Nielsen CEO: Changing TV measurement for the future is a ‘major shift’
The Media Leader Interview
Nielsen CEO Karthik Rao now has the top job after 23 years as a company man. He insists ‘the mission’ does not change despite increasing US competition and pressure to evolve media and adspend measurement.
Speaking to The Media Leader on stage at the ASI TV and Video Conference in Nice this month, Rao talked about:
>> Why last year’s $16bn company sale to private equity does not change the company’s “mission”.
>> How the company plans to grow internationally amid increased competition in the US where it has enjoyed a dominant position for decades.
>> Why the panel will remain very important to audience measurement.
>> Why a lack of audits and the market “not being ready” have delayed the rollout of a new TV measurement currency in the US.
>> Nielsen is not part of the proposed US joint industry currency because it is not “a level playing field”
>> Why, in hindsight, Nielsen got the order wrong in how it launched Nielsen One for Ads before Content.
Watch the full interview or read a (lightly edited) transcript below:
Karthik, you’ve been CEO of Nielsen since September; for a few months you were head of the audience measurement business at Nielsen. And before that chief operating officer, and you’ve been at the company for a couple of decades. So you know the business quite well. I guess you’ve been thinking about this job for quite a while, if you ever had the opportunity.
So what are you going to do with it? What’s your mission as CEO?
Yeah, it’s been 23 years and I’ve stayed there this long because we’re a 100-year-old company, this is our 100th year and it’s a real honour to be the leader of the company on its 100th year to chart the next chapter.
Our mission fundamentally has not changed.
For media, it’s all about following the consumer, wherever and however she consumes media. That’s all forms of it.
And how do you turn that mission into products that are relevant to understand how consumers engage with the content, because that’s the first place that they go to, and then all the monetisation that comes off of that, which is advertising sponsorships.
So for us, the mission is not any different. It’s just the context we’re in and the transformation that is taking place and how the consumer’s behaviour is just moving so rapidly. We have all kinds of sessions later today to talk about it. But for us, it’s [about] how do you help industries and markets grapple with the truth about the consumer? That’s really what we’re about.
Both Nielsen and Kantar are owned by private equity. Elliott and Brookfield bought [Nielsen] for something like $16bn last year. I mean, that’s putting out quite a big valuation — how are you going to pay that back?
I don’t think the valuation is high enough — they should have paid some more for the business!
But look, we’re really excited. So a couple of things about one of our owners is they have been in our stock when we were a public company for a very long time. So it’s good to work with owners who have studied your business, studied the industry you operate in, and have a really good, visceral feel for what the opportunities and the challenges are.
Nothing has changed about our mission, nothing has changed about our purpose, nothing has changed about our priorities, or our product roadmap.
As for my role, walking in and working with new owners, it’s largely about if we do what we believe is the right thing, which is about following the consumer and ultimately helping the industry take advantage of that, they should be really happy.
You’ve had this strong market position in the United States, where the bulk of your revenue comes from, but now you’re facing increasing competition… [where] there is this movement to create a joint industry currency [JIC]…. As part of your growth strategy going forward, do you see the rest of the world as more of an opportunity? Are you under pressure to grow the business internationally versus the US?
There’s a couple of things for us.
Actually, on the rest of the schedule for today, you’re going to see some increasingly amazing innovations taking place around the world and markets where we operate in. They’re tending to be on the leading edge, actually, of being aligned with the vision we have about how do you actually follow the consumer.
So it’s a major source of innovation inspiration for us. And I think that’ll just continue to be the path that we’re on; we operate in a lot of markets around the world.
The next chapter for us has to be about bringing the best of what we call Nielsen One, the platform which is our journey on cross-media measurement, to as many markets as we can, as fast as we can [and] all of the various components that you need to bring it to life.
We’re a global company, and it’s not just about audience measurement, which is one component of understanding the consumer engagement with content and ads.
It’s also important that we have an amazing global metadata capability in a business called Gracenote, which helps with discovery of content — you can only imagine all of what that allows for from an AI and innovation perspective for us to understand all of the reasons why consumers engage with content in a certain way. Metadata is the best way to do that.
And we also have around the world a lot of expertise in the area of outcomes. You will keep hearing about these words that will endure for a long time in our space. But we’re super excited about the portfolio we have and how global it is and it’s about bringing that to more markets in the right way. We’re very, very excited.
Gracenote must be a part of the business that’s close to your heart, because you used to run that — is that something you see as a big opportunity for Nielsen going forward? In terms of developing, as you mentioned, AI capability?
Yeah, it’s really important. Because one of the ways in which you understand the consumer is about what their discovery behaviour is. And metadata that ultimately is used in AI models can help you predict, so that is a very important component.
Where that then goes into [is]: if you imagine a world where there’s a lot of conversation around virtual IDs, and humans being converted into IDs — because of the need to do that in all systems, contextual targeting, context of the humans that we measure, and what they actually consume at a level of granularity — I think makes a big difference in the world of targeting and activation, as well.
So there’s multiple ways in which that business and capability can help all aspects of audience measurement, as well as just discovery of content.
How do you see the future of the panel? We spoke about it a bit yesterday [with Patrick Béhar, CEO of Kantar Media]. How do you see the future the panel in this world of first-party data, streaming data, set-top box data? What’s the role for the panel going forward?
The key for us is where I began; it’s about following the consumer — the consumer is not a device [and] not a machine.
So every measurement system, we believe, should have some foundation and actual people. And that’s what panels represent.
We can all have debates as to how big they need to be, or how small they need to be. But in our our rubric it’s inconceivable to have measurement systems that don’t have some actual observation of human behaviour in it.
So we continue to think that it’s really important for many reasons, probably the biggest of which is ultimately being able to assign demographics, as well as other characteristics that represent people, in home. So it’s about the marriage of the two — it’s ‘Big Data plus panel’, I think we’ve said this multiple times.
And we want to use the best data available. We’re not pedantic about panels being the only answer, or Big Data, it is about using the best data available, but having the person represented in that we believe is fundamental to any measurement system.
But would you say that Nielsen has been become too panel-centric? You’ve obviously built a cash cow, a very lucrative business on panels, but would you say going forward you need to have less reliance on panels?
No, actually, it’s more reliance on the hybrid of panels and Big Data.
So in the US, for instance, and many of the presentations you’re going to see today, many of our JIC partners are also using all sorts of Big Data in hybrids with panels. In the US, we have 60 million homes worth of Big Data from, you name whatever acronym of Big Data, we have it.
So it’s not about reducing our belief and reliance on it. It’s about augmenting it with all forms of Big Data.
What is the status of Nielsen One? You recently announced that it has launched in Denmark; it’s going to rollout to other markets globally. Can you give more details about that, what that rollout is going to look like, particularly in the US and other big Western markets?
Yeah, so it began in the US and this year we launched Nielsen One for Ads.
So think about it as being about cross-media measurement. It’s a transformation to all of the components of cross-media. Think of the four screens and it’s about Ads and Content.
So the Ads version of that launched; we’re continuing to iterate. It’s out there, people are using it today.
And the next version of that is is the Content version of Nielsen One. We want to make sure we continue to bring that platform to every market that we operate in. We will work with the JICs to adapt it to what is right for the particular market. We’re super excited about the work going on, obviously, in Denmark, which everyone is going to get to see a little later. But the intent for us is to work off of cross-media measurement.
Ultimately it’s a journey. But journeys work well if you have a platform that can scale all around the world and adapt to all of the complexities, not just about data availability, but also around things like privacy, which is really important.
And so for us, this is the platform by which all of our audience measurement development will continue to endure for a really long time.
You mentioned some of the factors that go into building such a platform, and it does seem like [Nielsen One] is sliding back. Why do the timetables keep changing? Have you been frustrated with that? What are the reasons behind it?
Yeah, there’s two things.
Look, we’re stewards of the consumer. But, in any market, you also have to be a steward of the industry, especially if you’re one of the main players.
And, to set the record straight: building of the product has not been delayed. It’s about how do you drive the change management required in the industry, because it’s really important for every constituency in the industry to get really used to how to work with it — what does the data look like?
So it’s about the change management, making sure the plumbing, which is incredibly important across the entire ecosystem, can actually ingest and digest all of that new capability.
We’re not minimising how much good work is needed to actually get the marketplace comfortable with what it’s actually producing and what that means for their business.
That takes a little bit of time and that’s the difference between what was built and delivered.
The week before the [US] upfronts, it appeared that you decided the data wasn’t ready for primetime measurement. Last week, you delayed the closure of pure panel metrics for the second time. Where are we now?
Again, just to make this clear: what we’re actually talking about here is the change to the television currency.
I want to be very specific: the television currency has been a panel-only based capability for decades. And we were bringing in all of this Big Data to augment the panel-only capability — it’s a major shift — and to use it as a currency requires making sure that the entire ecosystem is very comfortable with it.
And so the definition of ‘comfort’ is two things.
One, is it audited, and accredited? Because we fundamentally believe in that our clients are ready and capable to actually ingest all of it, and are able to explain what changed to their internal constituencies.
Because that’s the other component: we felt like we didn’t have the audits done back in April. We’re going through that process now and continue to work with clients, so that it becomes what is used for transactions for the next season.
With regard to your question around delaying taking away the metrics, it’s related to the same thing: you want to move a market, ultimately, you want to move the metrics in a market to be way more granular. C3 is a is a little bit of a rolled-up metric. It’s an average metric in the US and I don’t want to bore people here with with various metrics.
But the idea is to make it more granular. And the market needs more time.
We did a lot of research to figure out if they could actually use this much granularity because everybody wants a lot more data and a lot more granularity. Can you actually use it, explain it and take advantage of it, is a whole other question.
So that’s why we said, ‘look, we’re putting out the capability anyway, it’s in there’. We’re just not going to take away what already exists. That’s the only difference.
Why isn’t Nielsen part of this JIC initiative in the US?
Look, it’s an initiative of buyers and sellers, at least some buyers and some sellers coming coming together. Our entire premise is we want a system that actually enables and promotes the fidelity of what you’re actually doing.
To do that, the first thing is: it has to be inclusive of the entire industry. And I don’t know whether it is today. If you think about market share or video consumption, it did not have all the players in there. So we would be working with a system that’s not complete for all video consumption.
So that was one, it wasn’t completely inclusive of everybody there. And maybe they’re continuing to work on that.
But the second thing I think that’s really important is, the US is a self-regulated media market. It’s written into the laws of how the market is supposed to operate. We honour that and respect that.
And the Media Rating Council (MRC) was set up to provide this audit and accreditation capability, so that buyers and sellers could understand what measurement capabilities were out there e.g. what grade they were and do they follow a proper process.
And so we invest a lot in that and we just felt like the requirements in the JIC certification process did not honour all of the work we do in there.
We just didn’t feel like that was a level playing field. Because we want every currency contender to be measured by the same standard of quality [and] fidelity endurance.
And so we wanted to make sure that when we participate in anything that the MRC and their rules and their process is well respected in that. And that wasn’t the case, at least back in April.
There are a lot of people in this room, probably wouldn’t want me to name them, who feel that they have been encumbered by significant extensive legal action over multiple years that slows down their momentum and slows down their ability to innovate. Sometimes, I’m sure there are brilliant, first-class Nielsen patents that absolutely you have a right to defend. Sometimes, maybe that’s not the case. So when you say nothing has changed in your roadmap, does that also apply to your litigation strategy?
We will continue to protect our intellectual property vigorously around the world. That’s just going to always be the case.
Any company that invests this much in research and development, and is a world-ranked intellectual property creator, has to do that. And so that is going to be something that stays really front-and-centre for how we operate.
I’m intrigued by the fact that Nielsen One has launched Nielsen One Ads before Nielsen One Content because a number of the JICs and currencies I’ve worked with around the world find Content a lot easier to measure across platforms than Ads. And the Ads [part] is particularly tricky. So how have you cracked Ads? And is there a reason why Ads has been launched ahead of Content?
So a couple of things, you can still get [some] on the Ads platform, you do have programme information in there.
But if we had to do it over, we would have flipped the order. We were trying to be responsive to what the marketplace needed.
But I still feel and reflect back and say we got the order probably wrong.
And so we’re rapidly trying to to make sure we get back at the same playing field.
What needs to improve the way you measure digital adspend? For years and years agencies say that digital adspend is under counted. Why is that? And is any work being done to improve that?
Unfortunately, it’s a reflection of the complexity in the digital marketplace. Every company struggles with getting digital expenditure data.
We’re thinking increasingly about a partnership approach, rather than trying to build our way out of all of it, but it’s definitely an area of continuous improvement.
We’ve got to continue to figure [it] out because it’s an increasing component of total total expenditure. I think as long as you make progress in capturing the impressions, that’s a big start. We’re obviously making progress in that around the world.
But getting to the exact expenditure in terms of dollars and cents: you’ve got to rely a little bit on what is self-reported; it’s probably another area where you could get a little bit more, but this is an area we got to continue to work on. It’s not just unique to us; anybody in the industry has the same challenge.
Is that because it’s just more difficult to count expenditure by smaller and medium-sized businesses who are maybe buying direct on platforms?
Yeah, that’s right. It’s because programmatic [media buying] is a big component, and so there’s a lot of intermediaries. So how do you know which part of the total expenditure [is] right is a complex piece.