A. C. Nielsen Company Pioneers in Marketing and Media Research Summary

  • Last updated on November 10, 2022

With its pioneering techniques, the A. C. Nielsen Company became a leader in the field of market research and had significant technical and financial effects on commerce, advertising, and media research worldwide.

Summary of Event

In 1923, A. C. Nielsen, Sr., founded the A. C. Nielsen Company as a firm of engineering consultants who measured product movement and market size for industrial machinery and equipment. By 1933, the company had abandoned this service and replaced it with a marketing information service known as the Nielsen Drug Index. This service used a standing panel of drugstores to measure sales of products distributed through retail drugstores and attempted to identify factors that influenced sales. Seven months later, Nielsen established a similar service for the food industry known as the Retail Index Services. With the establishment of these services, the A. C. Nielsen Company grew to be the leading market research company in the world. A. C. Nielsen Company Marketing;media research Media research [kw]A. C. Nielsen Company Pioneers in Marketing and Media Research (1923) [kw]Nielsen Company Pioneers in Marketing and Media Research, A. C. (1923) [kw]Marketing and Media Research, A. C. Nielsen Company Pioneers in (1923) [kw]Media Research, A. C. Nielsen Company Pioneers in Marketing and (1923) [kw]Research, A. C. Nielsen Company Pioneers in Marketing and Media (1923) A. C. Nielsen Company Marketing;media research Media research [g]United States;1923: A. C. Nielsen Company Pioneers in Marketing and Media Research[05660] [c]Marketing and advertising;1923: A. C. Nielsen Company Pioneers in Marketing and Media Research[05660] [c]Communications and media;1923: A. C. Nielsen Company Pioneers in Marketing and Media Research[05660] Nielsen, A. C., Sr. Nielsen, A. C., Jr.

By the early 1960’s, many U.S. companies had begun to expand their operations abroad. In 1959, A. C. Nielsen, Jr., then president of the company, explained the research approach to marketing and set down a number of guidelines to successful marketing, particularly overseas. He stressed adapting the product to the market, gauging the impact of customs and traditions of prospective consumers, studying differences in advertising, identifying the product with the local scene, knowing the trade channels, and understanding consumers’ views of price and quality.

The Nielsen name is best known to the general public in the United States for the television rating system established by the company’s Nielsen Media Research Nielsen Media Research division. Nielsen began radio audience research Radio;audience research in 1936 as a service offered to advertisers, advertising agencies, and radio station business managers who looked to the medium as a means of selling products. The idea was to identify links between the kinds of programs people listened to and the products they were buying or were likely to buy. The company used a device known as the Audimeter, which was attached to a radio and connected to a moving roll of paper; the machine created a permanent record of the stations tuned in. Audimeters were placed in the homes of a sample population of about one thousand consumers. This replaced the slower and less accurate method of using telephone surveys to find out what people were listening to at a given time.

During the 1950’s, Nielsen began measuring and indexing the audiences of network and local television stations and assigning ratings points according to how many people in a sample audience were watching a given program at a given time. Television;audience research To select a sample of four thousand households with television sets, Nielsen used the U.S. Census Bureau’s decennial census counts of all housing units in the country and randomly selected about five thousand blocks in urban areas and correspondingly small geographic units in rural areas, then selected one household from each. Field researchers then collected data on the demographics of the households and individual information on persons in each home. Even this relatively small sample of households was statistically reliable, and Nielsen used the sample results to project ratings for the entire American television audience. If 15 percent of the sample watched a particular show, Nielsen awarded the show 15 ratings points. At first, Nielsen relied on telephone surveys and diary reports to collect data from “Nielsen families,” but later the company developed mechanized means of data collection on television viewing.

By 1964, Nielsen had discontinued its radio audience measurement to concentrate entirely on television viewership. By the late 1980’s, the company had streamlined its techniques of measuring the audience, collecting and computing data, and reporting to marketers, advertisers, and programmers who used the information, and television ratings could be reported overnight.

As of 1993, Nielsen provided five basic services to its customers: the Nielsen Television Index (NTI), which tracked national network television audiences (in use since 1950); the Nielsen Station Index (NSI), which tracked local television audiences (in use since 1954); the Nielsen Syndication Service (NSS), which tracked audiences for syndicated programming (in use since 1985); the Nielsen Home Video Index (NHI), which tracked audiences for cable, videocassette recorders, and other new television technologies (in use since 1980); and Nielsen New Media Services, which provided custom research and start-up services for measurement of nontraditional markets, such as Hispanic viewers (in use since 1992).

Significance

The A. C. Nielsen Company introduced and formalized the concept of products holding percentage shares of their market. This concept can be said to have brought the overlapping disciplines of advertising and marketing closer together. Nielsen tracked what stores were selling, and advertisers tracked what people were buying and how they made their purchase decisions. Nielsen’s quantitative statistics on product movement, its categorization of products moved, and its demographic statistics on buyers provided valuable information to producers, marketers, and advertisers. In 1959, Nielsen Marketing Research was operating in eleven countries. By 1991, that figure had grown to twenty-seven, and the company reported worldwide revenues of $1.2 billion.

Nielsen became synonymous with U.S. television audience measurement and expanded television audience research worldwide. By 1990, Nielsen’s metered research covered twenty-eight U.S. markets that included half of the country’s population. Despite questions raised by some observers concerning Nielsen’s methods of data collection, and despite criticism of the practice of basing programming decisions on ratings, Nielsen ratings continued to be the currency of negotiation in the multibillion-dollar business of buying and selling airtime. Programming decision makers in the television industry continued to rely on Nielsen Media Research statistics to determine which programs to air.

By the beginning of the twenty-first century, Nielsen Media Research expanded its coverage to more than seventy countries, representing 85 percent of global advertising spending in 2005. The A. C. Nielsen Company moved beyond research concerning traditional television broadcasting into research on viewers of cable television, regional cable systems, and satellite television as it adjusted to changes in the broadcasting industry. A. C. Nielsen Company Marketing;media research Media research

Further Reading
  • citation-type="booksimple"

    xlink:type="simple">Clark, Eric. The Want Makers. New York: Viking, 1989. Traces the advertising process from research and creation to the worldwide impact of electronic methods of marketing research.
  • citation-type="booksimple"

    xlink:type="simple">Nielsen, Arthur C., Jr. “Do’s and Don’ts in Selling Abroad.” In International Handbook of Advertising, edited by S. Watson Dunn. New York: McGraw-Hill, 1963. Contribution to a collection of essays by experts in the fields of international marketing and advertising discusses how to advertise in specific foreign markets and how international advertising is organized.
  • citation-type="booksimple"

    xlink:type="simple">Nielsen Media Research. The Quality Behind the Numbers. New York: Author, 1992. Outlines the history of the A. C. Nielsen Company in general and its media research in particular, including detailed information on Nielsen’s marketing philosophy, methods, services, and technology.
  • citation-type="booksimple"

    xlink:type="simple">Norback, Craig T., and Peter G. Norback. “Audience Research: A. C. Nielsen Company.” In TV Guide Almanac, edited by Craig T. Norback and Peter G. Norback. New York: Ballantine Books, 1980. Overview of all factors of television programming and production. Details the history, purpose, and methods of audience research used by Nielsen and other research companies as of the 1970’s.
  • citation-type="booksimple"

    xlink:type="simple">Roman, James. Love, Light, and a Dream: Television’s Past, Present, and Future. New York: Praeger, 1996. Discussion of the cultural significance of television includes coverage of the influence of the Nielsen rating system. Features bibliography and index.
  • citation-type="booksimple"

    xlink:type="simple">Schwerin, Horace S., and Henry H. Newell. Persuasion in Marketing. New York: John Wiley & Sons, 1981. Comprehensive discussion of consumer research and how its results are used in the formulation of advertising campaigns. Includes information on A. C. Nielsen’s research techniques.
  • citation-type="booksimple"

    xlink:type="simple">Webster, James G., Patricia F. Phalen, and Lawrence W. Lichty. Ratings Analysis: The Theory and Practice of Audience Research. 3d ed. Mahwah, N.J.: Lawrence Erlbaum, 2005. In-depth, scholarly discussion of mass-media audience research aimed at readers with background in advertising and related fields.

Scott Publishes The Theory of Advertising

Fuller Brush Company Is Incorporated

Advertisers Adopt a Truth-in-Advertising Code

Procter & Gamble Announces Plans to Sell Directly to Retailers

Mail-Order Clubs Revolutionize Book Sales

Wheeler-Lea Act Broadens FTC Control over Advertising

Categories: History Content