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Tuesday, 16 September 2014

Competition? What competition?

If David Calhoun sees much in the way of threats to Nielsen’s position as the world’s largest media research company, he certainly isn’t showing it. Google, ComScore and Rentrak – none of them pose a challenge, the CEO suggested in a conference call today.

Unlike the survey research industry, where a significant number are clearly worried about the threat posed by Google’s new Consumer Surveys tool, Calhoun dismissed Google’s recently launched Brand Activate initiative as nothing more than “captive measurement”.

For the uninitiated, Brand Activate is Google’s effort to improve the measurement of ads that run on its display network. The company says it wants to tell advertisers not only whether an ad has been served or clicked on, as it currently does, but whether it was actually viewed.

“This market is loaded with captive measurements,” says Calhoun. “Everyone who has a major publishing business, they are going to try and build a metric that supports their business”

There’s two prongs to the initiative (or three, if you count Consumer Surveys, which is also part of Google’s ambition to “fuel the insights engine”, as industry director Brian Zeug puts it). The first is ‘Active View’, which measures the percentage of an ad seen by a web user and for how long. And then there is Active GRP, which is meant to provide a measure of audience reach that is comparable to TV.

Analysts today wondered whether Google’s online GRP ambitions put it on a collision course with Nielsen, which is delivering its own online GRP metric through the Online Campaign Ratings service. Calhoun, though, doesn’t see it as a direct threat.

“This market is loaded with captive measurements,” he said. “Everyone who has a major publishing business, they are going to try and build a metric that supports their business.” Nielsen, being a third party, focuses on building solutions for all publishers and all forms of content, Calhoun said.

As captive metrics develop, Calhoun suggests there might be ways for Nielsen to use them to augment its own metrics. “But I don’t think about it as a direct threat,” he said.

Besides, Online Campaign Ratings (OCR) is gaining traction in the marketplace. Unilever is using it to measure its US advertising, while AOL is using it as the basis of its advertiser audience guarantee. “I didn’t expect that [sort of deal] to happen this year,” Calhoun said, referencing the AOL agreement. Clearly, it’s a positive step towards aligning the industry around OCR and the numbers look promising – 750 campaigns, 50 advertiser and agencies involved, and 60 publishers and ad networks. OCR doesn’t appear to be generating any meaningful revenue yet. “But we’re being deliberately patient with this,” Calhoun said.

Later, he was asked whether the Validated Campaign Essentials (VCE) product, developed by rival ComScore, was becoming more competitive with OCR. “No,” was the response, though Calhoun conceded that VCE had “a viewability [measurement] advantage” for a couple of months (it measures whether internet users had a chance to see the digital ads delivered to their computers).

And Rentrak? It wasn’t mentioned by name, but the TV set-top box data firm is developing a decent customer base among local market broadcasters by boasting a level of data granularity that Nielsen can’t hope to match using its panel-based measurement approach. Calhoun acknowledged that local markets are where “set-top box has taken effect”, though he reckons most of the progress so far has been on the sell-side – that is, media owners rather than advertisers or media buyers.

“We love set-top box data and will incorporate it into our metrics for local data because it will improve stability,” Calhoun said. “But as a standalone, we do not believe it meets the test. We don’t believe that [set-top box data alone] will ever be an accredited form of measurement.”

In sum: “I feel very good about the business,” said Calhoun. Click here for Nielsen’s first quarter results.

  • Is David Calhoun right to be feeling so bullish? Tell us in the comments thread below.

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Readers' comments (4)

  • Nielsen uses solely Facebook data for OCR audience ratings. Isn't that a "captive measurement" as defined by Mr. Calhoun above? The pot calling the kettle black...

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  • Nielsen with its debt appears to be part of the bigger problem we've all become so painfully aware of. The global finance and the way of operating where we spend more than we can afford.

    I think there are a lot of players out there with cleaner books and more innovative products. There is a whole generation of entrepreneurs coming out of schools as we speak. They wake up every morning to go to war against enemies like Nielsen. They have nothing to defend, nothing to lose and everything to gain.

    All that should start to matter at some stage. The thing about ivory towers is that they always end up coming down.

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  • Brian Tarran

    @Anonymous –

    You are correct about the FB data, although Calhoun did say:

    "We do have at last one other significant publisher that has embarked on the [OCR] roadmap."

    But he wouldn't name names at this stage

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  • I guess this is pretty much what the CEO has to say at this stage, particularly around earning time.

    But from a certain standpoint, it does look rather as if he should be worried - very worried. Nielsen has lost a few important online measurement contracts in the last year (UKOM for one), and is being squeezed both by Gemius in Eastern Europe and comScore elsewhere.

    On top of that, its TV panel data in the US is starting to see some of its brand value being eroded (as you allude in the article), and we as researchers know only too well the effect that commodity surveying and qual tools are having on big research houses' bottom lines.

    All in all, Calhoun *should* be rather worried; my guess fwiw is that privately he is.

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