The deal grew out of conversations that began last spring as part of a special task force created by MPG's Collaborative Alliance to find ways of utilizing set-top data to buy networks whose audience and/or coverage are currently too small to be measured by Nielsen's national TV ratings sample. The initiative, which successfully developed a method for extrapolating the equivalent of Nielsen ratings from set-top data, initially analyzed three networks - Bloomberg, Sprout and INSP - and at least three agencies - MPG, Carat and OMD - said they were considering using the data as a way to plan, buy and post networks not currently measured by Nielsen.
Industry experts estimate there are upwards of 100 networks whose audiences currently are too small to be measured by Nielsen's national TV ratings panel. Those so-called "long-tail" networks, in aggregate, are estimated to represent about 7% of total national viewing.
While small in total numbers, many of those networks represent the kind of highly targeted audiences that many advertisers and brands actually want to reach, but before the Rentrak/Donovan deal, did not have a way of practically integrating into their planning and buying systems.
Rentrak has been one of the most aggressive of a group of digital set-top data aggregators to bring new audience measurement services to the ad industry. Others include WPP's Kantar unit, TRA Analytics, and TiVo. All say their systems have some superior attributes to Nielsen's methods, not the least of which is the size of their databases; the dynamic, real-time nature of the data; and the fact that they are based on actual "census"-level viewing, as opposed to a proxy sample of the TV universe.
Nielsen's national TV ratings sample currently is about 18,000 households. Rentrak's currently is based on 17 million.
Nielsen supporters say that set-top data systems cannot currently determine who is watching TV inside the homes they gather real-time viewing data from, and cannot generate reliable demographic estimates. Set-top data proponents say who cares, because demographics are crude, and possibly anachronistic ways of clustering actual viewing behavior.
That latter argument is gaining more momentum as big ad agencies begin integrating the way they analyze and plan digital media, especially online video, and some including Havas spin-off Adnetik and Interpublic's Cadreon, have already begun integrating ways of buying TV audiences into their electronic trading systems the way they buy online display and video advertising.
Both Rentrak and Donovan indicate that their deal is not mutually exclusive. Rentrak plans to integrate its data into other big enterprise systems such as Mediabank and Strata. Donovan plans to strike deals that would integrate other digital set-top databases into its systems and software.
To date, Nielsen which recently began trading as a public company again, has paid only lip service to developing a serious digital set-top data-based measurement service, and the company seems to have little incentive in doing so, as long as its panel-based samples are the currency of the $80 billion U.S. TV advertising marketplace.
Ultimately, Rentrak CEO Bill Livek says the real value of set-top data will be in developing new ways of integrating it with other powerful consumer behavior data - such as purchasing behavior or other lifestyle information that could be better and more precise indicators of who advertisers should be targeting than traditional age/sex demographic breaks.