A. C. NIELSEN COMPANY

U.S. Media Market Research Firm

Under the banner of Nielsen Media Research the A. C. Nielsen Company measures and compiles statistics on television audiences. It sells this data in various formats to advertisers, advertising agencies, program syndicators, television networks, local stations, and cable program and system operators. Nielsen Marketing Research is the larger part of the company, providing a variety of standard market analysis reports and engaging in other market research. By some reports only 10% of Nielsen's total business relates to the television audience, though they are very well known to the general public for that work. This is due, of course, to the ubiquitous reporting and discussion of program and network ratings produced by Nielsen.

The company was started in 1923 by A. C. Nielsen, an engineer, and bought by Dun & Bradstreet in 1984 for $1.3 billion. They first became involved in audience studies in the 1930s as an extension of Nielsen's studies tracking retail food and drug purchase. In 1936 Nielsen bought the Audimeter from its designers, Robert Elder and Louis F. Woodruff, two Massachusetts Institute of Technology professors. The Audimeter (and a previous design for a similar device patented in 1929 by Claude E. Robinson then sold to RCA who never developed it), was intended to automatically record two aspects of radio listening which would be of interest to programmers and advertisers. The device recorded which frequencies a radio set was tuned to when it was on and the length of time the set was on. This technique had an obvious problem--it could not assure who, if anyone, was listening to the radio. But compared to the use of telephone surveys and diaries used by competing ratings companies it had important advantages as well. The other ratings methods depended to a much greater degree on audience members' active cooperation, memories, honesty, and availability.

After a period of redesign and a four year pilot study, the Nielsen Audimeter was introduced commercially in 1942 with an 800-home sample in the Eastern United States. The number of Audimeters and the sample size and coverage were expanded after World War II, eventually, by 1949, to represent 97% of U.S. radio homes. The Cooperative Analysis of Broadcasting had ceased providing ratings in 1946; in 1950 the A. C. Nielsen Company bought Hooper's national radio and television ratings services and thus became the single national radio rating service. This allowed the company to increase rates and the new capital was used to increase sample size. As the television industry grew, Nielsen's attention to television grew with it; they left the radio field in 1964.

In 1973 Nielsen began using the Storage Instantaneous Audimeter, a new and more sophisticated design for the same purposes as the original (surely not the only modification over the years, this one was much publicized). Set in a closet, designed with battery backup for power outages, and hooked to a dedicated telephone line for daily data reports to a central office, the device kept track of turn-on, turn-off, and channel-setting for every television in a household, including battery operated and portable units (through radio transmitter).

While the Audimeter, widely known as the Nielsen black box, was their most famous device, it was used only for household television ratings. For ratings by people and demographic descriptions of the audience Nielsen required supplementary studies of audience composition based on a separate sample using the diary technique. This separate sample was smaller and there was concern in the industry that the people who cooperated with the diaries were not representative of people in general.


A Nielsen viewing diary
Photos courtesy of A.C. Nielsen Company


A Nielsen "Peoplemeter"
Photo courtesy of A.C. Nielsen Company

Because the Peoplemeters produced different numbers than diaries, they generated controversy in the industry. Ratings points are the reference for negotiations in the purchase of advertising time, in deciding which programs are syndicated, and other issues vital to the television industry. Thus when different measurement techniques produce different ratings, normal business negotiations become complicated and less predictable. For this reason many participants in the television business actually prefer one company to have a monopoly on the ratings business, even it if does allow them to charge higher rates for their services. Even if this service provides inaccurate numbers, those numbers become agreed upon currency for purposes of negotiation. Eventually the most recent controversies were settled and Nielsen's Peoplemeter system now dominates the production of national television ratings.

The Audimeter was originally conceived as a means to the testing of advertising effectiveness. To at least some extent Nielsen's own interest in broadcast audiences was originally motivated by his marketing and advertising clients. But the ratings have grown to be an end in themselves, a product sold to parties interested in the composition of audiences for broadcasting.

Among the ratings reports provided by Nielsen were, until 1964, the Nielsen Radio Index (NRI) for network radio audiences. Currently the company provides the Nielsen Television Index (NTI) for network television audiences, the Station Index (NSI) for local stations and Designated Market Areas (DMA's), the Syndication Service (NSS) for the audiences of syndicated television shows, and the Homevideo Index (NHI) for the audiences of cable networks, superstations, and homevideo. They periodically produce reports on special topics as well, such as video-cassette recorder useage, viewership of sports programming, or television viewing in Presidential election years.

-Eric Rothenbuhler

FURTHER READING

Beeville, Hugh Malcolm. Audience Ratings: Radio, Television, and Cable. Hillsdale, New Jersey: Erlbaum, 1985; revised edition, 1988.

Buzzard, Karen. Electronic Media Ratings. Boston, Massachusetts: Focal, 1992.

Dominick, Joseph R., and James E. Fletcher. Broadcasting Research Methods. Boston, Massachusetts: Allyn and Bacon, 1985.

Clift, Charles III, and Archie Greer, editors. Broadcast Programming: The Current Perspective. Washington, D.C.: University Press of America, 1981.

Webster, James G., and Lawrence W. Lichty. Ratings Analysis: Theory and Practice. Hillsdale, New Jersey: Erlbaum, 1991.

"What TV Ratings Really Mean, How They are Obtained, Why They are Needed." New York: Nielsen Media Research, 1993.



See also A.C. Nielsen; Market; Ratings; Share