Nielsen CEO Karthik Rao has weighed in on the ratings measurement firm’s ongoing contract dispute with Paramount Global, pushing back against the media giant’s claim that it is seeking “substantial price increases” in negotiations.
“We are simply aiming to maintain fair value for the quality of our services—services that are empirically better than at any point in our history. Our proposal to Paramount is eminently reasonable and commensurate with the value our services deliver,” Rao said in a memo to clients obtained by TheWrap. “We’ve worked tirelessly to update our tools, refine measurement capabilities, and enhance your monetization options. These innovations are the result of significant investments over multiple years to build and also to maintain/enhance going forward. It’s hard work that we love doing, because it provides best-in-class, MRC-accredited solutions for our clients’ increasingly varied needs.”
Rao said that Paramount is demanding a “nearly 50% reduction” in the price of its service, which “not only undervalues our substantial investments, but makes it unsustainable to provide the support and quality that all Nielsen clients rely upon.”
“We can not reset the value of our services to a fraction of their worth due to the circumstances and demands of one client,” he added. “We are an industry solution and price integrity matters for the role we play in the industry.”
The current contract between Paramount and Nielsen expired on Oct. 1. In a memo to agencies ahead of the expiration, Paramount Advertising president John Halley argued that Nielsen’s costs as a percentage of Paramount’s ad revenue have “quintupled” over significant parts of its business, and proposed fees exceed the total ad revenue of the network being measured in some instances.
In the interim, advertisers’ campaigns are being measured with VideoAmp, which Halley said the company is prepared to make a permanent switch to. Rao says the move to rely exclusively on VideoAmp, which is not accredited by the Media Rating Council, raises “additional concerns.”
“Unlike Nielsen, which adheres to rigorous quality and accuracy standards, this substitute provider’s data lacks the precision to deliver reliable, actionable insights, particularly for over-the-air broadcasting and live sports,” Rao said. “It also does not measure diverse viewership—an insult to audiences that have a painful history of being overlooked and underserved by our industry, and to your clients who rightly value and seek to serve those audiences.”
Rao acknowledged that the dispute has “created unfortunate turbulence” for its clients, but remains hopeful that a deal will be reached with Paramount.
“I know many of you are anxious about Paramount’s disregard for accredited data. We’ve heard already from many clients about the impact on their ability to connect with desired audiences, meet campaign goals, and maintain consistency in marketing strategies. I encourage you to reach out to me directly with any questions or concerns. We’re here to support your business in any way we can,” Rao’s memo concluded. “I look forward to getting back to communicating about what we do best: innovating and expanding our measurement tools to meet your evolving needs. I hope by providing some additional context on our position you’ll understand why I felt it so important to step forward now to correct the record.”
A spokesperson for Nielsen declined to comment. Representatives for Paramount declined to comment.
Nielsen has dominated media measurement for the better part of a century. Advertisers largely depend on its data, which includes the Streaming Top 10 and The Gauge, in order to help determine their spending on commercials as audiences shift from linear TV to streaming.
But TV networks have complained that the firm is not measuring audiences as well as it should amid the transition from linear to streaming. In 2021, the MRC found that the firm undercounted viewers during the COVID-19 pandemic, which temporarily resulted in a suspension of their national accreditation.
Over the past six months, Nielsen has launched new capabilities to expand its measurement around audience and out-of-home viewing. Its data currently covers 45 million households and 75 million devices in the U.S. alone. While Nielsen’s national accreditation was recently renewed by the MRC, the move did not include local, big data or digital measurement.
Amazon has notably used Nielsen’s big data panel measurement tools for its “Thursday Night Football” ratings. It also recently struck an agreement with Netflix to measure live ratings of the streamer’s NFL Christmas Day Games, with the two parties collaborating on first-party streaming data. Netflix also struck a deal with VideoAmp to deliver cross-screen and live viewership measurement starting with the launch of WWE in January.
The dispute with Nielsen comes as Paramount is tightening its belt ahead of a merger with Skydance Media, with plans to lay off a total of 15% of its U.S. workforce to generate $500 million in annual run rate cost savings. The advertising division is among the already impacted areas.
“This really is not about affordability. It’s about getting the value we need for what we pay,” Paramount Global co-CEO George Cheeks told analysts during the company’s third quarter earnings call. “We haven’t seen any adverse impact on ad revenue to date and we don’t expect a material impact in Q4. But I do want to be clear that we do recognize that Nielsen can be a valuable resource. It’s just that the economics have to make sense for the business.”
A recent survey by Advertiser Perceptions found that 2 in 3 advertisers agree a multi-currency landscape is the future, but the respondents agreed that the marketplace needs an agreed-upon shortlist of no more than five providers. About 3 in 5 used alternative currencies for TV transactions in the past 12 months and said they are using more TV currencies, reporting three for 2024 with plans to add one more to their roster within the next two years.
VideoAmp, which is not accredited by the MRC, is certified by the Joint Industry Committee, which represents advertisers, agencies and media owners. Other ratings measurement competitors include Comscore and iSpot.tv, which have both received accreditations from the MRC.
