Nielsen to overhaul flagship currency by 2024, but change will be slow

Why you should care: Ad buyers and sellers have been looking for a better way to measure media across channels for years. Nielsen is finally getting its ducks in a row to do that, but there are tons of nuances around how and when the industry will be able to use this data effectively.

Nielsen announced Tuesday (December 8) a major overhaul of its TV ratings system, the de facto currency underpinning the $70 billion US linear TV ad market.

Ad buyers and sellers have been desperate to move past Nielsen’s panel-based measurement system for years, arguing it oversimplifies and increasingly misses large chunks of viewing as more audiences cut the cord.

To solve that, Nielsen began adding more addressable data into its measurable universe this year, including 55 million addressable TV households and viewing on YouTube and YouTube TV. With these pieces in place, Nielsen has committed to transitioning the $100 billion premium video industry onto a cross-platform currency, called Nielsen ONE, by fall 2024.

Nielsen ONE will launch in late 2022 and roll out in phases throughout the next year, as the industry transitions away from the C3 and C7 ratings system for linear TV entirely.

“We bring data sets together across TV and digital today, but we never put them together with the fundamental assumption that this is how the industry is going to buy and sell advertising,” said Scott Brown, head of audience measurement at Nielsen.

Nielsen can finally do away with C3 and C7 ratings thanks to a new technology in its panel that measures each ad exposure separately, rather than averaging the number of commercial minutes viewed during a live program. The change will allow Nielsen to measure linear TV ad viewing on par with digital viewing.

“[C3 and C7] had a fundamental assumption that when you watch TV, everyone sees the same ads,” Brown explained. “Our new currency is not assuming everyone sees the same ads, and will measure at a much more granular level.”

Nielsen is also expanding its panel to include viewing on streaming, mobile and desktop devices. The panel will be underpinned by Nielsen’s new identity resolution system, which uses the panel as a source of truth to validate and deduplicate viewing across platforms.

In other words, Nielsen’s panel will still sit at the center of its measurement system to verify that the third-party data it’s pulling in is accurate and isn’t counting the same view twice. It will also continue adding more datasets into the panel, including from walled gardens such as Facebook and Google.

“You can't build a panel big enough to measure all the ways people consume media today,” Brown said. “We use the panel to validate data we get from other parties and to correct the data to make sure it's representative.”

Nielsen will also combine its TV and radio panels so advertisers and media owners can measure campaigns more holistically. “All of the panels we had to measure different media exposures are all coming into one,” Brown said.

Not so fast

While ad buyers are excited that Nielsen is finally overhauling its legacy measurement system, there’s still a lot to be figured out.

Agencies don’t have access to the new data set yet. When they do get it in mid-2021, it will require an “extensive review period” to determine how it will impact historical measurement processes and tools, as well as conversations with media owners, said Adam Gerber, president of global media at WPP agency Essence.

“What Nielsen is doing is critical because it's the only way to move forward,” he said. “That said, it will take a lot of time and effort to incorporate the new data streams that Nielsen is saying it will produce.”

While the new dataset and methodology will be easy to apply for backend measurement, it could have a significant impact on how agencies plan and forecast, Gerber added. That’s because as more addressable audiences are included in the panel, it will be difficult to predict which audiences a national buyer can reach on a weekly basis.

“If you never know which audiences are going to be picked out of the available national ads [for an addressable buy], then how do you predict what audience the national advertiser will reach?” he said.

Another challenge will be how Nielsen will qualify an impression across different platforms. How do you measure a live Super Bowl ad, for example, against an ad someone saw while streaming a YouTube video on demand?

While these are difficult mathematical challenges, they’re not insurmountable—as long as the industry works together to tackle them. Nielsen is introducing a working group early next year to hash out these issues.

“This is not as simple as a light switch being turned on and off,” Gerber said. “We're breaking a legacy business model, and it means we're going to have a messy couple of years, but I think in the end we'll have something that's viable.”

Ultimately, adoption of Nielsen’s new methodology will come down to cost. Nielsen hasn’t briefed agencies on its business model yet, and there are more measurement alternatives cropping up in the market all the time.

“There's a point where paying for measurement and data has diminishing returns,” Gerber said. “As good as the data may be, we need to understand what the business model will look like.”