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Market Insight

Nielsen’s acquisition of data platform, eXelate, to address gaps in measurement beyond traditional TV

March 09, 2015

Kia Ling Teoh Kia Ling Teoh Senior Research Analyst – Advertising & Television Media, IHS Markit
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American information and measurement company Nielsen has acquired Israeli data management and analytics company eXelate for an estimated $200 million. eXelate owns a data exchange platform that accumulates data through “cookies” which track user’s browsing activities and behaviour. The data are then stored in a data management platform and sold to digital ad companies to improve targeting.

Nielsen reported annual revenue of $6,288 million in 2014 and claims to service 20,000 organizations in 100 countries. EXelate received $12 million in a series C round in September 2014 and is currently present in five countries.

Our Analysis

Nielsen has been the dominant television viewership ratings body since the invention of TV advertising in the 1950s and has provided the currency against which brands bought advertising on TV in the United States. However, in the last few years, the company has increasingly been criticized for neglecting to accurately measure viewership beyond traditional TV. Nielsen’s methods have been questioned and declared by some as obsolete and insufficient.

In response to this, Nielsen has been exploring different options to ramp up its digital content measurement. The company partnered with Adobe Analytics in October 2014 to track online video and other digital content ratings, but the cooperation has not yet demonstrated any change from the traditional model. In the meantime, broadcasters have become increasingly dissatisfied with Nielsen audience data. Viacom has publicly condemned Nielsen’s inaccurate television ratings for causing its advertising decline, stating that the traditional measurement had overlooked audience’s viewing through other screens such as mobile apps, gaming devices and other digital platforms. In January 2015, CNBC ceased using Nielsen’s service for its inability to measure audience by specific segment. CNBC’s daytime shows target a niche audience segment (in this case profession), which could not accurately be accounted for by Nielsen.

Nielsen hopes to address these concerns with the acquisition of eXelate. By incorporating eXelate’s data to its service, Nielsen will attempt to fill some of the gaps in its existing measurement and further expand its role in the increasingly data-driven advertising market. TV is a crowded marketplace and as it flourishes, media owners compete against each other for viewership, which is used as a basis for TV advertising rates. Traditional TV is still the dominant ad revenue generator, however as multi-device viewing and cord-cutting becomes the norm, its share is starting to be cannibalized by other screens. Broadcasters expect measurement companies to adjust their methods to more accurately portray viewership behaviour. Nielsen will have to adapt to remain relevant and the eXelate acquisition is good starting point. However, this will require a substantial investment, further acquisitions and more fundamentally a paradigm shift from the strongly embedded, traditional viewership model. 

 

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