Media Rating Council says Nielsen underestimated ratings data — again
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This follows an announcement by MRC in May 2021 that its own research and simulations showed that Nielsen had underestimated viewership during 2020 when the U.S. was embroiled in the coronavirus pandemic.
MRC says it looked at 56 local metered markets in its latest simulations and estimates that, on average, data is off by about 2.5%, with a range of 1% to as high as 5%.
Data showed that smaller markets were largely affected more by the under estimation.
The television industry has been hit hard by significant reductions in advertising by some industries and companies that cut back on expenses as a result of the coronavirus pandemic and its resulting shutdowns.
Meanwhile, other industries saw spikes in advertising, but general trends show advertising revenue for broadcasters, particularly linear ones, was down in 2020.
Nielsen provides customers, including local TV stations, with ratings data that it estimates based on a variety of data sources.
These can include so called “meters” that are attached to TVs in select homes and record what is being watched and, in some cases, the age and gender of the person watching. Nielsen also relies on return path data and even paper diaries that select families use to manually record what they watch.
Of course, many of these methodologies are subject to sampling and other statistical errors, so ratings issued by Nielsen are almost always just estimates.
Customers who subscribe to Nielsen data can then use this data to determine advertising rates, so TV ratings can have a significant impact on how much stations and networks can charge for advertising, since, unlike digital ads, it’s not always possible to determine exactly how many people are watching particular content.
Broadcasters are sometimes obligated to provide advertisers with credits if a particular show or campaign ends up getting less viewers than anticipated in the original advertising agreement, but if audiences come in higher than expected, advertisers typically aren’t charged more.
The MRC data is also, notably, just estimates based on statistical modeling and other methodologies.
It’s not clear how the underreporting claimed by MRC would affect the industry, if at all, especially when the industry is already in the middle of disruption from digital and streaming advertising that can be targeted and tracked more accurately.
Many advertisers may have been charged lower than list rates to encourage ad buys during the pandemic — with sales execs anticipating a downturn in the economy and, by extension, advertising expenditures.
These types of pricing strategies could have helped preserve at least some advertising revenue for networks and stations that it might have lost entirely if the price had been higher.