• by Joe Mandese  @mp_joemandese, June 22, 2006

Frank Maggio, the Florida real estate tycoon who has embarked on a Don Quixote-like quest to unseat Nielsen Media Research as the industry's TV ratings monopoly, was officially anointed Madison Avenue's new research champion on Wednesday during a presentation to what was perhaps his most skeptical audience to date: the industry's leading research minds, including several older war horses who have gone up against Nielsen in the past and failed.

"Philosophically, I think you are a breath of fresh air," beamed one, Gale Metzger, the former president of Statistical Research Inc., and a consultant with Knowledge Networks, who came closer to anyone yet at challenging Nielsen with his SMART TV ratings initiative nearly a decade ago.

But while evidently charmed by Maggio's zeal and enthusiasm for making real changes, Metzger, like other influential attendees, remained dubious about Maggio's chances for success, noting that after decades of attempts to create competition for Nielsen the industry seems resigned to business as usual. "The industry is definitely in a trap," Metzger said, adding that when push comes to shove in the media research business, "Business trumps research."

Sitting within earshot in the audience of the Advertising Research Foundation's Audience Measurement Symposium in New York, another former Nielsen adversary, Norman Hecht was heard to utter a not-so-flattering Yiddish word, which loosely implied that Maggio's approach may be naïve. Hecht, who is now head of Norman Hecht Research, mounted a formidable attempt to dislodge Nielsen's monopoly during the 1980s as head of the failed U.S. operations of AGB Television Research. That battle forced Nielsen to introduce people meters in its national TV ratings sample. Nielsen and AGB, which is now owned by WPP Group, now operate as a joint TV ratings venture in markets outside the U.S.

Another important stakeholder, Bruce Goerlich, research chief at Zenith Optimedia Group, said he welcomed Maggio's push to develop his fledgling erinMedia into an alternative to Nielsen for a variety or reasons, not the least of which was the need for business competition.

Goerlich, who said he spends $10 million annually on media research, sill isn't a big enough customer to command Nielsen's attention. Six months after he agreed to buy commercial TV ratings from Nielsen, he said they finally came to him this week, the day before Nielsen announced their availability beginning this fall, and only after the major broadcast networks signed off on the new data stream.

"I asked for the [commercial ratings data] six months ago," noted Goerlich. "They didn't talk to me. "It was handed to me on a platter because it was what the networks wanted."

Goerlich said he was intrigued by erinMedia's goal of developing a census-based TV ratings system utilizing actual TV usage data derived from cable and satellite digital set-top boxes, but he said he nonetheless had concerns about how representative it would be, and its ability to discern demographic information.

Maggio, who is also a mathematical genius, has maintained that erinMedia has a method for ascribing demographic estimates based on a mathematical formula, but that approach ahs not been vetted by the industry. Maggio, who also announced a plan to divest 50 percent of the profits from erinMedia to cable operators who share their set-top data, also announced that he has hired a former top executive of VNU to run Maggio Media Research, a holding company that includes erinMedia, and future research acquisitions and start-ups. Maggio said he still is interested in acquiring Nielsen in 18 months, when VNU's "no-shop" clause expires, but implied he might not have the financial wherewithal to make the estimated $4 billion purchase, and that it might not be the best use of his funds if he could raise it.

"I am interested. I think I can provide the leadership. I think I can provide the vision."

While clearly charmed by Maggio's presentation, some attendees appeared dubious. "We're past the point of righteous indignation," chided Josh Chasin, a long-time industry executive who is now principal of Warp Speed Marketing.

Maggio acknowledged that he is fighting an uphill battle and working with an especially tough crowd, sharing an anecdote from a meeting he held earlier that day with the worldwide CEO of one of Madison Avenue's top media buying shops.

"It lasted five minutes," he said, noting that minutes into the meeting the executive said, "Now that I've got Nielsen commercial ratings, I don't need anything else." After that, Maggio said he "got up and left."

But as Zenith Optimedia's Goerlich and Knowledge Network's Metzger pointed out, the industry may indeed need something else, even if it is simply competition.

"Nielsen is not accountable to anymore here except the networks," bemoaned Goerlich after sharing his anecdote about Nielsen's TV commercial ratings decision.

Metzger struck an even more ominous note, suggesting that the buyout of Nielsen parent VNU by a group of private equity firms would put even greater pressure on Nielsen to raise its prices and cut its costs to help service the debt of that deal and improve the company's margins.

"I feel the industry is heading into a very very scary direction right now in that regard," warned Metzger, suggesting that Nielsen might "kite" its prices as the entrenched monopoly.

"I don't know how the industry, frankly, is going to protect itself," he concluded.