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Thursday, 16 August 2012

Bogus viewership ratings

A few weeks ago, New Delhi Television Limited, India's oldest and largest news network has sued Nielsen, one of the largest and most prestigious international media research agencies for intentionally manipulating viewership ratings in return for bribes. Details of the news can be read here:
The lawsuit represents billions of dollars of potential losses for Nielsen, not even mentioning the loss of reputation, its core competitive advantage.

In all these cases, it is hard to make a judgment on who is wrong or right. The Indian business environment is known to be corrupt as many recent cases have shown, so it is conceivable that Nielsen executives fell into the trap of some local business practices. Courts will decide... 

However, it is important to keep in mind that the lawsuit does not (yet) cast doubt on the rating methodologies that have been used for decades by Nielsen, although their implementation in the Indian market is being questioned. This is important because the advertising industry is undergoing a major shift in terms of budget allocation. Large sums are moving, in particular, from traditional media to online media. The speed of this fundamental shift is based on consumers' presence in the competing (or complementary) media outlets, which in turn, is measured by media analysts like Nielsen. 

Marketing managers in all - especially large - companies are struggling to figure out what proportion of their budgets should be moved across media types. TV has been largely sheltered so far while print media had to face a harsher adjustment, although even here there are large differences. Mistakes can go in both directions: most companies tend to be too conservative although some others have been too bold. A recent example of boldness is Pepsi's shift of advertising budget from the Superbowl to sponsorship on social media in the "Refresh Everything" campaign. Sound media metrics are critical to make these decisions. Hopefully, Nielsen will be able to restore the trust of the advertising industry in its ratings. 

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