Many digital channels are still too small to be tracked by Nielsen Media Research's TV rating system, and advertisers are asking who's watching their long-form video-on-demand content, so set-top-box data is emerging as the next holy grail.
Spearheading Nielsen's march in that direction is Jed Meyer, senior-VP Nielsen Digital Plus, head of a relatively new unit unveiled at a client meeting in February.
"Ideally, what we'd provide is more accountability in terms of audience measurement, improved granularity of reporting on the new niche networks, geographic niches or targeted niches," Mr. Meyer said. "The second bucket is to report on interactive ad platforms that cable providers are rolling out. They've invested a lot of money to do things like long-form commercials and they need metrics."
Mr. Meyer is also looking to help cable and satellite operators improve their customer relationship management, or CRM, in order to cross-sell services by analyzing what existing subscribers are watching.
Nielsen Digital Plus is drafting plans with sibling units such as Monitor Plus and A.C. Nielsen to see if it can match data on what ads ran when, who was watching, and whether those people bought the products. And that's got marketers interested in what this nascent division has to offer.
But for now Mr. Meyer is focused on working with cable and satellite systems operators. As yet, only DirecTV has signed on as a client; other cable companies did not wish to go public about their involvement with the unit.
Mandate from the top
Such is the potential for Nielsen Digital Plus that soon after David Calhoun arrived at the company as CEO, he told Mr. Meyer to get the project on the fast track. "He got it in the first five minutes. David Calhoun talks about making bets in key areas. I would submit this is a great area of interest for us and everybody," Mr. Meyer said.
Mr. Calhoun is not alone in thinking this could be a huge revenue generator down the line. Charter Communications is already selling second-by-second ratings generated from its set-top box data and is working with ad spending measurement giant TNS Media Intelligence to turn it into something the industry can use. Media agency Starcom USA is a subscriber.
Indeed there are various data mining projects aimed at sifting through set-top-box data across the industry. Nielsen is hoping that it has a significant edge over rivals such as Rentrak that will help it become the de facto third-party clearinghouse for set-top-box numbers.
"Nielsen's advantage is having a finger in other parts of the pie," said Ira Sussman, Cable Advertising Bureau's senior VP-research. "People want to know what's happening in the household from every single source. That's a tough nut to crack. TNS also has a great product and competition is what's going to help things move faster."
What households are doing besides TV
Nielsen, after all, can tell clients what viewers are doing at home on their computers, and what other devices are plugged into the TV set, from PlayStations to DVD players. More important, it can tell if the screen is dark, even when the set-top box indicates that everyone's home watching Nickelodeon.
Though cable operators already provide set-top-box data, Nielsen argues its efforts are more beneficial to clients because it will establish norms in both reporting the data and in setting standards for such things as what defines a stream. Not only does Time Warner Cable report data differently than Comcast, but the various set-top boxes from hardware firms like Scientific Atlanta also spit out the information in different ways. For instance, "The Sopranos" might be referred to as "TS1" in one report and as "The_SPN" in another.
The big sticking point in reaching this gold mine is privacy, and all participants are clear to underline that they take consumer privacy very seriously.
Uncertain business model
How the business model pans out is anyone's guess at this stage. Mr. Meyer won't comment on whether Nielsen would pay the cable companies or the other way around, but one thing is -- the cable operators want to get paid for this valuable information.
"I'm cognizant of their desire to create a revenue stream and if I can meet their desires, I am going to try to," Mr. Meyer said.
Meanwhile, cable operators are keen to stress that collecting insights from set-top boxes is no easy job. "It is not a snap of the fingers to take raw data and turn it into business intelligence. It's an art and a science. It is quite, quite technical," said Jonathan Sims, Comcast Spotlight, VP-research.
The big question facing Mr. Meyer is whether Nielsen can deliver on the promise quickly. "Talk to anyone and they get my sense of urgency. We know we need to move fast, and [Nielsen Media Research President-CEO] Susan Whiting gets it. Her directive is to make this happen quickly. It is critical to our future," he said.