The Media Rating Council (MRC) officially suspended accreditation for Nielsen’s national TV ratings service on Wednesday. For months, the measuring dictator has been mired in a dispute over the currency used to transact billions of dollars in ad revenue, with the Video Advertising Bureau (VAB) spearheading the battle, alleging that Nielsen’s statistics during the COVID-19 pandemic undercounted viewers. Nielsen presently earns more than $60 billion in annual advertising revenue.
The MRC is a non-profit organization founded in 1963 with government support and a mandate to oversee stakeholders in the television industry in the aftermath of the quiz-show scandals of the 1950s. Nielsen was formally notified of the potential suspension action on August 12 for the National Television service and on August 20 for the Local Market services. Since January 2021, accreditation for local services has been suspended. Nielsen informed MRC on August 17 that it planned to add Broadband-Only (BBO) homes to its local panels in October 2021. MRC had previously expressed reservations about Nielsen’s Local Market offerings. Following a review of Nielsen’s capacity to correctly incorporate BBO watching at the local market level, the Board halted certification for the Local Markets as well.
There is a measurement legitimacy crisis brewing in the media industry not seen since 1964, when the Media Rating Council sprang up as the answer to questionable TV and radio ratings that spawned Congressional hearings a year earlier. https://t.co/XXnOaCo9vc
— Ad Age (@adage) August 30, 2021
The decision, which will go into effect in mid-September, is the result of an audit done by the MRC board, which is made up of representatives from all members, which now number roughly 160, with TV networks of all types accounting for less than a third and agency and client representatives accounting for the remainder.
According to the audit, Nielsen likely undercounted adult viewers aged 18-to-49 by 2% to 6% in February. Furthermore, TV viewing among those aged 18 to 48 decreased by 1% to 5%. As a result, the VAB alleged that Nielsen’s inability to reliably gauge TV audiences resulted in a loss of at least $468 million in national ad revenue over a 12-month period. In order to demand responsibility, the VAB urged the MRC to revoke Nielsen’s accreditation in July.
Networks and distributors ordered an audit of Nielsen in April, stating that Nielsen allowed its panel size to decline during the pandemic, resulting in an undercounting of the number of people watching television. Nielsen, under fire, declined the audit and defended its methods, claiming that its data – which showed considerable drops since the outbreak – were reliable. Nielsen stated in an April blog post that the reduction in viewing was caused by changes in viewer behavior and the cancellation of games by sports leagues.
“Nielsen looked internally at its own process for estimating the ratings via our observational panel, a source of audience estimates that fuels the media industry. While this drove a sample size smaller than it was pre-COVID, it remains robust and representative”.
Nielsen claimed that total TV viewing had declined in recent years, with a drop of roughly 20% in the first quarter of 2021, a figure that is unfavorable for networks looking to sell advertising for the 2021-22 season. Mainak Mazumdar, Nielsen’s chief research officer, noted that the company went back and discovered nothing in its study that indicated they needed to make changes. Instead, Nielsen claimed that the epidemic had “bottlenecked and accelerated portions of the media sector, functioning as a polarizing factor for consumer segments,” all of which were fueled by COVID. Mazumdar responded further, saying:
“What we see is despite the decline in the sample. There is no material statistical difference, right the error has increased, but the confidence interval is still high, as we have reported. We feel the standard error needs to be accounted for when folks are forecasting their inventory for rest of the year into upfront.”
However, after maintaining for a month that its figures were accurate, in May, Nielson confirmed that its figures actually did need adjustment.
Nielsen has been the sole source for monitoring network TV audiences since 1950. Nielsen purchased Sorenson Media, an addressable TV technology vendor, in 2019 to cover what it described as a gap in its portfolio. Nielsen claimed that with the acquisition, it would be able to construct a “end-to-end, AI-optimized platform” for targeted TV commercials, including distribution, data-driven targeting, unified campaign management, and measurement.
While competitors have surely attempted to enter the Nielsen ratings game, none have succeeded, owing to a lack of adoption by potential clients and a lack of investors.
In a statement issued on Thursday, Nielsen CEO David Kenny said:
“We want to be transparent about the factors the MRC called out in their decision, the actions we are taking to address outstanding issues and the ongoing work we’re doing to build a new measurement model that reflects where the industry is going. While we are disappointed with this outcome, the suspension will not impact the usability of our data,” the measurement provider said in a statement. “Nielsen remains the currency of choice for media companies, advertisers, and agencies. We are committed to the audit process, and during this pause in accreditation, we will work with the MRC on resolving this suspension. We will also take the opportunity to focus on innovating our core products and continue to deliver data that clients can rely on, ultimately creating a better media future for the entire industry.”