Nielsen Finally Modernizes – Will it Matter?

Nielsen Outlines Push to Modernize Its Ratings System

Nielsen Media Research, the sole provider of national television ratings in the U.S., outlined plans to modernize the way it compiles TV ratings to include viewing done on the Internet and in bars, hotels and airports.

As part of the modernization, the firm plans to eliminate by 2011 its decades-old system of relying on viewers to keep diaries to record the shows they have watched. Nielsen operates an electronic metering system in the 60 biggest markets in the country, but it still relies on viewers’ diaries in 150 others.

Nielsen’s overhaul comes as the TV industry has been transformed into a business screening programs in a variety of media. In the past year, dozens of broadcast and cable networks have begun streaming programs on the Web, developing content for the coming wave of video-enabled cellphones and selling shows for viewing on video iPods.

Nielsen, a unit of Haarlem, Netherlands-based media giant VNU NV, has been under pressure from TV networks to update its measurement system. The firm has tried in recent years to update its system to address the proliferation of cable networks and the increasingly haphazard way people watch TV. Nielsen Chief Executive Susan Whiting said the modernization “is the result of extensive consultation with clients, who told us clearly that we should ‘follow the video.’ “

TV networks hope the modernization will give them ammunition to boost ad rates. “We will finally start getting credit for an awful lot of eyeballs that aren’t getting counted,” says Mike Mellon, senior vice president of research at Walt Disney Co.’s ABC. In 2005, TV advertising totaled about $58 billion in the U.S., according to TNS Media Intelligence.

Nielsen, which declined to say how much the project would cost and to what degree clients would be asked to contribute, plans to implement the changes in phases over the next five years. Starting this summer, Nielsen will begin rolling out technology to measure ratings for programs streamed on the Internet. Nielsen said it hopes to fully deploy Internet measurement during the 2007 to 2008 television season. Nielsen said it will begin limited measuring of iPod viewing by the end of this year, with a test of its new “solo meters,” technology designed to measure viewing on cellphones and other mobile devices, to begin in 2007.

Nielsen plans to introduce equipment to measure viewing in bars, offices, hotels and other venues by late 2008, a move that could boost ratings for sports and news networks, in particular.