How Do Television Ratings Work?

In the U.S., the term "TV ratings" is synonymous with "Nielsen" because Nielsen Media Research has become the de facto national measurement service for the television industry. Nielsen measures the number of people watching television shows and makes its data available to television and cable networks, advertisers, and the media. The company has been measuring television audiences since 1950, when TV sets were just beginning to appear in many households.

TV ratings provide valuable insights into how many people are consuming content, as well as how and when they do so. That information is useful for advertisers, networks, and other entities in the media industry that make content or market products and services.

Since it's a tall feat to measure the viewing habits of every single person in the U.S., Nielsen uses a technique called statistical sampling to rate shows. It's the same technique that pollsters use to predict the outcome of elections. Nielsen recruits people to join its TV ratings panels and measures what they watch, how often they watch it, and how long they watch it. Nielsen then extrapolates the data that it collects from these sample audiences to draw conclusions about larger populations. That's a simple way of explaining a complicated, extensive process.

Around 20,000 households are included in the representative sample for the national ratings estimates. Though this number is a small percentage of the 121 million homes with TVs in the U.S., panels are selected so that they mirror the makeup and behavior of the larger populations that they represent.

Panelists are strategically selected. They provide Nielsen with information about their gender, household income, and ethnicity. To measure how panelists watch TV, Nielsen uses a combination of panel data, data from cable and satellite set top boxes, and census data from digital devices (collected through measurement tags in content). Meters installed on panelists' TVs track who is watching television and what they're watching. The meters send reports of panelists' TV viewing to Nielsen, and they collect information from signals from TV broadcasts. To ensure reasonably accurate results, Nielsen uses audits and quality checks and regularly compares the ratings it gets from different samples and measurement methods.

The media landscape has changed dramatically since the mid-20th century. Viewers can watch TV programming on many different devices, and Nielsen ratings have had to adapt to new playing fields. For instance, the company measures live, DVR, on-demand, and streamed content.

In recent years, Nielsen has introduced initiatives to reckon with the reign of video on demand and streaming services. In April 2021, it launched Nielsen Streaming Video Ratings, acknowledging the shift in viewers' preferences. But its ratings still do not account for viewership outside of the U.S., and its streaming metrics only measure what people are watching on television screens. Considering the trend toward more streaming on phones, laptops, and other devices, traditional methodologies for TV ratings could quickly become outdated.

Still, media research is worth billions of dollars. Advertisers pay to air their commercials on TV programs using rates that are based on Nielsen's data. Programmers also use Nielsen's data to decide which shows to keep and which to cancel. The technology may be scrambling to keep up with the rapidly changing landscape, but the industry continues to rely on TV ratings for decision-making purposes and bragging rights.