In the U.S., the term "TV ratings" immediately makes people think of "Nielsen" because Nielsen Media Research has become the de facto national measurement service for the television industry in the United States and Canada. Nielson measures the number of people watching television shows and makes its data available to the television and cable networks, advertisers and the media.
Nielsen uses a technique called statistical sampling to rate the shows -- the same technique that pollsters use to predict the outcome of elections. Nielsen creates a "sample audience" and then counts how many in that audience view each program. Nielsen then extrapolates from the sample and estimates the number of viewers in the entire population watching the show. That's a simple way of explaining what is a complicated, extensive process. Nielsen relies mainly on information collected from TV set meters that it installs, and then combines this information with huge databases of the programs that appear on each TV station and cable channel.
To find out who is watching TV and what they are watching, the company gets around 5,000 households to agree to be a part of the representative sample for the national ratings estimates. Nielsen's statistics show that 99 million households have TVs in the United States, so Nielsen's sample is not very large. The key, therefore, is to be sure the sample is representative. Then TVs, homes, programs, and people are measured in a variety of ways.
To find out what people are watching, meters installed in the selected sample of homes track when TV sets are on and what channels they are tuned to. A "black box," which is just a computer and modem, gathers and sends all this information to the company's central computer every night. Then by monitoring what is on TV at any given time, the company is able to keep track of how many people watch which program.
Small boxes, placed near the TV sets of those in the national sample, measure who is watching by giving each member of the household a button to turn on and off to show when he or she begins and ends viewing. This information is also collected each night.
The national TV ratings largely rely on these meters. To ensure reasonably accurate results, the company uses audits and quality checks and regularly compares the ratings it gets from different samples and measurement methods.
Participants in Nielsen's national sample are randomly selected. Every U.S. household with a TV theoretically has a chance to be a part of the sample. The sample is also compared to the general population, and at times Nielsen calls thousands of households to see if their TV sets are on and who is watching.
This 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. A show that has several million viewers may seem popular to us, but a network may need millions more watching that program to make it a financial success. That's why some shows with a loyal following still get canceled.