Nielsen plans to upgrade local TV ratings starting in 2013 in 20 initial markets using watermark code-readers and set-top box data from operators including DirecTV and Charter Communications.
With the enhanced measurement techniques, Nielsen Local Audience Ratings will quadruple the effective sample size in Local People Meter and "set metered" markets and double effective sample size in paper-based diary markets, according to the company.
Nielsen's moves to improve the accuracy of its local ratings come after it has been challenged by Rentrak, which has launched a research service based on set-top data aimed at local markets.
Nielsen said the new program will provide broadcast TV stations and local cable with "more granular and stable data" for both programming and ad sales. The larger sample sizes also will result in a significant reduction in ratings variability and "zero rated" periods, according to the company.
"Our clients' priorities are clear: improved ratings stability and cross-platform measurement," Matt O'Grady, Nielsen executive vice president and managing director of Local Media, said in a statement. "Nielsen will dramatically increase sample sizes while maintaining the critical principle of market representation."
Nielsen plans to increase the sample sizes by using a hybrid measurement methodology that combines existing panels, new proprietary watermark-measurement technology -- currently referred to as the Nielsen Code Reader -- and return-path data from set-tops.
Starting in the fourth quarter of 2012, Nielsen Code Reader installation will begin in three Local People Meter markets: St. Louis, Dallas, and Charlotte, N.C. Those will be followed by five Set Meter markets: Nashville, Tenn.; Greenville, S.C.; Birmingham, Ala.; Albuquerque, N.M.; and New Orleans. Nielsen will announce the 12 initial Diary markets at a later date.
Nielsen said preliminary data will become available for the 20 introductory markets in 2013, beginning with the Local People Meter markets. All markets will have a parallel period of three to six months to evaluate, comment and prepare for the new ratings while using the existing service.
Rollouts across the 190 remaining markets are expected to be completed within approximately two years of gaining client acceptance in the introductory markets.
In 2010, Nielsen ran a test to incorporate set-top data collected in July 2010 in three Charter markets: St. Louis, where Nielsen offers its Local People Meter service; Greenville, S.C., where it uses set meters; and Reno, Nev., where it collects ratings data via paper diaries. With the additional data, Nielsen was able to eliminate between 50% and 90% of the variability for ratings in a diary market.
Last year Nielsen struck a multiyear deal with WPP's Kantar Media to incorporate set-top data from about 100,000 DirecTV households into local TV ratings.
"With the local market becoming more fragmented, and the need for representative measurement still important, we fully support projectable increased sample sizes in local markets," Brad Adgate, senior vice president and Director of Research at Horizon Media, said in a statement. "Nielsen's unique new metering technology, the code reader, shows true promise and will be a more reliable form of data collection than the current state of return path data, which has certain limitations in measuring viewers."
Added Jim Babb, executive vice president and chief operating officer for Bahakel Communications, which owns five TV stations including WCCB (Fox) in Charlotte: "We are encouraged that Nielsen has announced its hybrid measurement improvements that hold the promise of an enhanced service. We believe that the substantial sample size increase anticipated will be a big improvement for stabilizing ratings."
The enhanced local TV ratings initiative also will lay the groundwork for local online, tablet and mobile cross-platform measurement and integrated media/purchase analytics, Nielsen said.
Nielsen said it has developed plans to use the set-top data through an extensive client-review process. The company has presented its Local Audience Ratings plan to the Media Ratings Council (MRC) and is working closely with the MRC to meet the standards set by the industry.
"The new 'code reader' combined with set-top-box return path data are a promising strategy for increasing sample sizes," Bahakel's Babb said. "We're pleased that Nielsen is taking the initiative both to improve its legacy TV ratings service while also investing in timely preparation for an emerging cross-platform media environment ahead."
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