the face of stiff competition from VideoAmp, comScore, or other companies, it may look for more revenue on the audio side. While I’m not privy to Nielsen Audio contracts, the Cumulus lawsuit stated Nielsen wanted a 36% rate increase on their new contract. I’ve heard that another major radio group was hit with a similar increase. Say what you want about inflation during Joe Biden’s time in office, but it wasn’t anywhere near that high!
I spent four Barrett Media columns in September sketching out a possible alternative for measuring audio. It wasn’t perfect, but it was a framework for incorporating big data in a less expensive system. Others may have different and perhaps better ways to skin this cat.
However it happens, Nielsen may soon be pushing the radio business closer to major change.
Let’s meet again next week.
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