TV execs to Nielsen: get SMART; can the Nielsen ratings survive 500 channels, the Internet, and a new competitor? - Nielsen Media Research Inc. copes with Systems for Measuring and Reporting Television rating laboratory

American Demographics, Oct, 1997 by Brad Edmondson

Both systems will soon adopt a new way of identifying programs on TV sets. Nielsen's current meter uses the set's tuner to identify a viewer's channel selection, then matches the channel to program listings. The new technology, which will be tested in different versions by both firms this fall, implants a unique code in the audio and video signal of each program at the point of transmission. This Universal Television Program Code (UTPC) is read directly by the meter, just as a supermarket's laser scanner reads a UPC code on a box of cereal.

What about programs that don't contain a code? Nielsen's new system captures audio and video "samples" of uncoded programs and compares them with a library of current programs at its data-processing center in Dunedin, Florida. SMART ignores uncoded programs. SMART's critics say this method discriminates against small cable channels that might not code programs properly, and will result in data skewed in favor of the big networks. SMART contends that sensible producers will make sure programs are coded, because ad sponsors will depend on it.

SMART also takes pains to be friendly to clients. While Nielsen charges customers more for special tabulations of its data, SMART promises unlimited access for one flat fee. Most important, says Schiavone, is that SMART's experiment in Philadelphia is open to all visitors. "There's no mystery. Nielsen could come in and copy everything about SMART. In fact, that was our original hope."

This seems unlikely. "Nielsen would have to change its system dramatically to copy ours, because everything has been developed specifically for us," says George Hooper of SRI Research. "If it had adopted things earlier, we wouldn't be here today." The incumbent's official position is that it is open to suggestions. "If SRI can come up with improvements, everybody wins," says Nielsen's Loftus. "But we don't think that their people meter is easier to use. We're watching."

Once the UTPC codes are in place in the spring, SMART's system will be ready to go national. Some network execs are hoping out loud that a well-funded third party will license SMART and take on Nielsen. "A company like IBM or Lucent Technologies could see that there are dissatisfied customers here. There's an opportunity to compete," says Schiavone. If that happens, revenues from television advertising--about $43 billion last year--could easily go up or down a few billion. Careers could be made and destroyed. Like the Friday episode of a weekday soap opera, the fight between Nielsen and the networks is a cliffhanger. Stay tuned.

TAKING IT FURTHER

For a complete description of people meters and TV ratings, see "Confessions of a Nielsen TV Household" (March 1997). Nielsen's survey of Internet users is described in the October 1996 issue of Forecast. For a copy, call (800) 828-1133 or go to Internet site http://www.demo graphics.com. Contact Nielsen Media Research in New York City at (212) 708-7500; a description of the company is available on the Internet at http://www.cognizant.com. For more information about the SMART project, contact Statistical Research, Inc. in Westfield, New Jersey; telephone (908) 654-4000; or on the Internet at http://www.sriresearch.com.