The iPod, and the $1.99-per-episode television programming that Apple introduced with it, have brought home how much the TV business that Nielsen tracks is changing. Viewers once tied to their living room couches are becoming mobile, watching TV when and where they want.
Those changes mean the longtime ratings maven has to overcome major technology challenges if it wants to keep its customers--the TV networks and their advertisers--happy. To get a handle on things, Nielsen is expanding its tools to reach TiVos, cell phones and iPods. It's also grappling with a broad rethinking of what its viewership measurements mean.
"The problem with the way Nielsen has approached the problem is that their focus has been completely on the program," said Kate Sirkin, global research director for media buying giant Starcom MediaVest Group. "We want to know the truth about who's actually watching the ads we're putting out on television."
For an industry that pulls in an estimated $70 billion per year in advertising, it's hard to understate how important getting at that "truth" is. In the age of portable devices and TiVo ad-skipping, advertisers want to know if people are indeed watching the commercials, not just the shows. And if Nielsen can't help them do it, they may not be so willing to buy the pricey reports the ratings company sells.
Already, they're increasingly getting data directly from companies like TiVo, which can offer a look at exactly what viewers are watching.
That's hardly good news for Nielsen. But to understand how tricky these changes will be for the ratings giant, it's good to explain how the 70-year-old service has traditionally collected data, as well as the changes it's made in recent years.
The majority of Nielsen's local ratings are still produced the old-fashioned way: Randomly selected panels of viewers are given diaries to record their daily TV watching habits as accurately as possible. That's less accurate than electronic measurements, but small markets don't have enough advertising funding to support investment in expensive equipment, the company says.
In larger markets, Nielsen has long used tools that can sense what channel a TV is tuned to. And since the early 1990s, Nielsen has been developing a way to instead identify specific programs, no matter when or how they are being viewed.
To make this possible, Nielsen developed technology to insert a code into TV shows' audio tracks that makes a sound, inaudbile to human ears, about every two and half seconds. That sound carries information about which station the show came from and when it was broadcast.
For the last year and half, Nielsen has been distributing detectors that can "hear" this signal to some members of its audience panels. By comparing the time encoded in the signal with the actual clock time, the company can now tell whether those viewers are watching a live broadcast or a recording.
This system also has a backup that takes a full audio "fingerprint," or unique audio signature, of shows being watched on a home TV, and compares this to a central database of shows. This level of redundancy helps the ratings be even more accurate, the company says.