Will media measurement systems like Nielsen C3 and radio’s Arbitron Personal People Meter be enough to stop ad spending from moving to the Internet and mobile devices?

Howard Cosell never sent my dad and me a thank-you note, but perhaps he should have. Neither one of us could stand Howard, but during the 1970s we usually turned on Monday Night Football anyway. Our mutual dislike for Howard gave us something to bond over so that we argued less about Richard Nixon. So why do I think Howard Cosell owed us a thank-you? 

You see, back in 1975 we were a Nielsen family. We were selected at random to keep a log of the TV shows we watched. By including Monday Night Football on our log sheet we contributed to the high ratings that kept Mr. Cosell and his colleagues near the top of the weekly ratings. ABC didn’t mind that viewers disliked Howard; they were laughing all the way to the bank. The show was more interesting because of the controversy he generated. That translated into higher ratings, and of course higher advertising rates.

Being a Nielsen family made us kids feel really important. Mom and dad had more weighty things to worry about so it was just the kids who kept the log. We couldn’t have cared less about the advertising revenues and royalties that relied on our data. Our only interest was in keeping our favorite shows from being canceled, so we entered the shows we liked even if we didn’t actually watch them. At the end of the week, we put the log into the US mail. Obviously the data had problems in both accuracy and timeliness.

In those days it was a valid assumption that watching a show corresponded to watching the ads, since changing channels or turning down the volume required walking across the room. It was reasonable then to measure data only in half-hour increments. Remotes have long since called that assumption into question. Digital video recorders and Internet video downloading make those assumptions even less credible.

I was reminded of this when I read in the Wall Street Journal that Nielsen ratings for the recent Super Bowl rank it as the second-highest watched show of all time. The Nielsen rating system was developed in the early 1940s by Arthur Nielsen and has been the gold standard for TV rating ever since. I can’t think of any other company that has completely dominated their field for over 60 years. Chances are you know who Nielsen is but couldn't name the No. 2 company.

Nielsen is obviously a great company. To hold its lead over all its competitors, Nielson has had to change with the times. Last year Nielsen’s new C3 system went into production. The system captures data from digital video recorders so the reporting audience includes those who record and watch the shows later. It also tracks actual ad viewership so advertisers know if the ads were skipped.

TV advertising revenues are suffering today as online ads take a larger slice of corporate spending. According to a Yankee Group and Universal McCann study in 2007, the percentage of ad spending going to online ads will double between now and 2011. Online ads can be more easily measured for effectiveness, cost less and are more easily targeted to potential buyers. Nielsen and others in the traditional media market are fighting back with new systems that more accurately track the audience and provide data in much closer to real time.

Even radio is adapting to the changing world. Personally, I’m an XM and iPod type of person, but radio advertising still attracts around $20 billion a year in the US, so advertisers think someone is listening.  Radio has changed less since the 1970s than anything else I can think of. In fact, many stations are still playing the same songs. Most radio rating is still done by surveys that ask people what stations they listen to. So the data is questionable and advertisers are hungry for more accurate audience data to support the case for spending money on the medium. That’s where the Arbitron Personal People Meter comes in. Using an embedded code that can be detected by the People Meter but not the respondents, Arbitron tracks what listeners actually hear, giving advertisers something much more meaningful to support the business case.

These new media measurement systems are necessary steps to combat the threat to traditional media from online advertising. Internet Protocol Television (IPTV) is likely to change this dynamic radically. The current measurement models rely on a small sample and extrapolate that data across the whole population. An IP-enabled set-top box attached to millions of televisions means that everyone’s viewing habits can be measured. Programmers and advertisers go from a scarcity of data to an information glut. So the advantage shifts to those companies that make use of the data to improve the customer experience. Over time, measurement systems need to provide a picture of the individual across media types. As consumers are able to opt out of advertising they find irrelevant or annoying, the winners will be the companies that can paint a picture of the consumer across video, Internet browsing, mobile networks, social networks and spending patterns.