In the end, all those Nielsen rivals failed to capture any appreciable market share for a variety of reasons. Some people cite their costs, but I think the main reason is that people simply
don’t like complexity. And having more than one currency in a marketplace creates confusion. That was the problem when Nielsen and Arbitron competed in the local TV measurement business decades
ago. It created friction between agencies and stations trying to do business when one or the other was either a “Nielsen” or an “Arbitron” shop.
A similar situation has been playing out in the digital audience measurement marketplace, where comScore was the clear currency, but where Nielsen has begun to make serious inroads -- largely, I believe, because of the complexity issue. Some people would like a simple way of hooking TV and digital audience estimates together, and Nielsen’s OXR -- and soon its mobile ratings -- are the best means of doing that, because Nielsen also owns the TV industry’s ratings currency.
At least in most markets. Unless Nielsen pulls some rabbit ears out of its hat, it looks like it won’t be the absolute currency in at least 18 major TV markets where Fox owns and operates TV stations. As of tonight, the Fox stations’ contract with Nielsen expires, and the stations will do business with national and local advertisers on the basis of Rentrak’s ratings.
How long that competitive dynamic will remain, I can’t say. But if history is any lesson, it may not be for long before Nielsen either caves on the economic terms of its negotiations, or capitulates on the methodological ones. Because the one thing history has proven, is that the only time Nielsen makes big concessions is when it faces a big competitive threat. Competition is what pushed it to embrace people meters, passive measurement techniques -- and begrudgingly, the kind of digital set-top data Rentrak and others are basing their business on. I say begrudgingly, because Nielsen hasn’t actually put a commercialized version of such a service into the market, partly because doing so would effectively level the playing field with other digital set-top-based audience estimators.
Don’t get me wrong. I’m not saying Nielsen doesn't innovate. I believe its research organization is committed to producing the best possible estimates it can within the framework it's dealt. I just think economics and other considerations are even stronger forces. Think about it, to Fox’s last big campaign against Nielsen: the one that culminated in hearings before Congress, to get Nielsen to address the under-representation of minority households in its ratings sample. So far, we’re not seeing Fox play that kind of hardball. Maybe because the company genuinely feels it doesn't have to, because the market will simply accept Rentrak estimates as an alternative form of currency. If that’s true, it's a far more serious threat to Nielsen -- and the thesis of this column may be entirely wrong.