Jack Myers' Weekend Think Tank: Is Nielsen Preventing Research Innovation?

The single biggest problem confronting the television business today is not new media technologies, on-demand viewing or commercial avoidance. It is the dramatic and exponential increase in budgets that media companies are agreeing to invest in Nielsen data with absolutely no indication they will generate any return on these added investments. They are agreeing to spend more on Nielsen out of habit and a misguided belief they have no choice.

What are the fundamental goals of television companies and agencies today? Is it to further quantify the mass audience delivery of media that is no longer mass? Or is it to answer the age-old dilemma that marketers have voiced forever: they simply don't know what advertising works, and what doesn't work.

For the past five decades in the television industry, the focus of audience measurement has been almost exclusively on quantitative census taking--how many people are exposed to a commercial--narrowed by age and gender characteristics. In a mass media business model, size is all that counts.

Now we are engaged in a transformation to new business models dependent less on audience size than on consumer involvement with media content, responsiveness to advertising messages, co-viewing patterns, and willingness to spend money to consume media on-demand. Traditional research models that focus on audience size simply do not serve all of a marketer's or media seller's needs as new models emerge.

The basic currency of the television industry, Nielsen ratings, will remain an essential requirement for traditional media buying and selling into the foreseeable future. But the key question for those who fund Nielsen research is whether they should be increasing or decreasing their dependence on Nielsen. Will commercial minute ratings, second-by-second ratings, and live plus three or live plus seven ratings data really advance the business, or drown it in irrelevant data?

In his important book Technopoly: The Surrender of Culture to Technology, the late NYU professor Neil Postman wrote that "statistics create an enormous amount of completely useless information, which compounds the always difficult task of locating that which is useful... This is more than 'information overload.' It is a matter of 'information trivia.'"

We're an industry obsessed with information trivia.

Any media brand that hopes to move away from the traditional supply/demand chain and generate incremental value for its relationships with viewers will require new currencies that focus less on total audience size and more on the quality of its relationships with audiences, and its ability to transfer those relationships to advertisers. While this issue is really not debatable, problems arise when research budgets are stretched beyond their limits just to create more information trivia.

If 90% of a television network's business today is dependent on traditional mass business models and 10% on emerging "relationship-based" business models, and the goal for 2012 is perhaps 50% traditional and 50% relationship, then the research budget should go immediately from 70% committed to fund Nielsen ratings to 50% Nielsen, in order to fund research investments that support and advance new business models. In reality, the percentage breakdown of a television network's research budget is moving in exactly the opposite direction. Credit Nielsen for smart and clever management. Fault the networks and agencies for falling into a trap.

Postman said, "Information has become a form of garbage, not only incapable of answering the most fundamental questions, but barely useful for providing coherent direction to simple needs. The tie between information and human purpose has been severed."

Nowhere is this truer than in the advertising business, where devotion to information trivia will continue to keep marketers in the dark about the true value of their advertising spending.