MediaPost: Analysis Finds Nielsen Data Used By Modelers Undercounts TV’s ROI By As Much As 20%

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Originally published in MediaPost

By Joe Mandese

A first-of-its kind analysis of TV audience data used by modelers to measure the return on investment (ROI) for ad spending found that it is sorely lacking, and in some cases misrepresents TV’s ROI by as much as 20%.

The findings, which were unveiled Monday during the Advertising Research Foundation’s Audience Measurement Conference in Jersey City, NJ, are based on an exhaustive analysis conducted by Sequent Partners and Nielsen for the Council for Research Excellence (CRE).

The analysis, which is summed up in a white paper, presented by Sequent partners Jim Spaeth and Alice Sylvester, found that a combination of legacy factors in the way Nielsen data is processed for third-party modelers contributes to inaccurate and/or weak data distorting their outputs.

In 90% of the cases that Sequent and Nielsen analyzed, the effect was relatively small, distorting TV’s contribution to advertising ROI by less than 10%. 

But in 10% of the cases, the effect was relatively significant, reducing TV’s ROI by 20%.

The analysis examined a variety of factors, but the No. 1 contributor to the distortion was the inability of modelers to align the actual audience delivery with the commercials that ran in the advertisers’ schedules, because the data supplied to modelers by Nielsen does not represent exact minute ratings, but are based on average quarter hour audience estimates.

The findings are significant, says Sequent’s Spaeth, because many big brands rely on mix models as the basis for allocating advertising budgets to media. He said an underestimate in the range of 20% might be enough to knock TV off an advertiser’s plan altogether.

Spaeth likened the phenomenon the the kind of “last click attribution” analysis used by modelers in digital media, which gave too much weight to the digital media that had the last point of contact with a user before they clicked through to take an action.

Spaeth said more work needs to be done to figure out better ways to align Nielsen’s audience data with actual advertising exposure, but he said Nielsen has already begun taking steps to fix some of those problems.