1. Let’s start with a little background. What does Nielsen actually do?
We’re celebrating our 90th anniversary this year, and we’ve been in audience measurement, particularly around TV, for most of that time. The core of our business is to measure and provide the rating services to the market so it can buy and sell advertising based on that data. I’m told that in the United States, $70 billion worth of advertising is traded based on Nielsen’s TV ratings. The way we do it is with a pretty traditional sample method. We have one of the highest quality TV panels which we monitor and manage on a minute-to-minute basis to make sure that sample is representative of the population. We know what people watched and when they watched it, and from there we provide the TV ratings.
2. What is currently measured in Nielsen ratings?
There are two different types of ratings: The standard TV rating is the C3 rating, which is for content that carries the same commercial load as what was viewed on TV for a three-day period. The second type of rating is the Digital Dynamic rating. What we’re doing with that is measuring the viewing of video content across digital devices. Our software is able to determine whether or not that content is C3 eligible. If it is, it’s added to the linear TV ratings; if it’s not, then it’s added to the digital ratings.
3. Nielsen recently announced that starting with the fall 2014 TV season, it’s going to be measuring mobile devices. What will that include?
We [already] measure DVR and VOD viewing. So if the programming is watched on a TV set in the home, we measure that and add it to the linear ratings. The addition of this new digital piece will include that but will also add smart phones and tablets. So on top of extending to broadband, we’re introducing this push to include the mobile measurement. If we measure a video or an ad and it’s eligible for the C3 ratings, then it will be added onto that.
4. Why was it important to incorporate those numbers?
Digital is a new outlet for TV broadcasters and they want to monetize content as it flows across [platforms] and is consumed by audiences on digital devices. The issue for broadcasters was that digital measurement had not been included in the TV ratings. So as they move advertising from the traditional TV set to digital devices, they needed to make sure they were getting credit for that audience in their ratings. And also, if you move away from thinking of the TV industry in a silo by itself, there are other players now in the digital space that want to compete for video advertising dollars. Hence, there is the need to apply a comparable metric that enables the digital audience to be compared alongside traditional TV. The most important layer to solve is the cross-platform between traditional TV, where everybody sees the same ad, and a digital environment where the ad you see is not the same ad that your neighbor sees.
5. Have you determined what percentage of the total television audience is watching content on mobile devices?
From a time-spent perspective, the viewing of video on mobile devices—I’m talking about computers and smart phones—is about 6 percent to 7 percent of the overall viewing. Now, that’s all video content, not necessarily television. But what that means is that audiences are really starting to utilize those devices to view their content. We know that 50 million Americans watch video on their mobile phone. That’s up about 35 percent from last year, and is growing exponentially. So there’s no time like the present to start measuring it properly and create the metrics that the broadcasters can trade on for advertising.
6. At the same time, traditional television still captures the lion’s share of people’s free time.
Yes, that’s absolutely right. Viewers watch nearly 32 hours of traditional television a week, and the TV is still the dominant screen inside of the home. What we do find is the digital devices are additions to that. People view them alongside the TV, as opposed to a replacement for the TV.
7. In 2012, Nielsen reported that the number of American households with access to a television and a TV signal had shrunk for the second year in a row. What conclusions can be drawn from that for the industry?
The only thing we can conclude is that consumers now have options. They’re really embracing the anywhere-anytime concept. Those viewers haven’t gone anywhere; they’re just using different devices to consume the same content. So broadcasters who really welcome that and make investments to stay relevant to consumers as they move across devices will do very well. I think the state of the industry has never been more positive given the opportunities that have opened up to them because of the shift.
8. If research data identifies an audience and spurs advertising revenue to flow to new platforms, how can that benefit directors?
I think what it does is open up the broadcasters’ ability to be flexible around the content, and therefore be flexible around the advertising they place inside of that content. It introduces the ability to monetize their advertising across multiple devices. In the past, they’d show a piece of content on TV, and then after three days they were unable to monetize it in the same way. Now they’ll have the numbers at their fingertips. It gives them the ability to really harness that [audience] in a digital environment and do a lot of things that are technically limited in a linear space. It opens up a world of possibilities for directors, producers, and everybody looking to monetize the space.
9. What trends do you see in viewer habits?
We see the trend of broadband-only homes growing in the younger demographic. What’s been interesting is that the baby boomers have now moved out of the middle demographic set, and you’re starting to see different, younger behavior coming into that mid-demographic. The under-24 audience has different behavior altogether in terms of what they view, how they view it, where they view it, the demands they have on that content, and the type of content they view.
10. What are the Nielsen ratings going to look like in the fall 2014 TV season?
Broadcasters who make content available on mobile devices with the same ad load as TV for a period of three days will be able to add that audience to their ratings figures. Alongside that, we’ll be producing ratings that measure viewership for content that doesn’t qualify for [three-day] TV ratings. It will be exciting to see how broadcasters use this entire package to further monetize their assets. I think 2014 is going to be a very exciting marketplace for video in the U.S.