Friday, September 23, 2011

Nielsen Discloses Major Ratings "Glitch"

Nielsen has admitted that much of the data it has been reporting for most of the last year has been incorrect.  Nielsen attributed the errors to a "glitch" that has been generating incorrect estimates for a range of measures, including GRPs (Gross Ratings Points), and the reach and frequency estimates used as a basis for most TV advertising plans.  Nielsen thinks the problem began when it implemented a new method for calculating average audience measures, resulting in incorrect data being sent out beginning on Feb. 1, 2011.  However, an investigation is still ongoing and no specific problem has been identified or fixed.
From the industry perspective, this is certainly embarrassing for Nielsen, particularly as they are trying to sell an already skeptical industry on a new Internet ratings system, and touting their system as following their "high standards of accuracy and reliability" in TV ratings. Particularly following last year's major glitch when the ratings calculations failed to include a significant portion of viewing data by forgetting to link to the location where the data was being collected and stored.
But the potential impact is likely to go well beyond embarrassment.  The measures that Nielsen is acknowledging as probably incorrect are precisely those used to make buys and set prices in the national TV advertising marketplace.  Those measures are widely used to set advertising rates.  Further, with the historic volatility of TV viewing, ad buy deals are increasingly incorporating guarantees of audience reach.  As Nielsen is suggesting that the glitch "overestimated" audience, it means that advertisers paid too much for many buys, and that networks are likely to have to make good on many more audience guarantees.  Because the size of the error is unknown, it's not clear at this moment what the eventual cost of the glitch will be.  One thing that seems clear, though, is that neither the advertising industry or TV networks are likely to want to cover the cost of Nielsen's errors themselves.  It should make for some interesting and volatile transactions for a while.

Source -  Nielsen Discloses Major TV Ratings Glitch, Could Impact Millions in TV Ad BuysMediaDailyNews

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