Nielsen ratings consist of measuring audience behavior in order to find out how many people watch a TV program in the U.S.
Arthur Nielsen started Nielsen Media Research in the 1920s to study brand advertising. The company expanded its service to radio in the 1930s and then to TV in 1950. Nielsen’s methods are now the primary means used to measure audience behavior in the television market across the globe. Nielsen gathers data in two ways.
The first method involves viewers keeping a diary where they record what they watch. By aiming at specific demographics, data from Nielsen is able to statistically show what people watch for every network, every TV show and every hour.
The second way Nielsen gathers data is by Set Meters. These devices are attached to the TV and transmit data to Nielsen via a phone line. The data gives researchers the ability to study viewing behavior by the minute.
The use of Optimove customer segmentation software by Nielsen gives the company the ability to track and determine which TV programs Americans watch every day.
Customer segmentation software allows companies to gather data in order to predict how consumers might choose a product. Segmentation breaks people down into smaller groups for the purpose of marketing.
For example, lifestyles of certain groups of people can serve as a predictive factor in determining what kinds of products they buy. Lifestyle data will include demographics, geographic information, values, attitudes, personality, behavior and goods and services purchased.
The data that Nielsen gathers helps to set advertising rates on TV. Advertisers consider the group of people between the ages of 18 to 49 as the most important age demographic. It’s more important than the total number of viewers watching a TV program.
This age data allows one TV program to charge more for an advertising spot than another program that has more viewers. Quite simply, advertisers consider the 18 to 49-year-old group more important than the total number of viewers.
The most critical time for program producers, networks and advertisers is during the Nielsen sweeps.
During these sweeps, which take place in May, July, November and February, Nielsen gathers all the data from viewers. This data includes about 2 million paper diaries from across the U.S. These diaries include information about which family members are watching which TV channel.
All this information is calculated and analyzed. This data is used by TV stations, programmers and advertisers to determine which shows stand or fail and how much to charge advertisers for a commercial.