Recent major deals by Rentrak are shaking up the Nielsen-dominated world of TV audience data. The data it derives from millions of cable and satellite set-top boxes is enhanced with data about consumer spending patterns, and many are seeing it as a needed alternative in a new-media world.
With two high-profile deals announced in just the past eight days, Rentrak appears to be gaining momentum in its challenge of Nielsen as the nation’s primary provider of TV ratings.
Yesterday, Rentrak and global advertising giant WPP said WPP was acquiring a 16.7% stake in Rentrak by buying $56 million in Rentrak stock and by accepting $98 million of Rentrak stock in exchange for the TV viewing measurement unit of WPP’s Kantar Media that competed with Rentrak.
Hours later, WPP’s major media buying agency, Group M, said that it would begin using the Rentrak data in its planning and buying presumably along with Nielsen numbers.
Thursday’s WPP announcements came less than a week after Zenith Media and Rentrak announced jointly that Zenith would adopt Rentrak’s “massive and passive TV currency for local television buying.”
And more such developments could be on the way. “I can’t tell you [about deals that might be in the works],” Rentrak CEO Bill Livek told TVNewsCheck in a phone interview. “I will tell you that if these were seismic events, they usually come in a pattern,” he said.
Regardless of whether the deals are “seismic” enough to shake up the Nielsen-dominated world of TV audience data, they drew the attention of Wall Street. Rentrak’s stock price shot dramatically upward on Thursday with shares (NASDAQ: RENT), rising $7.56 to close at $72.07 per share, an 11% percent increase.
Although Rentrak and its representatives avoid mentioning the word “Nielsen” when asked about the competitive landscape in TV ratings, the company has nevertheless been positioning itself as a Nielsen alternative.
Rentrak and Nielsen use different methodologies to track TV viewership. Nielsen extrapolates viewership from small samples of homes in each TV market that are equipped with electronic boxes or are asked to record what they are watching in paper diaries.
Rentrak extracts ratings from millions of cable and satellite set-top boxes. It enhances its ratings with data about consumer spending patterns.
Without mentioning Nielsen by name, Zenith and Group M officials made clear that their involvement with Rentrak was a rebuke of the ratings leader.
“Zenith is proud to be at the beginning of a big industry change,” said Rob Jayson, chief data officer for Zenith, in a prepared statement released jointly by Rentrak and Zenith. “For the first time in industry history, we are replacing the low-response rate, highly unpredictable surveys and diaries with massive and passive measurement. We expect to see significant reductions in costs for our clients as well as dramatically improved service.… We expect that this new Rentrak-based currency will become the new gold standard for all of local TV ad spending.”
For his part, GroupM Global Chairman Irwin Gotlieb said that ” legacy sample methodology simply can’t keep up” in today’s fragmented mediascape.
“Television measurement needs to move toward census-based methodology. Our agencies are doing such refined targeting and segmentation, and that work can only be supported by census data,” he said. “It is our hope that we can act as catalysts in moving the industry toward greater data reliability and accountability.”
On Tuesday, MediaPost.com took some of the luster off the Zenith announcement, quoting an executive there as saying that Zenith was merely conducting a three-market test of the Rentrak data.
“If we see success and increased reliability and increased performance and increased cost savings, we will roll it out to additional markets,” Zenith Optimedia Chief Data Officer Rob Jayson told MediaPost.com. “Our intention is that the test will go well. We do quite strongly believe in this.”
When asked about the Zenith deal, Livek would neither confirm nor deny the three-market test scenario. “Zenith is a client of Rentrak and they’re moving toward having us as the currency in local markets,” Livek said. “This is a process. Zenith is 100% committed to work with us in all of their local markets as the currency.”
Even before these most recent announcements, Rentrak has been busy making news. Since January, the company has been steadily growing its roster of high-profile clients, including the owned-station groups of all four broadcast networks. One network — CBS — signed up for Rentrak data. Rentrak also added several ad agencies this year — including Hill Holliday and Wyse Advertising — plus one giant producer of TV programs, Sony Pictures Television, the first (and so far only) major studio on Rentrak’s client roster.
When asked whether his goal was to displace Nielsen, Livek said he saw the two co-existing.
“We’re reinventing the measurement business, he said. “I live in reality. I believe reality is [that] we live in a world where, economically, multiple currencies exist — the British pound exists, the European euro, the Chinese RMB and down the list, along with the dollar.
“In media, it’s very simple,” he added. “We have two currencies and [Rentrak’s] currency serves a lot of purposes because of the granularity and stability” of the data it produces.
But outside observers were more blunt about the Nielsen vs. Rentrak situation. “The bottom line is Nielsen has been lazy for a long time,” said Bill Hague, senior vice president of Frank N. Magid Associates, a TV consulting and research firm. “They have horrible customer service, their samples have not gotten better or bigger and competition is good.”
Nielsen did not immediately reply to a request for comment from TVNewsCheck.