Have you ever wondered how television networks decide which shows to keep on the air and which shows to cancel? How do they determine what show is a hit with viewers and what show is a dud? How do the networks decide what advertising goes with what show? Have you ever noticed that certain types of commercials are featured during the breaks of certain kinds of shows?
The networks decide all of this via a method called Nielsen ratings. Nielsen ratings measure the number of viewers for a show and the demographics of those viewers.
It was brought about by a desire of broadcasting companies to measure the size of audiences for the then-new medium of television in the United States. Nielsen Media Research, a global information and measurement company devoted to understanding and interpreting consumer behavior, released the first Nielsen ratings for television in 1950.
The first Nielsen ratings were actually compiled in the 1940s for the most popular medium of the time, radio. A device was attached to the radio to monitor and record what programs were listened to and when.
How does Nielsen Media Research collect the data that is so crucial to the networks for their advertising and programming?
First, they use viewer "diaries," sent to a targeted audience. This audience then records its viewing habits, covering the shows that they watch and the length of time they spend watching them. This practice began in 1953.
Nielsen also uses a far more technologically advanced system known as set meters. Set meters are attached to televisions in selected homes, and they monitor and record the viewing habits of those in the home. Then the data is transmitted every night back to Nielsen via a home unit that is connected to a phone line.
Homes that are connected to Nielsen via the set meters often also have people meters, which were introduced in the 1980s to further identify the viewing habits within a Nielsen home. Resembling a remote control device, people meters are equipped with buttons that represent each individual who resides in the home, along with extra buttons for guests.
People meters also observe how long viewers are actually in the room where the television is located. In 2005, Nielsen began measuring use of devices such as TiVo and digital video recorders.
Nielsen ratings are reported in two ways: ratings points and share. For a single rating point, one percent of the total number of television households in the United States are represented. Share involves the measurement of the percentage of television sets that are being used and are tuned into a particular program.
Nielsen ratings are also effective in monitoring the impact of commercial advertising during a program. Demographics such as race, age, and gender are taken into account to determine advertising rates.
Shows that are popular with the coveted 18-49 demographic garner the highest advertising rates, as that age range is viewed as "movers and shapers" by advertisers who are willing to spend more money on advertised products. Nielsen also provides data on the average number of viewers for the commercial time only during a program.