• by Tyler Loechner , Staff Writer @mp_tyler, March 12, 2015

Jim Nail, a principal analyst at Forrester Research, recently issued a note on the Nielsen-eXelate deal, stating that he believes the move signals Nielsen’s recognition of “TV’s impending addressable future.”

It’s an interesting stance, considering that many others in the industry contend the move is more about Nielsen’s digital plans.

“While a fully addressable TV future is still several years away, Nielsen has made a preemptive acquisition to protect its central place -- as the established standard when it comes to audience measurement and targeting -- in the TV ecosystem,” writes Nail in his note. 

Real-Time Daily caught up with Nail.

Real-Time Daily: In the note, you write: “It’s not hard to imagine a future where Nielsen’s gross rating point loses relevance.” What, if anything, replaces it?

Jim Nail: I read a quote from Steve Hasker, global president of Nielsen, in a Wall Street Journal article. The quote: “We think the combination of Nielsen and eXelate will allow us to better serve the programmatic buying and selling space, in and around particularly video, but all forms of media. While we are starting in digital video, we think it will -- if and when the market is ready -- go to a broader television ecosystem.”

I read between the lines here that if Nielsen didn't think programmatic would ever come to TV, they wouldn't be in as much of a rush to buy a DMP.

RTD: But your note is more about “addressable TV” than “programmatic TV.” Can you specify between the two? Is this move a play on Nielsen’s part to get involved in “programmatic TV”?

Nail: Maybe at some point in the distant future.

The distinction I make is that addressable TV allows for different commercials to air in different households determined by the different characteristics of that household.

Programmatic is a spectrum of automation that is already starting, to some extent, by automating the back office: scheduling, traffic, reporting -- that kind of stuff. Eventually, does it reach into that real-time, impression-by-impression transaction processing for TV as it is now for display? I think that’s a bridge too far for the foreseeable future. But as marketers increase their use of addressable TV, they need the kind of detailed household data that a DMP can provide.

RTD: Many others viewed the move as Nielsen taking on a big role in digital, but you contend this move is still about the TV space (via addressable TV). What impact do you see it having on Nielsen in digital?

Nail: Don't forget that TV is becoming digital too, and one of Nielsen's biggest problems is trying to size the audience for TV Everywhere, network app, etc. views so those Nielsen clients (who pay them big bucks) can monetize those views. They need bigger data than they currently have to be able to do that effectively, and that is where I see eXelate fitting in.

In the broader video world, advertisers want to be able to do cross-platform/cross content-type (long-form/short-form, professional/UGC, linear native/Web native) to understand, measure and control reach and frequency holistically.

RTD: What do you mean they need “bigger data” than they currently have?

Nail: [The acquisition] is about Big Data, as opposed to medium-sized data (Nielsen net ratings) or mini-data (measuring 20,000 households for TV data).

I really see this as Nielsen going: “These old methodologies we’ve used simply can’t keep up with what marketers want, which is more targeting using data that’s more and more granular.

RTD: What does the Nielsen-eXelate deal mean for the programmatic ad space in general? Is audience-buying really the future?

Nail: I am confident audience-based buying is the future, so the idea of the GRP that provides a general aggregated description of who views the content is inadequate. Instead, marketers will manage more granularly the reach and frequency of their campaigns against very specific segments: not A 18-49, but dog owners who buy premium food.

There may be only 10 million households like that in the country, so why should a brand like Beneful buy 80 million households via GRPs? They will plan and buy an 80% reach with a 4 frequency against those 10 million households -- and some of those ad exposures will be on linear TV, some will be on digital TV, some will be on appropriate YouTube channels, consumer videos of their pets, etc. You have to have a DMP to do this kind of media strategy.

RTD: If Nielsen, a “monopoly” in the TV business as you note, goes out and buys a DMP that’s tied to the digital programmatic ad industry, what does that say about the future of television?

Nail: What is television? If you mean linear, this has nothing to do with it -- consumer viewing behavior is eroding linear viewing pretty rapidly, and it seems to be accelerating.

If you mean TV as in “long-form professionally produced video entertainment content,” I like to say that in the Game of Thrones that is the TV ad business, TV-like content becomes more powerful. It will aggregate larger audiences that are even more attentive than those watching at air time, thus more valuable to the advertiser.

If you mean TV as in short-form brand/product messages that are inserted into content, it also becomes more important in marketing: these different devices/sources/types of content will reach consumers at different times of day, when they are in different kinds of mindsets. And being able to deliver the power of a sight, sound and motion message is the advertiser's dream. Print, radio, outdoor, etc. were always second-choice ways to deliver the message that now will be delivered with video.  

RTD: So you think this move is more about Nielsen prepping itself to be a leader in the addressable TV space, but what implications does the acquisition have on Nielsen’s role in the “traditional” digital space, such as digital video, or even display?

Nail: There are questions I’m sure they are answering this week.

Are they buying eXelate for the data to improve their measurement capability? Are they moving into the selling of data to marketers? Are they moving into the the middle of the transaction, in the exchanges?

That is a huge strategic issue for them, because they’ve always been the neutral arbitrator -- the umpires sitting on the side. As a DMP, that doesn’t necessarily compromise their neutral stance, but depending on how they execute, and the revenue model they use, it could move them into a part of the media transaction that they have never been in before.