Nielsen's New TV Universe Will Change Ad Marketplace—In Time

In the ever-changing world of viewing content, media
agencies welcome the news that Nielsen will now be counting some homes
without a traditional TV set. It's an important step that recognizes the
growing percentage of homes watching programs even though they are not
receiving signals via traditional antenna or a cable/satellite/phone company

We've seen the measured Nielsen TV universe decrease from
115.9 million homes, or 98.9% of all U.S. homes in 2011, to 114.2 million homes,
or 95.8%, in 2013. While television is still quite ubiquitous, that low a
penetration rate has not been seen since the early 1970s.

If the new, refined TV universe grows in 2014, which we
anticipate it will slightly, this could lead to slightly less gross rating
points (GRPs) being available in the market. We believe the impact on
the 2013-14 TV ad marketplace would be minimal at best, but growth of
non-connected TV over time could see slightly more impact. We will continue to
monitor the impact on the marketplace as this year's upfront approaches.

Nielsen estimates that about 0.6% of these current "non-TV
homes" would meet the new TV home definition because they can receive video
signals via a computer, Internet-connected TV or gaming device. Tablets and
mobile phones would be added later. These homes were previously bypassed by
Nielsen for the national people meter, but would now be included in the sample.

We feel this figure is actually conservative based on what
we know about video consumption and anticipate it to grow steadily. Nielsen
acknowledging these homes is a great step moving forward as we anticipate the
viewing landscape to continue to fragment across multiple viewing options and

Here's the important thing to know: Video viewing by these
households won't count toward the C3 rating that is the currency of our
business. It will be placed in a separate category for purposes of evaluation.
This will allow us to see where viewing of programs, if not our clients'
commercials, is coming from.

Video suppliers are encouraged by Nielsen (and the
agencies for that matter) to encode their shows so viewing can be captured
by Nielsen's TV meters. This learning could lead to true single source
multiplatform measurement. It's an exciting prospect and ahead of what any of
Nielsen's competitors can currently offer.

Nielsen has been counting some viewing to TV programs via
the Internet since 2011 through its weekly extended screen report. The problem
is that only a handful of cable networks subscribe, and they only ask Nielsen
to rate a few programs which contain the original commercials as they were
telecast. This audience is uncounted by traditional reports and to our
knowledge does not figure in any business transactions.

There will still be limitations, however, with the new
measurement. Viewing to services such as Netflix will not be broken out by
program, which is what we as advertisers would like to see. What will be
available is the share of viewership at any given moment for viewing coming
from these streaming services, as well as devices such as the XBox. 

Down the road, Nielsen is hoping to get services such as
Hulu, Netflix and Amazon to provide this level of detail through encoding, but
for now that is some time away.

Measurement of iPads is also being rolled out slowly. We
probably won't see any representative tablet data until 2014, since iPads have
roughly a 70%-plus share of the tablet market.

Ultimately, we'd like to see how all TV content
is consumed, regardless of ad load, with viewing sources broken out separately,
such as TV, gaming, PC, smartphone, tablet, etc.