News in recent weeks called out the troublesome business situation in the media measurement space. Both Nielsen (which is rumored to be finding it difficult to find a buyer) and Comscore (which forced out its CEO and president after less than a year) highlight the difficulties even the key companies in this space are experiencing, quite apart from the difficulty of measuring today’s media use.
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In most industries, the seller delivers a discrete product or service to the buyer – but in TV and media, buyers and sellers transact their business based on market research results (audience estimates, also called “ratings”). Because the audience measures account for billions of dollars in spending, media research has traditionally been subject to high levels of scrutiny, an important consideration to keep in mind when considering the future of audience measurement.
Disruption Isn’t As Easy As Some Might Think
It would seem that, in today’s world, a business such as audience measurement of electronic media – led by a near-monopolist for half a century – would be a ripe target for disruption and new entrants. But it is not that easy. There are numerous “structural” issues that stand in the way of progress, separate from developing a holistic, cross-platform solution.
These obstacles include:
- Nielsen exploiting its monopoly power in terms of revenue and agreements, and generally implementing improvements only when faced with potential competitors
- On the TV network side, a reluctance to fund two parallel measurements – most past models of Nielsen competitor roll-outs assume that the new entrant would have to run parallel with Nielsen for at least some period
- TV network sales people preferring to sell a “Nielsen” currency because of the prestige of the name itself
- Getting agencies to buy into an audience measurement system developed or led by TV networks, since the assumption is that a method led by the sellers will disadvantage the buyers.
Despite its protestations to the contrary, Nielsen wields the power of a monopoly – one that US courts said was OK, even before Nielsen gobbled up one of it only potential competitors, Arbitron, in 2013. Being the sole arbiter of the national television currency for decades, and of local television since 1993, Nielsen has been a perennial lightning rod for critics, with some good reason. It is expensive and seemingly slow to innovate unless it perceives a competitive threat.
In Defense of Nielsen
The ratings giant does have a difficult mission – trying to keep up with the constant change in media while still maintaining the strict quality its clients demand (or at least the previous generation of research heads used to demand). Media researchers have been bashing Nielsen for the three decades I have been in the industry, but no one yet has been willing to fully fund an alternative. For many in the industry, to paraphrase Churchill’s comment about democracy: Nielsen is seemingly the worst form of audience measure, except for all the others.
Despite calls for disruptive entrants, what I perceive from many in the industry is resignation to Nielsen’s dominance. As with the Borg from Star Trek: The Next Generation, “resistance is futile,” given that Nielsen has faced down about a dozen potential competitors as well as an antitrust suit over the past 50 years.
Who Could Step Up?
Only the most deep-pocketed, risk-tolerant firms would even be tempted to enter this space as the barriers to entry for a new currency-quality measure are now so high. Alphabet, Amazon, and Facebook all have the money and would
likely have a great deal of interest in the viewer data stream; but their positioning as competitors in this space – both between themselves and with regular television – would almost certainly prevent any one of them from creating a widely accepted advanced measurement.
Perhaps someone could interest Elon Musk once he gets a man on Mars – that might be the easier task!
David Tice is the principal of TiceVision LLC, a media research consultancy.
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