QVC, Comcast challenge Nielsen

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Shopping network QVC and its majority owner, cable system operator Comcast, are developing a TV audience measurement system that could pose the biggest challenge in years to VNU's Nielsen Media Research.

Research executives have voiced complaints for years about Nielsen's virtual lock on TV ratings data. But they said the new service still has a number of flaws and faces significant hurdles in its bid to take on Nielsen.

The service is the first offering from a new interactive TV venture called TargetTV. Chuck Thomas, VP of TargetTV, quietly approached potential clients-including agency, marketing and network research executives-at the Advertising Research Federation conference in New York last week.

TargetTV, a venture between QVC and Comcast, began deploying specially equipped digital set-top boxes in about 60,000 homes in Comcast's Philadelphia market late last year. It has since moved into Comcast's Charleston, S.C., system, and is preparing to distribute boxes in four more Comcast markets: Baltimore; Hartford, Conn.; New Haven, Conn.; and an unspecified West Coast system.

The company is also in discussions with non-Comcast cable operators for expansion into their markets. Ultimately, TargetTV is looking to expand into at least 750,000 homes.

TargetTV is also preparing to test another service in Philadelphia and Charleston that will allow consumers to use remote controls to make purchases or request information about products advertised in commercials or during shopping shows.

Unlike past challenges to Nielsen, such as the SMART venture abandoned by Statistical Research Inc. in 1999, TargetTV won't depend on research revenue alone. The company plans to generate revenue from sales of targeted interactive advertising, home shopping services, surveys and games.

At least as measured by households and markets, TargetTV is the biggest challenge to Nielsen in recent years. ADcom Information Services, whose investors include WPP Group, operates a cable measurement service in Dallas; Jacksonville, Fla.; and San Francisco, with panel sizes ranging from 600 to 1,000 or more.

Network and agency executives and media consultants, however, expressed skepticism the new service could mount a serious challenge anytime soon to Nielsen's near-monopoly.

"It doesn't collect persons viewing, and they aren't necessarily giving a representative sample," said Bruce Goerlich, senior VP-media research at Bcom3 Group's MediaVest Worldwide, New York.

TargetTV is limited to digital set-top households, so it doesn't account for noncable users, or, for that matter, cable subscribers with analog cable boxes.

"There's little doubt who would benefit from any of these new systems ... smaller cable networks," said David Poltrack, exec VP-research and planning for Viacom's CBS Television Network. "The bigger problem is that the set-top users have more [viewing] choices than people who don't."

STRUCTURAL PROBLEMS

Network executives also point to structural problems. "None of these systems tell you who is viewing," said Mr. Poltrack. "That said, there is some value in monitoring 60,000 people" as TargetTV does in Philadelphia, "compared to Nielsen's 5,000. At the very least there is opportunity to gain knowledge."

TargetTV's ties to QVC and Comcast are also likely to be viewed dimly in the TV research community. Asked whether it matters that QVC owns the new operation, Mr. Poltrack said, "Certainly, that's a problem."

Mr. Thomas said TargetTV is trying to address bias concerns by operating independently from its parents. But Jim Peacock, a former Arbitron executive who now operates independent media consultancy Peacock Research, said TargetTV data would probably have to be validated by third-party audits.

Mr. Thomas also said Target TV is working on a supplemental sampling system that could fill in individual viewership data and other gaps. The company is developing subset panels in each market representative of the broader population rather than just households with digital set-top boxes.

It would take considerable work before a system such as TargetTV could become the basis for transactions as Nielsen is now, said Erwin Ephron, of media consulting firm Ephron, Papazian & Ephron. But he said media buyers might still be able to use it to spot buying opportunities based on more detailed demographic and second-by-second channel surfing data.

Unlike Nielsen households that keep diaries or have sets equipped with People Meters, TargetTV households are largely unaware their viewing is monitored, said Mr. Thomas. TargetTV uses provisions in standard cable-service contracts for Comcast and most other systems that allow collection of anonymous viewing data for research. Mr. Thomas said safeguards prevent TargetTV from identifying individual household viewing data.

To track channel surfing, TargetTV reports "clickstream" data in increments as small as five seconds. One analysis of Philadelphia households during last month's Grammy Awards broadcast showed most viewers who strayed during commercial breaks headed to Fox's "Temptation Island".

Mr. Thomas said TargetTV is far from having its business figured out and doesn't even know what types of reports clients will prefer. Early relationships with a handful of select clients will be key in developing the service, he said.

TargetTV may consider a partnership with another marketing services company, he said. "Where we're strong is in the technology side and the ability to produce that and deliver it. Where we're infants is in the ability to market it."

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