Sign in or Register

Already a member?

Sign in

Or sign in with your account on:

Not a member yet?


Are Nielsen Ratings Still Relevant?

  +Follow October 17, 2013 9:23AM
Tickers Mentioned:

As football season hits its stride and the World Series premieres, media analysts continue to cite one metric when judging the success (or failure) of these media events: the Nielsen Ratings. Developed in the 1950 to measure viewership of television, Nielsen ratings rely on information provided by the several thousand “Nielsen families” that fill out “paper diaries” about their viewing habits. The operators of the Nielsen ratings system extrapolate from the information supplied by the Nielsen families to estimate the number of nationwide viewers of any given program.

If the system seems imprecise or outdated, it is. But it’s unlikely to change anytime soon.

How Imprecise are Nielsen Ratings?

Think of it this way. There are 25,000 Nielsen families out of 114.5 million television-owning households, or .02183 percent. Nielsen also fails to account people watching in a group setting, which has normally skewed the Nielsen ratings of “television events” like the Super Bowl.

Contrast the Nielsen ratings with the internal numbers the widly popular streaming service Netflix Inc. (NFLX) logs about its customer’s viewing habits.  Netflix knows exactly how many people are watching, to the person. To be sure, a little chicanery concerning people sharing Netflix accounts skews the numbers slightly. But the sample size is exponentially more accurate than, say, .02183 percent.

Nielsen has been attempting to rectify this streaming shortfall, and in February announced they’d begin incorporating streaming viewership into their counters in September. It still doesn’t account for everything, however.

The DVR Issue

Cultural events like Breaking Bad or sporting events, most viewers aren’t terribly concerned with watching a show the exact moment it was released. This has further affected Nielsen’s ability to accurately gauge viewership of particular shows, as many viewers choose to DVR shows and watch them at their own leisure – maybe even the next week, after the numbers are already logged (Nielsen only counts up to seven days after an initial airing.) Watching shows long after the fact is becoming increasingly popular, especially among viewers 18-49.

That age range, known colloquially as “the demo,” is the area most coveted by ad buyers. A show that logs a high percentage of viewers in the demo can charge ad buyers substantially more. And ad buyers have a vested interest in paying less. Hence, Nielsen stays outdated.

It’s All About the Demo

The reason Nielsen remains entrenched in its archaic model is pretty simple: a more accurate model would show how many young people are still watching shows. It’s not hard to see which shows are getting plenty of attention. Look at total show mentions on Twitter, for instance. That number, while not pegging exactly how many people watched a show on airing, does provide an exact, specific number of how many people are discussing a show.

Twitter mentions are chock full with shows popular with young people that have conspicuously low Nielsen ratings.  Take the Twitter mentions of the week of Oct 7-13:

1. The Walking Dead (AMC, Sun.)
Tweets: 1,172,000
Audience: 7,491,200

2. Glee (Fox, Thurs.)
Tweets: 822,100
Audience: 5,167,500

3. American Horror Story: Coven (FX, Wed.)
Tweets: 435,600
Audience: 4,623,800

4. Catfish: TV Show (MTV, Tue.)
Tweets: 743,600
Audience: 3,544,300

5. The X-Factor (Fox, Wed.)
Tweets: 422,900
Audience: 2,393,300

Of those five shows, only one, the Walking Dead, cracked the Top 20 in Nielsen ratings that week.

According to Pew Research Center, as of May 2013 over two-thirds of US Twitter users are in the demo. While the number of mentions and subsequent audience reach don’t peg exactly the number of views, they give us a pretty good idea of the shows the demo cares about. And it’s markedly different than Nielsen.

Why Ignore the Demo?

Failing to account for streaming, Netflix, and other non-traditional viewing habits does one thing: under-represent the shows young people actually watch and care about. Certain shows that are popular with the demo but don’t score good Nielsen numbers – Community, Mad Men, Parks and Recreation to name a few – can still be advertised on cheaply. Ad buyers can simply tout low Nielsen numbers, even when they know the viewership is higher.

Of course, as the sea change towards online continues unabated, it might just be a moot point. But while traditional media still has control, Nielsen with all its flaws will probably continue to reign. Just don’t think it means what young people are really watching is being accurately counted.


DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions.

Signup for our daily newsletter and get our best articles emailed right to you!

Results for NFLX
OM Daily Wisdom
27 Feb 15 16:03:17
$AAPL $NFLX $TSLA Unusual Option Action – Live Webinar – March 5th 2015 http://t.co/pjnQaXd1LG
Ravi Romo
27 Feb 15 15:57:06
'House of Cards' turns out to be Netflix's ace in the hole: http://t.co/h5K8QWQFU8 $nflx
27 Feb 15 15:53:53
RT @wallinex: 32% of @SprinkleBit's users beat the market. http://t.co/ClBIsRvwRw #Stocks $AAPL $TSLA $NFLX #Investing http://t.co/7TmDe6Ap…
Alexander Wallin
27 Feb 15 15:50:25
32% of @SprinkleBit's users beat the market. http://t.co/ClBIsRvwRw #Stocks $AAPL $TSLA $NFLX #Investing http://t.co/7TmDe6Apb6
27 Feb 15 15:47:54
$NFLX OI for maturity 02/27/2015. 470.00 Highest put. 490.00 Highest call. http://t.co/KDoAZWBbpD
27 Feb 15 15:46:19
$NFLX:US BREAKING: 9th Circ. Won't Revive Netflix Antitrust Suit #NETFLIX INC http://t.co/a1ZKAYE7Jk #NASDAQ
Jay Auvigne
27 Feb 15 15:37:48
@canuck2usa new highs for $NFLX or double top and going to fill the gap below?
Samuel Brown
27 Feb 15 15:33:39
$NFLX The Silly Reason Netflix, Inc. Could Be Worth $527 http://t.co/hRqi0vz1Xy
27 Feb 15 15:30:18
$NFLX Max Pain is 477.50 for maturity 02/27/2015. Price = 474.91. http://t.co/VkNC6d1odb
27 Feb 15 15:27:02
$.IXIC $NFLX $IBM $AZO $TGT $BBY $HON $XOM $KR $COST: Cramer game plan: Rest up-this will charge higher!: http://t.co/aRonuQFpJ4
GFH Asset Management
27 Feb 15 15:25:22
$NFLX 474.91 (-1.68%) ¡Reciba hasta un 125% más de ganancias y cuide su capital con notas de Principal Protegido! http://t.co/0zDgtLozBK
mr. jucijuce
27 Feb 15 15:25:05
RT @TheStreet: Why Netflix's future depends on 'House of Cards.' Good thing we'll all be watching http://t.co/slrWaifvAT $NFLX
27 Feb 15 15:22:14
RT TheStreet: Why Netflix's future depends on 'House of Cards.' Good thing we'll all be watching http://t.co/KlkenP6CN6  $NFLX
27 Feb 15 15:21:01
$NFLX: Is Netflix's Stock Chart A House Of Cards?: http://t.co/Huhj3KePb3
27 Feb 15 15:10:24
Netflix long-term view $NFLX http://t.co/c2rEZkaYui
Mo Taslaq
27 Feb 15 15:09:41
Can Hewlett-Packard Re-Invent Itself? http://t.co/hYO9Qpup8C #IBDNews via @IBDinvestors $AAPL $NFLX $GOOGL $HPQ $FB $TWTR
Carolyn B Miciano
27 Feb 15 15:09:28
Use Options spreads to enhance your trades http://t.co/wpcGZc0bU0 $NFLX $PCLN $TSLA
Breaking News
27 Feb 15 15:07:02
$T $NFLX $CVC $ILD.FR: Ditching Your Smartphone Bill and Going Wi-Fi Only: http://t.co/u6vid2ibEp
Ronnie DiMaio
27 Feb 15 15:03:11
@jimcramer sign ups on $NFLX don't count! People change their email addresses to get another free trial
Options Action
27 Feb 15 15:01:10
@ItsMariaCapone we offered a bearish view earlier in the show on $NFLX.
27 Feb 15 15:00:56
$NFLX $PCLN $GPRO Unusual Option Action – Live Webinar – March 5th 2015 http://t.co/OAsMhZ1Y9I
27 Feb 15 14:59:03
$NFLX $HPQ: Can Hewlett-Packard Re-Invent Itself?: http://t.co/8vHJliYcGQ
Osiris Trading
27 Feb 15 14:57:29
Weekly recap $GOOGL 100% $PCLN 550% $TSLA 100% $NFLX 75% $GE 350% $CYBR $FEYE big wins. Ready for nxt week already. Check our TWTR for more
The Legacy News
27 Feb 15 14:57:13
Stock Traders Buy Large Volume of Netflix Put Options $NFLX http://t.co/rzQcRTtmY0
US Banking News
27 Feb 15 14:49:37
Stock Traders Buy Large Volume of Netflix Put Options $NFLX http://t.co/7Zh0agBSvI
Lisa Johnson
27 Feb 15 14:47:27
RT @TheStreet: Why Netflix's future depends on 'House of Cards.' Good thing we'll all be watching http://t.co/slrWaifvAT $NFLX
J. Wes
27 Feb 15 14:44:42
RT @TheStreet: Why Netflix's future depends on 'House of Cards.' Good thing we'll all be watching http://t.co/slrWaifvAT $NFLX
J. Wes
27 Feb 15 14:44:19
RT @OptionsAction: Mike's (slightly) bearish bet on Netflix: Sell the $NFLX 485/505 call spread for a $7.50 credit
27 Feb 15 14:40:55
RT @OptionsAction: Mike's (slightly) bearish bet on Netflix: Sell the $NFLX 485/505 call spread for a $7.50 credit
IH News Desk
27 Feb 15 14:40:29
$NFLX Opinions Updated Friday, February 27, 2015 5:11:25 PM $AGG $URE $AMGN $IJJP http://t.co/fEnGoBOMJz
27 Feb 15 14:40:01
Why Netflix's future depends on 'House of Cards.' Good thing we'll all be watching http://t.co/slrWaifvAT $NFLX
Media Sentiment
27 Feb 15 14:39:49
$NFLX received a new alert. Find out why at http://t.co/nZwqReM0tj #stocks #daytrading #trading #mkt #NYSE #NASDAQ #markets 462
Options Action
27 Feb 15 14:39:00
Mike's (slightly) bearish bet on Netflix: Sell the $NFLX 485/505 call spread for a $7.50 credit
Ophir Gottlieb
27 Feb 15 14:25:09
EOD: * News $NFLX * Stock/Option Movers $SPX * Covered Calls * Biotech Update http://t.co/9HfHhOsCNk
27 Feb 15 14:18:05
$NFLX: CNBC: Netflix’s future ‘House of Cards?’: http://t.co/5RC4lCXZZ5
Alex Hernandez
27 Feb 15 14:14:18
RT @YahooFinance: Why Netflix is absolutely incredible, but risks everything http://t.co/g0aPk2Ls5t via @OphirGottlieb $NFLX http://t.co/tL…
Tri Phan
27 Feb 15 14:07:36
RT @TheStreet: President Underwood is long $NFLX #HouseofCards http://t.co/Duk9mD9QTl http://t.co/Js4H7jSUvM
Karen Keeley (Goldy)
27 Feb 15 14:04:52
RT @YahooFinance: How 'House of Cards' dealt Netflix a winning hand http://t.co/WxZqeQcLB8 $NFLX #HouseOfCards
Alvan Duckworth
27 Feb 15 14:00:28
Nobody talk to me all weekend. Gonna be a little busy. $NFLX #HouseOfCards https://t.co/owpSDMvN1z
Carolyn B Miciano
27 Feb 15 13:56:00
Free ebook Top 7 Options mistakes traders make http://t.co/vJaEdon2ei $NFLX $PCLN $LNKD
E.G. Flaggs, Esq.
27 Feb 15 13:41:32
RT @YahooFinance: How 'House of Cards' dealt Netflix a winning hand http://t.co/WxZqeQcLB8 $NFLX #HouseOfCards
IH News Desk
27 Feb 15 13:39:20
$NFLX Opinions Updated Friday, February 27, 2015 4:11:24 PM $AUY $USO $PFE $IYR http://t.co/AAgdvxAsa4
Home Loans Solutions
27 Feb 15 13:38:16
RT @YahooFinance: How 'House of Cards' dealt Netflix a winning hand http://t.co/WxZqeQcLB8 $NFLX #HouseOfCards
Capital Market Labs
27 Feb 15 13:35:43
$NFLX Assets and Stock Buy-backs Trends #CML http://t.co/GqbhZlGJvR
Chris Oliver
27 Feb 15 13:34:33
Please Help Disabled Veterans with my new Charity Just a few bucks goes a long way $AAPL $NFLX $AMZN $BIIB http://t.co/tffANrWQsZ
D. Johnson
27 Feb 15 13:34:08
RT @YahooFinance: How 'House of Cards' dealt Netflix a winning hand http://t.co/WxZqeQcLB8 $NFLX #HouseOfCards
Yahoo Finance
27 Feb 15 13:33:43
How 'House of Cards' dealt Netflix a winning hand http://t.co/WxZqeQcLB8 $NFLX #HouseOfCards
27 Feb 15 13:33:03
$NFLX: Bloomberg: Who Wins the ‘World Cup’ of Peak Video Streaming?: http://t.co/bOi65H1MXq
Common King
27 Feb 15 13:31:27
Portfolio Holdings #1-10: $GOOGL, $AAPL, $PCLN, $MSFT, $MA, $FDX, $NFLX, $AIG, $LNKD, $AMZN http://t.co/G2sTpSv9Ku
Carolyn B Miciano
27 Feb 15 13:20:48
Use volume analysis to know when money is coming in or out http://t.co/AkKKwgCFzf $NFLX $PCLN $LNKD
  +Follow October 17, 2013 9:23AM



blog comments powered by Disqus

About us

Equities.com is the most advanced interactive online social ecosystem for the financial industry, serving as a resource center and next-generation communication platform that connects self-directed investors with public issuers, market experts, and professional service providers and vendors. Registered members can leverage our exclusive proprietary research tools such as the Small-Cap Stars, which outperformed 90% of all small-cap mutual funds, and robust do-it-yourself E.V.A. research reports. The Equities.com Issuer Dashboard is the ideal tool to communicate and manage investor awareness campaigns to the investment community, as well as to access valuable resources to help your company grow.

Market Data powered by QuoteMedia.
Copyright © QuoteMedia. Data delayed 15 minutes unless otherwise indicated. Terms of Use.