AAAA asks FTC for confidential inquiry
NEW YORK — The broadcast networks aren’t the only ones complaining bitterly about Nielsen Media Research these days.
In an unprecedented move, Madison Avenue has asked federal regulators to examine whether the ratings company engages in monopolistic practices.
Ongoing confidential inquiry by the Federal Trade Commission was requested by the American Assn. of Advertising Agencies (AAAA), which alleges Nielsen may act anticompetitively in the way it does business with third-party processing companies. Ad agencies rely on these third parties to analyze Nielsen data.
Timing of the informal FTC proceeding comes as the networks fight their own battle with Nielsen over the mysterious disappearance of young male viewers from the lagging fall TV sked. With Nielsen expected to conclude in the next few days that there is nothing inherently wrong with its systems, nets are potentially looking at millions of dollars in make-goods to advertisers for unmet rating levels.
The debates raging in network exec suites and on Madison Avenue suites have reignited the discussion about Nielsen as the only game in town.
“There’s no other leverage in the marketplace to look to for a fix,” said AAAA senior VP and legal counsel Adonis Hoffman. “Asking the FTC for help indicates the seriousness of our concern. Our general posture is to self-regulate at almost every turn.”
Hoffman said the FTC has met with individual ad agencies since AAAA asked for the informal inquiry in mid-September. He did not know if the consumer regulatory agency had contacted Nielsen or the networks.
An FTC spokeswoman said the agency can neither confirm nor deny that any sort of proceeding is under way.
Not aware of inquiry
Nielsen spokesman Jack Loftus said the FTC has not notified the company of an inquiry, formal or otherwise. Furthermore, all third-party processing companies have now renewed their contracts with Nielsen, indicating that the contentious issues — such as increased fees — have been worked out satisfactorily.
“I think that the situation has really subsided. We do take our clients very seriously and we respect them very highly. We really like to think that we are working closely with them,” Loftus said.
Nielsen’s conciliatory approach will be put to the test when it releases to the TV networks its “white paper” on the steep dropoff in young adult men 18-34 and, more specifically, men 18-24. The report, which was to have been released this week, likely will not be sent to Nielsen clients until early next week, possibly Monday.
Networks, which demanded Nielsen investigate the matter, have insisted such a sudden decline in young men doesn’t make sense and say there is something wrong with Nielsen’s sampling.
No single factor
Nielsen has suggested the dropoff is real and that there are any number of contributing factors — including a lack of testosterone-drive programming on the fall sked, and increased usage of DVDs, Internet and vidgames.
“I don’t see any smoking gun, like we didn’t add data correctly or that we made a mistake in the calculation. We’ve moved beyond to provide more information about what we are seeing in the sample,” Loftus said.
At the same time, Loftus said the networks are rightly frustrated by the delay in getting more detailed information from Nielsen regarding the viewing sample in question.
“With millions of dollars of ad guarantees at stake, we probably need to get something out there a lot faster than we did,” Loftus said. “We have an obligation to provide all clients with data as quickly as we can about audience viewing behavior.”
Loftus said Nielsen will make a better effort to do so from now on.
But networks aren’t likely to be easily assuaged by Nielsen’s olive branch, even though they know there is little to be done. All previous attempts to fund a competing measuring service to Nielsen have failed.
Don’t want duplication
Bottom line: No one, from Madison Ave. to stations to nets, wants to pay for two sets of numbers.
“Companies don’t want to enter the market because they see roadkill,” one net exec said.
Also, Madison Ave. and the networks haven’t trusted each other’s intentions to band together and raise the money to fund a competitor.
The decision by the AAAA to approach the FTC was reached after Nielsen proposed steep fees for third-party processing companies, saying the increased cost would merely be passed on to them.
“The problem is that Nielsen is so inept at not only collecting data, but then making it user-friendly, that almost everyone who pays for and uses Nielsen data has to pay someone to process the data,” a TV exec said.
Broadcast networks are about the only slice of the media biz that have hatched their own research departments, cutting out the need for a middleman. Virtually everyone else — ad agencies, local stations — must pay the additional cost of a third-party company.
Loftus said the fee hikes for third-party processors appeared more dramatic than they were, since the fees previously being charged were next to nothing.
Also of concern to AAAA in seeking the FTC inquiry was Nielsen’s apparent requirement that third-party companies give Nielsen proprietary information about their software.
Loftus conceded Nielsen didn’t do a good job in its initial communication on this matter and said it has since made clear that third parties don’t have to turn over any proprietary info.