• by Joe Mandese  @mp_joemandese, July 29, 2003

In an effort to mollify ad industry concerns surrounding new rules for processing its TV ratings data, Nielsen Media Research held a high-level meeting with top ad agency executives. But the meeting, which was held Monday at the New York office of the American Association of Advertising Agencies, appears to have raised as many questions as it answered.

While Nielsen executives asserted they have no intention of changing the way Madison Avenue uses its data, or how much ad agencies pay for it, agency executives say it still is unclear how Nielsen's so-called third-party licensing agreements will effect the quality of their TV ratings research or their bottom lines.

The concerns first arose when Nielsen informed all its users that it would begin charging third-party processors to recoup costs. Many agencies, networks and stations depend on such processors to generate proprietary reports based on Nielsen data and historically Nielsen assisted them free of charge. But as the number of processors and databases has grown, Nielsen said the extra charges were needed to cover its costs.

When the initial drafts of those agreements were first released to processors several weeks ago, they contained especially strong language that caused many to fear they might not be able to manipulate Nielsen data with the same flexibility and creativity that they have been used to. Among other things, those agreements would have restricted agencies from integrating Nielsen data with other databases.

"I'm still trying to clarify what all this means, but Nielsen seems to have put to bed the data restriction issues," says Susan Nathan, senior VP-director of media knowledge at Universal McCann. She says Nielsen has cleared up much of the "legal mumbo jumbo" that initially raised those concerns.

Others were far less sanguine about the resolution of those data restrictions and noted that the incremental costs Nielsen is charging third-party processors amounts to a new "tax" for the ad industry.

"Nielsen is telling us this is an issue for third-party processors and not ad agencies. But that's not so," says Gregg Liebman, senior VP-director of strategic resources at Zenith Media Services. "This is just a way for them to drive incremental revenue to their bottom like. After all this history, that just doesn't seem fair."

While Nielsen says it will be charging processors, agency executives say those costs will be billed back to Nielsen clients by processors on top of the fees they already pay the processors and on top of the data licensing fees they already pay Nielsen.

Agency execs are still trying to determine what the incremental costs ultimately will be, but one executive said it could add up to as much as $5 million in incremental revenue to Nielsen each year. Nielsen executives have said the new fees would be miniscule.

Meanwhile, some executives believe any restrictions on the use of Nielsen data - economic or otherwise - violate the intent of their original Nielsen data licensing agreements and make it more onerous for their processors to develop the best products.

"MediaCom is very, very concerned about this issue. Primarily because of the potential restraints it puts on the use of our partner third-party companies. We work with them to develop the most innovative and valuable tools possible to drive our clients' brands," said Tony Jarvis, senior VP-director of the strategic insights group at MediaCom Worldwide. He said it still is unclear exactly how Nielsen's new third-party rules might restrict some of that innovation and what the total cost implications are.

None of the executives would venture what possible next steps would be, but the issue adds to a long litany of client frustrations with Nielsen.