• by Frank S. Foster , May 5, 2008

Last week it was announced by both TNS and GfK that the companies were seriously considering a merger to better compete in the global research marketplace, with a unitary board and TNS' David Lowden as the CEO. If the two companies were to get together, what might it mean for television audience research in the United States? As someone who has worked closely with executives from both companies in the past year, I think the prospect is enticing for three reasons:

1. GfK executives understand the power of very large data sets.

2. TNS has extensive television panel experience and arguably more set-top-box data experience than any company still competing in the domestic television audience measurement business.

3. In the television audience measurement arena, neither company has significant legacy revenue streams to protect, and could therefore embrace a new approach to audience measurement.

In December of 2007, GfK restructured into three divisions. Interestingly, the company appeared to align itself based on how data was obtained: (a) data collected from consumers or specific target groups describes the Custom Research Division; (b) data collected from the point of sale defines the Retail and Technology Division; and (c) data collected from the point where consumption is measured feeds the Media Division.

Dr. Gérard Hermet is responsible for the Retail and Technology group. I spent time with Dr. Hermet last fall, and he clearly understands what tremendous gains can be made in the area of television audience measurement with set-top-box data.

Amy Heller, president USA, media-control, GfK International, manages the domestic forecasting and reporting business for the entertainment, video game and music industries. As a Paramount and Viacom alum, Heller recognizes the potential for new data sets to transform how studios run their businesses.

In March of 2008, TNS created a new entity called TNS Media, which combined the North American operating units TNS Media Intelligence and TNS Media Research along with newly-acquired companies Compete and Cymfony under one business unit. Dean DeBiase was appointed CEO of TNS Media. A new media industry veteran, DeBiase has an extensive background running Internet, media and digital services businesses. TNS appears to be betting that he can take the company to the next level of scale and market leadership. Complementing the new hire is the chief operator officer of TNS' Media Research operating unit, George Shababb. With a long history in the media research industry, Shababb and his group appreciate the tactical and strategic research needs of media buyers and media sellers on Madison Avenue. They have inked agreements with data suppliers such as DirecTV, Charter, and Time Warner's Oceanic as well as agencies such as Starcom. Couple DeBiase's technology and new media experience with Shababb's research industry background -- and TNS should be well positioned to bring innovative solutions to the domestic television audience measurement space.

But GfK and TNS together should be able to bring something extra to the table. With the financial support of the new entity and a firm commitment to the U.S. market, could George Shababb deliver a next-generation interface to supplant InfoSys? Could next-generation media planning systems be far behind? GfK's association with academic institutions is well known. Might the two companies return quality and accountability to television audience research? Dare we envision an association with Columbia, Stanford, or Northwestern, where the goal would be to develop new analytics complete with error margins and confidence intervals? GfK's academic weight would undoubtedly support a mathematical approach to demographics and offer an alternative to error- and bias-prone small panels as the one source for demographic attribution.

Not too long ago, the currency for the music industry was Billboard's airplay charts. Billboard's employees managed BDS airplay data as well as "call in" charts from radio stations to produce estimates of the most popular music in the country. In the early 1990s, Mike Fine and Mike Shalett had a better idea and Soundscan was born. Soundscan collected point of sale data from retailers and proved what many had suspected for years -- that Billboard's estimates were unreliable, error-prone and susceptible to fraud. Billboard eliminated the potentially embarrassing situation by purchasing Soundscan in 1991.

Suppose for a moment that set-to- box-based ratings were to differ dramatically from ratings based on small, recruited panels. As the incumbent research provider, Nielsen would be faced with a very difficult transition to the new data source. Clients would certainly question whether the purveyor of the "gold standard" had always known its research was flawed, especially given the fact the Nielsen Company owns Billboard and Nielsen Soundscan. With that as a backdrop, it is easy to see why many in the industry are skeptical when Nielsen dismisses set-top-box data as "supplemental," "insufficient," or "unreliable."

GfK-TNS would not have to deal with those issues. It could let research quality drive its product decisions. Without a significant legacy business the new company could choose the most accurate and reliable data source without having to deal with infuriated bean counters, sales executives and public relations people.

Although the prospects may be appealing, the announcement of a union is probably a bit premature. In addition to regulatory approval, the proposed merger must survive inevitable attacks by both Nielsen and WPP. I would expect Nielsen to announce a competing bid to buy GfK (or perhaps even TNS) before the end of the week. By the time you read this, a proposed WPP Kantar offer for TNS may have already been rejected. If unsuccessful on the acquisition front, do not be surprised if (of all people) Nielsen turns around with an antitrust claim.

Wouldn't that be ironic?