The Devaluing of Nielsen’s Diary Currency

Sometimes people in the TV business can’t see a ridiculous situation because they are so deeply enmeshed in it.

Take this for instance: The whole business works on Nielsen ratings. But for most of its existence and continuing to this day, Nielsen’s accuracy has been a huge question mark. For a lot of people in the business, Nielsen’s slogan might as well be: We’re Better Than Nothing!

Nielsen would no doubt argue that’s a rude exaggeration, especially since the advent of local people meters, which are used in bigger cities. And indeed, ratings are now far more sophisticated than ever. Kicking Nielsen is, after all, an old sport.

But in many markets — 154 out of 210 as a matter of fact — local ratings are still obtained by households that complete paper diaries to mark what they’ve been watching. (And every so often, the Pony Express picks them up and delivers the journals to one of those fancy skyscrapers in the big city over yonder.)

It seems like such an antiquated way to measure viewership. Nielsen itself acknowledges the limitations of the diary as it extols the benefits of local people meters in the 56 markets where the new technology replaces the old.

“Because the meters are electronic, they measure what people really watch and do not rely on diarists’ memories of what they watched,” reads a Nielsen press release from 2009. “This is increasingly important in a TV world where people change the channel frequently, have access to several hundred TV sources, and use DVRs.”

You know, like real life.

The diary endures. Since 1965, the Media Rating Council, which is made up of advertisers, agencies, TV stations and broadcast and cable networks, has annually accredited the Nielsen NSI service as the diary service is called.

 Until now.

After an audit, MRC on Nov. 17 lifted its approval. That essentially devalues Nielsen numbers in all those small diary markets where stations pay so dearly for the service.

MRC found problems with the sampling and Nielsen admits that for two ratings periods in 2009, it had trouble with its methodology.

The reaction to the news after it was reported on TVNewsCheck was just about what you’d imagine.

“I am shocked! Shocked I tell you, that anyone would question the absolute accuracy of Nielsen’s measuring service. I am offended on their behalf! SHOCKED!!!” wrote a reader who calls himself TVGenMgr.

Just to make this crystal clear for those of you who didn’t see Casablanca, he was not shocked.  

A Nielsen spokesman says the company has fixed holes in the system. But until MRC decides the new improved NSI passes the smell test, for many advertisers those household diaries might as well be coasters.

The ratings company used to pick its diary sample by calling homes to enlist participants. In 2009 it turned toward “address-based sampling” to capture the growing number of people who either only have a cell phone or no phone at all — households that are more likely to be younger or minority-based.

That can be up to 30% of the population. Nielsen acknowledges it underestimated the target sample size it needed, apparently because as a group, people with cell phones are not as reliable about reporting, so Nielsen needed to get more people in that group. It says it finally straightened that out by November 2009.

Then the MRC audit process began. That review ultimately involved more than 100 people from all sides of the industry, and eventually led to Nielsen losing its accreditation. It is possible that the address-based sampling problem was only one of MRC’s concerns.

The same process is now underway with the 2010 ratings books, says David Gunzerath, the MRC SVP and associate director.

“We are now in the first review process with the 2010 audit assessment,” he says. “But I’m not being coy when I say I have no idea how long the whole process will last.”

While Nielsen may have fixed its problems — it says it has — getting reaccredited takes time. So by the time the February 2011 ratings books go out, Nielsen (and its clients) may still be hanging out on a limb.

“As far as the data is concerned, it still is being used,” says Rod Murray, VP of research for Katz Media Group, which reps more than 100 diary market stations. “It is the currency of the business. But obviously we’d like them to be accredited. We like that stamp of approval. ”

But Murray points out that in many diary markets, Nielsen didn’t have a problem, and where they did, stations knew about it long ago.

Sabrina Crow, Nielsen’s SVP and managing director for local media client services, said in a statement, “We remain committed as ever to the markets served by our diary service and we continue to make significant investments in developing and investing in a range of measurement options and improving existing solutions.”

The ad industry is waiting. “Mid- and small-size television stations rely on accurate and reliable data to evaluate programming and to develop pricing  strategy,” says Val Napolitano, president-CEO of Petry Television, which reps about 150 stations, many of them in diary markets.

“Although there is a groundswell for alternative research options like Rentrak, the present currency is still Nielsen. It is in the industry’s best interest that the MRC will be able to provide reaccreditation to Nielsen’s diary markets.”

At TVB, which flies the flag for local station sales, President Steve Lanzano has been more mad about a Nielsen report that claims spot sales were down 3.25% through the first three quarters.

That seems wildly improbable — “an absurdity,” Lanzano told me — since, for example, Kantar Media says spot sales are up over 24% for that time period. 

Lanzano wrote an op-ed piece for Mediaweek that began: “What can be done about the Nielsen Company? That’s a question that increasingly comes up in my conversations with both broadcasters and advertisers.”

But the diary snafu is on his radar, and TVB is working with stations, with Nielsen and with others including the Collaborative Alliance, a think tank of sorts headed by MPG’s Mitch Oscar, to develop a set-top service that smaller markets could afford.  

It’s way too expensive now. Nielsen won’t even say it’s down the road. Until stations want to pay for it, it seems to be a road that’s not even on the map.

But ultimately, it’s the diaries, not who fills them out, that are the problem. “Diaries are always suspect,” Lanzano says. But for now, “You have what you have.”

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