Probably one of the biggest media deals in recent years has been the proposed purchase of Arbitron by Nielsen. For those of us in research who have used both services, it is ground-shifting. For many throughout the industry, there is a question of how this might impact the measurement business.
Arbitron is more than just a radio measurement company. Its businesses expand into many areas of the media, including portable people meters (PPMs) and Scarborough local market, interface software and a trove of patents and other intellectual property. For Nielsen, ownership of Arbitron’s PPMs will help “fill in the gaps” by facilitating a single source method for cross-platform measurement for radio and outdoor.
For Nielsen, which is currently the television measurement currency, the capabilities offered by an Arbitron acquisition will not only solidify Nielsen’s market position, it could -- as one media CEO stated -- create an “artificial monopoly” that impacts ad agencies and those businesses that buy and sell on age and gender demographics.
Many of the top media executives I spoke to about this acquisition preferred to speak off the record -- such is the sensitivity on this subject. The general consensus is that the purchase of Arbitron will narrow the field of competitive measurement options for media companies, especially for ad agencies, and by extension, programmers and networks. It could stifle innovation as a lack of competition could lead to complacency.
However, most agreed that without vocal customer opposition, the acquisition would (eventually) clear the antitrust review. Competitors to Nielsen may emerge sometime in the future -- be it an unknown techie in Silicon Valley or even Google, if it were to acquire Rentrak and comScore. But for now, the past is prologue.
The competitive arena for TV measurement once included both Nielsen and
Arbitron. In 1993, however, facing an erosion of its customer base, Arbitron terminated its TV measurement services. That left only one company to measure TV usage for that increasingly profitable
media market. Ironically, a year earlier, Arbitron established itself as the sole measurement service of radio with the demise of Birch in 1992. There is precedent for a single measurement company.
Whether that is good for the media business or not is less discussed.
According to some media executives, consolidation of Arbitron’s radio measurement into Nielsen is not a huge concern. Radio advertising marketplace revenue is dwarfed by television. The money to be made by providing television measurement far exceeds that from radio measurement. Still, the real value in Nielsen acquiring Arbitron, according to these executives, is that the IP developed for better radio measurement will actually have a profound positive impact on its cross-platform measurement initiative.
For some executives, the continued dominance of Nielsen is the responsibility of the measurement clients. I quote one whose opinion mirrors others: "It’s more than a bit disingenuous for media researchers to complain about the Nielsen monopoly on the one hand and ask for single-source (or linked/fused) multiplatform measurement on the other. The industry has been given a number of opportunities in the past to fund a competitor, but at this point (or even at those points 10-15 years ago), it’s simply too expensive a prospect. You’d have to continue to pay Nielsen, while you test a parallel trend with the competition. The simplest way for Nielsen to accomplish the multiplatform gold standard is to acquire competitors in the different individual media, which they have been doing, and of which Arbitron is the latest and largest."
In this era of multiplatform devices, such as computers, tablets and mobile phones, the silo-style measurement of media does not provide a true picture of individual consumer media usage. Advertisers and programmers desire a seamless cross-platform measurement at the individual user level.
In 1992, Arbitron launched a passive people metering device for use in their radio measurement business, which might now prove invaluable as an important component in facilitating individual usage measurement across platforms. Once Nielsen ingests Arbitron, there will be no other company in the marketplace able to measure individual age and gender demographics for television in combination across platforms.
Nielsen is not the only company to measure media via a proprietary panel. There are several companies that maintain user panels, including Nielsen Net Ratings online measurement competitor ComScore. Will Nielsen, capitalizing on economies of scale that the Arbitron purchase will provide, squeeze competition through under-pricing or “add ons” for those measurement services with multi-providers?
Perhaps more worrying to some, Nielsen will soon be the only company with a PPM panel, online and television panels and the potential to measure out-of-home, which has been a notable gap in Nielsen’s measurement coverage. Does this create a type of artificial monopoly? Or is there no better alternative to Nielsen?
One executive says: “It’s probably a combination of the two. While Nielsen remains focused on audience measurement, the digital world seems to be moving more toward ad effectiveness. That’s where I think Nielsen may be overtaken. Also, Nielsen’s 'monopolistic' power is really driven by TV; in digital, there is plenty of competition.”
My opinion is that subsuming Arbitron into Nielsen is not good for the media business because it further consolidates measurement power into one single provider. Pro-active innovation thrives in a competitive environment, and the one thing media measurement desperately needs now is innovation. But is the industry ready to pay for it?
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