Nielsen Decides Not To Venture Into PPM

Nielsen said Wednesday it has decided not to go into business with Arbitron to deploy the Portable People Meter.

Arbitron has had operational oversight of the new system, which is being evaluated in Houston, while Nielsen has invested, by its count, "tens of millions" in the technology but had not committed to joining the venture.

Unlike diaries, which viewers have to fill out, or Local People Meters (LPMs), which viewers have to log in to, the PPMs automatically register radio and TV signals within a given range of the subject.

Nielsen said that rather enter into a joint venture on the Portable People Meter, it would take a "portfolio" approach to TV ratings, combining its LPMs with added measurement of time-shifted viewing and video-on-demand, as well as the expansion of its national sample to include out-of-home viewing by college students.

Nielsen said the decision does not affect Arbitron and Nielsen's joint participation in Project Apollo, a new service to integrate viewership with product-purchasing information.

That service, which is based on Portable People Meters, is intended to give advertisers a better gage of the effectiveness of their ads by relating exposures across multiple platforms to shopping behaviors.

Nielsen said Wednesday that it had also talked to Arbitron about licensing the PPM technology to add to its portfolio, specifically to measure out-of-home viewing.

Arbitron says the split allows them to focus on radio ratings, the PPM's original primary function. When the companies entered into the joint venture in May 2000, "the original vision was to build a system with PPM that does both radio and TV," said Arbitron spokesperson Thom Mocarsky. "We can now go forward and deploy PPM at the pace that radio wants and just for radio."

Arbitron has said that, if Nielsen opted out of the partnership, it would focus the service on radio.  However, there are still some opportunities for TV stations and cable operators to glean information from the passive, portable devices. Should a TV station or cable operator choose to encode its signal, then the PPMs would pick up usage.
Nielsen explained the move in the following letter to clients:

To Our Clients:

At Nielsen Media Research, we believe that television will change more in the next five years than it did in the previous fifty.Digitization, time-shifting, Internet video, mobile media, interactive TV and home networking will soon have a profound impact on the way that television is consumed and that, in turn, will have important implications for the way we measure television viewing.

I am writing today to outline our strategy for addressing these challenges and to let you know why we have decided not to enter into a joint venture with Arbitron to commercially deploy its Portable People Meter (PPM) as a primary ratings currency, even as we consider licensing it to measure television outside the home.

Background

Over the past few years, Nielsen has moved aggressively to address the evolving needs of the television and advertising industries.During this last 12 months alone we have:

• Begun to measure DVR viewing
• Finalized plans to begin measuring Video On Demand this spring
• Completed the introduction of Local People Meters in nine of the top ten local markets
• Announced plans for measuring students in the national sample living at college – the first time we have measured family members living outside the home.

We understand, though, that we need to build on these achievements and accelerate our efforts to measure all forms of television.We have been consulting with television and advertising clients on how Nielsen can work more closely with both constituencies to deliver the most accurate and complete measurement of television viewing.As part of this extensive consultation process, we asked our clients to identify their top priorities and discussed the actions necessary to satisfy their needs.It is clear from those conversations that our clients are changing the way they do business and they need Nielsen to keep pace with them.

Over and over during these discussions, clients have told us that we need to “follow the video.” In other words, Nielsen must be prepared to measure ad-supported television no matter what platform it is viewed on and track the source of distribution.

After absorbing a wide variety of opinions from our clients, we have come to the following conclusions about what our priorities should be in developing a television measurement strategy for the 21st Century:

1. We believe that the new Active/Passive (A/P) Meter remains the foundation for measuring viewing on the home television set.It is not only the most accurate meter for traditional television viewing, it is also the best way to measure new forms of digital viewing including DVR and VOD usage.

1. We are committed to bringing more electronic measurement to our local market services -- both by adding electronic persons measurement to existing Set Meter markets, by converting larger Diary-only markets to electronic measurement, and by integrating set top box data.

1. It is clear that people are increasingly viewing television outside the home.This viewing includes more than traditional out-of-home viewing in the workplace and other people’s homes.It also includes video on mobile media such as iPods and cell phones that will require different metering solutions.Going forward, Nielsen clearly needs to follow a plan that includes measuring these media.

1. Clients have strongly articulated that, more than any other combination of media, it is critically important that we bring together television and Internet measurement, thereby breaking down silos of different audience measurement services.This will be one of our top goals.

Developing a New Metering Strategy

These are ambitious but necessary priorities.Implementing them will require considerable additional consultation with clients on the best solutions and a commitment on Nielsen’s part to invest significant resources in the development or adaptation of new or existing technologies.We are prepared to make those commitments and will communicate a plan for addressing each of these priorities within 90 days.

And while it is too early to lay out in detail what our ultimate strategy will be, it is not too early to discuss some of the ideas that are at the core of our thinking.

1. To increase the amount of electronic measurement at the local level, our options include expanding the current Local People Meter rollout into more markets, developing more affordable versions of the A/P Metering system for small Set Meter markets, and developing a battery operated, mailable meter for many existing Diary markets.

1. To measure viewing outside the home, we will be able to draw upon an array of new technologies that can record and interpret audio signatures.At the same time, we will be evaluating several different methodological approaches, including whether to set up separate panels for each new measurement or to ask existing sample households also to measure viewing beyond the traditional television.We are also prepared to discuss further with Arbitron the role the PPM might play in measuring out-of-home viewing.

1. To measure mobile viewing, we will continue developing various potential solutions. This may involve software metering developed several years ago that can take advantage of the existing capabilities of these devices, such as data backhaul path, microprocessor and memory.

1. To measure viewing on the Internet, we again have several different options to discuss with clients, including the possibility of installing NielsenNetRatings meters in existing Nielsen television sample households or to continue with separate measurement services but integrate their information.

Arbitron’s Portable People Meter

As you know, for the past five years, Nielsen has been evaluating whether to enter into a joint venture with Arbitron to commercially deploy its Portable People Meter.During that time, we have spent millions of dollars and countless research hours trying to determine whether the PPM is the right approach for measuring both in-home and out-of-home television viewing.

As you can see from the attached press release, we have decided not to proceed with the joint venture.While we recognize the appeal of a portable, single source measurement tool, we believe the “one size fits all” approach of relying upon PPM for in-home and out-of-home television measurement, as well as for radio measurement, is unworkable to provide a currency for today’s complex television markets.

But television is a different medium and the PPM was, of course, originally developed in the early 1990’s to measure radio audiences.And it may indeed offer many advantages – for radio measurement. Since the early 1990s, there have been considerable advances in engineering, software and metering technology that we believe create more attractive alternatives for television measurement than the PPM. There have, of course, also been dramatic changes in how viewers consume television.

After more than five years of evaluating, testing and investing in the PPM system, in an environment of explosive change in TV technology and services, Nielsen reached the following opinions about the system:

1. Because the PPM was originally designed to measure radio, its new exposure-based definition of “audience” resulted in large and still unexplained increases in television viewership. Based on our experience, we believe that the marketplace will require a clearer explanation for such increases than has been provided to date.

1. In Nielsen’s opinion, the PPM system is not an affordable option for television audience measurement, either for Nielsen or its clients. The system was initially designed to use low-cost telephone recruitment with minimal coaching.However, based on field tests, Nielsen believes that most of the homes would need to be recruited in person by costlier field representatives, while the incentive payments needed to keep people in the panel would be more expensive than originally anticipated.  Cost sharing under the joint venture would require the television industry to bear a greater percentage of currently forecasted costs, and the future costs to enhance quality, thereby subsidizing radio.

1. Nielsen also considered issues regarding sample quality, including “differential fault rates,” response rates and sample characteristics that we believe to be incompatible with the needs for television research.

1. It is unclear what level of support the PPM has among television broadcasters. Questions remain as to whether major client groups will support it and encode their programming for PPM service.

Project Apollo

Nielsen’s decision not to enter into a joint venture with Arbitron to commercially deploy the PPM as a currency for television will not affect its collaboration with Arbitron on “Project Apollo,” a national marketing research service which would collect multi-media and purchase information from a common sample of consumers.

While Nielsen’s opinion is that the PPM does not satisfy the needs of a currency for television audience measurement – based on the high quality thresholds demanded of a currency service by both buyers and sellers in the television marketplace – we also believe PPM has useful applications for marketing research.

As you know, Arbitron and VNU (Nielsen’s parent company) have jointly deployed a pilot panel as a demonstration for a potential “Project Apollo” service.Individuals in the panel would carry a PPM to detect exposure to media, while the same individuals’ product purchasing would be tracked by ACNielsen’s Homescan technology.

Conclusion

Technologies, when thoroughly tested and correctly applied, can create exciting new television measurement solutions.But only by working together can we achieve those goals. Our industry is well positioned to evaluate and act on the effects of so many dynamic forces that are revolutionizing the marketplace.Nielsen has taken the first steps in bringing measurement solutions to the table.Now it’s up to all of us to evaluate these systems so that they may deliver measurement services of increasing value.

We look forward to hearing from you.