Rentrak-comScore Combo Turns Up Heat on Nielsen

TV’s massive measurement mess has a new clean-up crew. ComScore and Rentrak, the Nos. 2 and 3 companies in the measurement sector, last week agreed to merge and create a company that thinks it’s capable of finally cracking the code on cross-platform ratings.

With each company a leader in measuring separate parts of the media business, the comScore-Rentrak combination would represent the most formidable competitor Nielsen, the dominant measurement company—and long-time industry whipping boy—has faced in decades.

The deal was announced during Advertising Week, the annual hurdy-gurdy of brands, tech execs and agency troops held in midtown Manhattan. Executives including Linda Yaccarino, chairman of ad sales and client partnership for NBCUniversal, used the word “crisis” to describe the measurement issue.

Similarly charged rhetoric came from the ratings companies themselves. On the same day the deal was made public, Nielsen global president Steve Hasker spoke on an Advertising Week panel that also featured Rentrak CEO Bill Livek and comScore president and CEO Serge Matta. The conversation quickly grew tense.

Livek objected to Nielsen’s posture that it is the “currency” of the media buying realm. “We live in a world of a basket of currencies,” he said. “We have the dollar. We have the pound. We have the euro. They function together. You’re not the only currency. Please.”

Responded Hasker, “The dollar and the pound talk to each other.” Livek: “We should too.”

Cross-media ratings, which Nielsen promises to roll out by year-end, are crucial as more viewing is done on an array of devices, particularly mobile gadgets like tablets and smartphones. At present they are either not measured or included in the ratings currencies used now to determine advertising rates. As they say in the ad business, if you can’t measure it, you can’t sell it. And without a robust advertising business, television as we know it becomes an endangered species.

TV advertising growth has been flat this year because traditional ratings have been eroding and marketing dollars are following eyeballs to the forms of digital media. Advertisers like digital media because they feel they get lots of information about who is watching and how they react to ads. But they’re also finding that the digital media is fraught with ad blockers, robots, viewability issues and other problems that need to be addressed.

Philippe Dauman, CEO of Viacom, which has seen its ad revenue fall as more of its young viewers watch on digital devices, regularly cites inadequate measurement as a culprit. Viacom is looking to reduce its reliance on ad revenue based on Nielsen measurements to 50% and has been one of the media companies most aggressively creating products using other data to target viewer for marketers.

Ad agency giant WPP is a major shareholder in both comScore and Rentrak. In August WPP CEO Martin Sorrell said “we very much would welcome them coming together.” After the transaction was announced, Sorrell called the new entity “an ideal combination to deal with the off-line and online measurement issues our clients and both legacy and new media owners face.”

In announcing its marriage to Rentrak, comScore’s Matta said, “Together we have an even more powerful ability to deliver what our clients and the media industry have long been asking for: a comprehensive cross-platform measurement currency that accounts for all the ways in which content is consumed.”

Hasker, at the Ad Week panel, promised that the company’s “total audience measurement” offering would be “about as far from Frankenmetrics as you can get.” Nielsen also announced a deal with CBS in which, for the first time viewers watching live CBS programming via the CBS All Access over-the-top subscription streaming service would be included in ratings for those shows, an announcement that appeared be a big step towards cross-platform measurement.

CBS’ long-time head of research David Poltrack said that while CBS All-Access is a small part of viewership now, it is going to become significant.

Poltrack noted that CBS and Nielsen have teamed up for decades. But the trick to getting ratings for mobile viewing, he said, is embedding measurement software in the app. “After a bit of an early struggle, Nielsen finally solved that problem,” he said. “The great news is once you’ve solved it, it’s pretty well solved forever.”

CBS often talks about how despite ratings being lower, its programing is being viewed by more people than ever. “There’s an impression out there that millennials don’t watch television,” says Poltrack. “We know they’re watching our programs with a great deal of enthusiasm and they’re doing it as well as in the traditional ways they’re doing it through mobile phones and tablets and all these new forms of viewing and we need to capture that.” But in order for TV to have a robust advertising business, measurement that counts the house won’t be enough. “The relevant measures are actually measuring the results for the advertisers,” Poltrack says. “Five years from now the idea that people were buying media based on adult 18 to 49 viewer counts is going to see archaic.”

Media buyers also want better metrics for TV. Kate Sirkin, executive VP of global research for Starcom MediaVest Group, figures that for certain shows, certain time periods and certain genres, was much of 50% of viewing isn’t being counted. “As we look to our kids’ behavior and teens’ behavior [the measurement system] is pretty much broken for them unless we have full cross-screen measurement.”

“It’s urgent,” says Jed Meyer, global director of research and analytics at Annalect, part of the Omnicom Media Group. “We’re all trying to understand the consumer landscape and the media behavior and the measurement’s not there yet. And the pace of change is so rapid that literally it’s month by month with technology innovations and we’re still dealing with a fairly antiquated methodology that does not fi t in today’s fragmented media environment.” Meyer, a former Nielsen executive, thinks that having the comScore-Rentrak combination compete with Nielsen will be good for the industry.

“I think there could be room for more than one provider here. And I think if history is any guide, Nielsen responds better and innovates more when they have a competitor,” Meyer says. “The biggest thing I’m hope for is this will spur innovation and progress in the marketplace because if it does that then we all benefit. Those companies that merged benefit. Nielsen can benefit from the point of bringing better products to market.”

“Competition is always good,” adds CBS’ Poltrack, who acknowledges that supporting two competitors will be a challenge for the industry. “If they both solve the problems and find the ideal system and they both then switch to the ideal system that means they’ll both give you the same exact numbers, which means there’s no need to buy both,” he says. “What you’re looking for is a case where both services have a solid base and each one offers a unique benefit. I believe it will get better.”

Wall Street analysts don’t see the deal threatening Nielsen long-term. One concern among media veterans: WPP’s influence over the new ratings company.

“I wish they weren’t partly owned by one of the big players in the buy-sell transaction. I would prefer they were truly independent,” said Meyer of Omnicom, which competes with WPP.

CBS’s Poltrak agreed, but added there was an upside. “You’d rather have an owner that’s involved in the process and has a vested interest in making advertising on television work as effectively as possible and across the digital assets as well than someone who’s just in it for a pure profit motive.”

But analysts who follow the measurement business don’t see these competitors as equals. If anyone is due to lead the industry out of the wilderness, they say, it will be the better-capitalized Nielsen.

“We believe the industry is looking for a better/best measurement solution to its audience crisis. We don't believe the industry will find that from comScore/Rentrak—not even close,” said Todd Juenger of Sanford C. Bernstein.

Tom Eagan of the Telsey Group said media programmers would wind up the biggest beneficiary of the merger. “With proliferating viewership across desktop, mobile and on-demand platforms, ratings will continue to decline,” he said. “The comScore-Rentrak deal will guarantee an improved cross-platform metric which should serve to reverse the concern over lost viewers.”

The newly fortified player “will undoubtedly continue to grow, but not necessarily at Nielsen’s expense,” said Brian Wieser of Pivotal Research. “Third-party measurement companies could continue to find traction in the space without harming Nielsen longer-term.”

Jon Lafayette

Jon has been business editor of Broadcasting+Cable since 2010. He focuses on revenue-generating activities, including advertising and distribution, as well as executive intrigue and merger and acquisition activity. Just about any story is fair game, if a dollar sign can make its way into the article. Before B+C, Jon covered the industry for TVWeek, Cable World, Electronic Media, Advertising Age and The New York Post. A native New Yorker, Jon is hiding in plain sight in the suburbs of Chicago.