Nielsen: Unique Opportunity with Big Challenges
Who is Nielsen?
The Nielsen Company, founded in 1923, tracks and ultimately sells data on “what people watch, listen to, and buy”. For the “Buy” business, Nielsen has relationships with all major retailers in the United States (Walmart, Kroger, Safeway, etc) where retailers provide their scanner data to Nielsen. This scanner data includes unit sales, pricing and promotion, unit size, geography, and more by various timeframes. Nielsen then uses this data to help these retailers manage their categories more effectively while also assisting consumer packaged goods companies with their brands. This model is similar to what is offered in the “Listen” and “Watch” businesses.
Who are Nielsen Competitors?
Nielsen faces significant competition across all of its businesses. Major competitors in the Buy space include IRI, Catalina, Dunnhumby, Ipsos, and Kantar Group. IRI, Catalina, and Dunnhumby create value through retail data while Ipsos and Kantar create value through new product testing and forecasting. Media tracking competitors include comScore, Rentrak, and TNS, a Kantar subsidiary. Their specialties range from measuring online media performance to social media tracking.
How is Niesen Different?
Initially Nielsen captured value by selling the data without any analysis or insight. Realizing that additional value could be captured through consulting on the data it was providing, Nielsen began to develop analytical capabilities and grow client service teams. Currently, what differentiates Nielsen from competitors on the Buy side of the business is that Nielsen is the standard for tracking and reporting retail data. Typically, data from companies like dunnhumby or Catalina are crossed checked with data from Nielsen. Nielsen also has long, established relationships with retailers who are just now seeing disruptions to their business model with grocery delivery companies.
With the Watch business, GRPs, a reporting metric created by Nielsen, is still important and differentiated for traditional tv tracking. However, this side of the business has been disrupted very quickly with many consumers watching tv online and on mobile. There is also the social experience that accompanies TV watching, and it can sometimes be more valuable from an advertising standpoint.
Where is Nielsen Now?
In the last few years Nielsen has established partnerships with Facebook and Twitter to create social unit measurements similar to GRPs. The goal is to allow companies to measure advertising effectiveness across platforms and understand what the equivalency for the various advertising opportunities. They have also extended relationships with traditional media conglomerates to track viewership through their online portals.
Nielsen has also tried to position itself as a thought leader around the data they have available. It is not uncommon to see reports and case studies on consumer spending, audiences, media consumptions, etc.
Although in a unique position to be the trusted marketing research and sales analytics advisor to many companies, Nielsen still has not figured out how to effectively provide tailored solutions across all of its capabilities. This is allowing incumbent players to enter Nielsen markets and gain traction with key clients.
This is an interesting post. To what I understand, 45% of Neilson’s business lies in “what people watch”. Having worked in the advertisement industry, Neilson has became industry standard to track performance data for traditional media (i.e. TV commercials, radio..etc.) As the world increasingly shifts ad spending from TV to digital media, Neilson quickly becomes less and less important. Brands strive to find a reliable source to track digital media and given the large amount and variety of advertising spaces and ownership, the world still strives to find one single consolidated and reliable source for digital ad spending performance data. You’ve mention they are actively trying to integrate data from online media sources, I think this is the key and critical strategic step for them to stay relevant in the increasingly digitized world and the best way for them to maintain their status as an industry leader.
Thanks for your comment! The Watch side of the business faces the most risk as consumers are shifting their watch patterns from traditional tv to a number of different devices.
Cool post! Do you think Nielsen will become less relevant in the digital space as companies bring more of some of these features in house? While I see Nielsen’s value prop in the scanner tracking space because that’s an offline domain, I wonder if as more companies try to base their competitive advantage on their data (aka data being their #1 asset) if they will move away from Nielsen so as to build platforms that are more applicable for them and so that competitors cannot glean information from them as well.
I feel like Nielsen will still remain relevant on the Buy side of the business since I don’t believe most consumers will start doing their grocery shopping online or through delivery companies. However, I already think they’re losing relevancy on the media side. Simply put, they are a slow moving giant and aren’t nimble enough. I think companies are willing to give them a little more time to figure it out because they see the potential, but I’m not hopeful.
I actually WOULD argue that people are going to start buying their groceries online- Amazon’s definitely banking on that, and companies like Peapod and Instacart are doing great and gaining market share over time. I think a lot of people right now just don’t instinctively think to buy those sorts of things online, but there will come a tipping point pretty soon where they will. I’d be very worried if I was Nielsen.