Nielsen is the leading global information and measurement company that birthed market research, “Nielsen ratings”, the “people meter”, and the concept of “market share”; Rentrak is Nielsen’s greatest and latest competitor. One thing on an advertiser’s mind today is, should we be considering trading in Nielsen’s services for Rentrak’s?
Nielsen was founded in 1923 by Arthur C. Nielsen, and his vision for his company was selling engineering performance surveys. Eight years later, Nielsen acquired the Audimeter, the device that told what radio stations listeners had tuned into during the day. Four years later, the national radio rating service was born. And now, Nielsen has been measuring both radio and television consumption since the dawn of TV. The Nielsen audience measuring system we use today works like this: devices attached to the TV record what is being watched, and in smaller sample homes, viewers fill out a diary of what they watch on TV. This data from the device and diaries allows for estimating the number of Americans watching TV as well as the demographic make-up of the audience.
Rentrak was founded in 1977 by Ron Berger, but his company started as a national video chain called National Video. His vision for National Video was to provide a system to allow studios and retailers to lease movie titles, or “rent movies”, rather than purchasing them. Ten years later, the rivalry between National Video and Blockbuster Video pushed National Video in another direction and Berger changed the name to Rentrak (think Rental Tracking). In 2009, Rentrak was the sole provider of global box office ticket sales information for studios and business and entertainment forecasters. A short time later, Rentrak acquired a local TV measurement service. Today, Rentrak has a product that measures overall daily media consumption and audience behaviors across all channels: box office, DVD, download, etc. The Rentrak television audience measuring system works like this: Rentrak measures audiences through set-top-boxes so viewers are counted by just turning on their TV. Rentrak’s TV Essentials service tracks data from set-top-boxes (STBs) in AT&T U-verse, DISH Network, and Charter Communications households. This model can be thought of as “passive participation” as opposed to Nielsen’s “active participation.
• Whose ratings are more accurate? While Rentrak shows a more stable view of TV usage, it does have some limitations:
o It does not collect demographic data, the jurisdiction behind all media plans.
o The data is only collected from satellite homes, yet the satellite homes are still representative of non-cable and non-satellite homes (however non-cable and non-satellite homes only make up about 10% of total households.)
Nielsen’s methods to providing ratings bring up these concerns:
o The larger markets don’t have equal meter placement, a major concern as mentioned in this article http://www.tvnewscheck.com/article/56019/rentraks-influence-growing-in-ratings-wars
o The diaries they use in the smaller markets are sloppy, illegible, and poorly documented.
o A small percentage of filled out diaries actually come back to be measured. If thousands are distributed, only hundreds come back.
We know Rentrak’s numbers are more accurate but many would argue that both Nielsen and Rentrak seem to have a faulty currency as it stands.
• Who tracks more households? PPBH, a Utah based advertising agency, compared Nielsen and Rentrak in the Salt Lake City market and confirmed in that DMA Nielsen tracks 410 homes and Rentrak monitors more than 50,000 DISH satellite households. Here is the full article on their investigation http://www.rentrak.com/downloads/Exact_Commercial_Ratings_Presentation.pdf. It’s the same story in Nashville (approximately 600,000 households versus 400 households respectively) and Columbus (150,000 households versus 500 households). The question was who tracks more households but the real question is does that matter? It is still undecided as to why Rentrak’s ratings are usually higher than Nielsen’s but one assumption is that it’s due to the fact that Rentrak has a larger household count and if that was the case then we would be comparing apples to oranges. Both results need to tell the same story so if the sample size is causing the inconsistency in the two, then agencies should actually consider using Rentrak as a complimentary service to Nielsen.
• Who shows a more accurate picture of station share and viewership levels? Rentrak and Nielsen both seem to show that the trends between stations are the same. In the PPBH investigation, they were in agreement on the station that had the highest household ratings in November 2012, what station had the lowest, and what station is picking up speed in 2013.
Who wins? Nielsen is still the primary source of audience measurement but Rentrak is gradually acquiring momentum. It will be interesting to watch this play out between the defender and the challenger and will give us here at SMG another good race to follow in this non-political season. Some have placed bets that Nielsen will purchase their competitor. I guess we’ll have to wait and see.