Nielsen Decides against PPM Joint Venture
March 2 2006
Nielsen Media Research has declined its option to work with Arbitron in developing the latter's PPM technology as the primary measurement tool for US media ratings currency. Nielsen has spent millions of dollars on assessing the technology since signing an agreement in 2000, but will now pursue a multi-stranded 'portfolio strategy'.
NMR CEO Susan Whiting said the company recognised the appeal of a portable, single source measurement tool but, 'While it may offer considerable benefits for radio research, we believe that a one-size-fits-all measurement system is not the approach for a currency in today's complex television markets.'
NMR cited two principle factors in the decision:
- 'Because the PPM's exposure-based definition of 'audience' produced larger and still unexplained television viewership, Nielsen believes that the marketplace will require a clearer explanation for the differences.
- In Nielsen's opinion, the PPM system would be more expensive than the methodologies it would replace, with the joint venture requiring the television industry to bear most of the costs and effectively subsidize radio. Nielsen believes that to improve sample quality to the level its clients have said is necessary for television currency, it will be necessary to further increase payments to sample participants and hire more field representatives to recruit households in person, none of which had been anticipated when the joint venture was first conceived.'
The two ratings giants will continue with their plans for market research j.v. Project Apollo, which is said to be unaffected. Nielsen's statement says that 'the quality threshold required for market research is very different from the thresholds demanded of a television 'currency' service and that it believes the PPM offers potential for market research applications.' The two are also expected to discuss Nielsen's potential licensing of the PPM to measure television viewing outside the home, which is said to account for some 15% of all audience.
Nielsen has given itself 90 days to communicate to clients a plan for providing more accurate and complete measurement of television ratings. Whiting said clients had indicated their desire for 'a 21st Century solution that is accurate, affordable, and adaptable to all forms of video-based media.' She added: 'At the same time, it is essential that we maintain the highest quality standards for measuring traditional television inside the home, which continues to provide the vast majority of television viewing... Nielsen will draw on the remarkable technological advances of the last few years to provide a portfolio of services that will expand electronic measurement across all video platforms'. Recent NMR initiatives include the introduction of its own controversial Local People Meters, the measurement of 'time-shifted' viewing with DVRs and Video on Demand, and the upcoming expansion of the national sample to include college students living outside the home.
While deferring precise plans, Nielsen did set out five core principles for its strategy:
- Affordable electronic alternatives to the paper diary
- Expanded electronic measurement of television viewing inside the home, including set top box data.
- Electronic measurement of television viewing outside the home
- Measuring TV usage that occurs in connection with the Internet
- Measurement solutions for mobile media (e.g., cell phones and video iPods).
Meanwhile, Arbitron will now focus on its proposed 'radio first' PPM deployment, which has in any case been the basis of its discussions with the industry in recent months. 'Going it alone does not change our final intentions for PPM' according to President and CEO Steve Morris. The radio rollout is scheduled to take in Houston and Philadelphia this year, with plans for 2007 pending final negotiation with the radio industry. To date, the company has announced signed contracts for a PPM-based radio ratings service with a number of agencies, advertisers and broadcasters and now aims to rapidly secure a critical mass of stations and agencies to allow it to go forward rapidly.
Morris said that despite seeing some economic benefits from a joint venture, the termination of the May 2000 option gives his company 'complete flexibility to meet the needs of our customers in terms of when and at what speed we deploy the Portable People Meter' and that Arbitron would 'work directly with the broadcast television and cable industry on additional, non-currency services that utilize the PPM'.
In a conference call this afternoon, Morris appeared to rule out the possibility of competing with Nielsen as a 'core currency service' for TV measurement, calling it 'a bad economic idea'.
The Arbitron Portable People Meter (PPM) system uses a passive audience measurement device - about the size of a small cell phone - to track consumer exposure to media and entertainment. It is carried throughout the day by randomly selected survey participants, and detects inaudible codes embedded in the audio portion of media and entertainment content delivered by broadcasters, content providers and distributors, downloading into a docking station and sent to a central computer at the end of each day. Arbitron is online at
www.arbitron.com and NMR at
www.nielsenmedia.com
All articles 2006-23 written and edited by Mel Crowther and/or Nick Thomas, 2024- by Nick Thomas, unless otherwise stated.
