Local FMCG brands are outperforming rivals: Nielsen CEO Mitch Barns
New Delhi: Mitch Barns, 53, is chief executive officer of the global information and research firm Nielsen. Barns, who has held different leadership positions during his 20 years with the company, was appointed CEO in January 2014. In an interview, during his brief trip to India to meet both employees and clients, Barns spoke about the challenges of measuring audiences and the changing habits of consumers. Edited excerpts:
What are the challenges of measuring audiences across multiple platforms, especially digital?
The biggest challenge is not so much measuring each of those platforms but measuring them in a way that is comparable. People not only want to know how big their TV or digital audience is, but they also want to know what their total audience is. To find a way to measure all of the different platforms in a manner that is comparable, that you can then de-duplicate the reach across those platforms, that is what is really hard. And that’s the problem we have been solving.
If you are an advertiser, you care about the percent reach that you achieve…so if you advertise on television and on digital, some portion will be common and you will reach the same people on both platforms. So, they need us to de-duplicate that reach so they get the net reach they achieve.
In how many markets are you able to offer total audience measurement?
We have television in approximately 35 and digital in about 25. And our true total audience measurement system in about half a dozen markets at this point of time—that is, where you put traditional and digital media together in one measurement programme. But it is growing rapidly.
Do you plan to launch it in India?
We have already launched our digital measurement in India, and we will be working with BARC (Broadcast Audience Research Council India), the joint industry committee (for TV measurement) here to bring digital measurement into their portfolio. As far as television is concerned, BARC is using other methodologies. We lend some technology to support TV but we don’t have the full responsibility for the television measurement here.
TV measurement agency TAM where Nielsen was a partner was discontinued by broadcasters in India. Do you think you will come back to TV?
We hope so. Right now, however, we are focused on digital measurement.
You measure what people buy—what are they buying now and how has that changed over a period of time?
We are mostly focused on fast- moving consumer goods (FMCG). What we have seen over the past few years in fast-moving consumer goods is that consumers are allocating their purchasing on smaller and local and speciality products. And that is coming at the expense of bigger and global brands. That’s a reversal from a trend may be 5-7- 10 years ago. Now, smaller products, local brands and speciality products are outperforming the bigger, global brands, they are winning market share from the bigger companies. And it all starts with the consumer, in particular, the younger generation. This trend is most pronounced with millennial population because they see their purchasing as an expression of their identity, trying to be different from their friends so they will buy the local and speciality products in greater proportions than people of my generation.
And what are people watching?
Media fragmentation is real and significant. But most of the video content people are watching in markets is still being watched on the TV screen. So, the big screen is still the preference. In some markets, mobile has actually captured a fairly significant amount of time spent viewing, especially in markets like India, China, Japan and South Korea. But even there, the big TV is still the dominant screen in terms of time spent in watching premium video content, which is really what advertisers want to be associated with. How dominant big screen still is, is a surprise, I think, for a lot of media companies these days.
Which is the bigger of the two practices for you in terms of revenue—TV measurement or retail?
This year will be the first time in our 94-year history that what we call the “watch” side of our business, that is television measurement will be bigger than the “buy” side of our business. According to current projections, more than 50% (revenue) will be the media side. At a global level, we will be in the range of $6.5 billion in revenue.
What accounts for this sudden growth in the TV business?
At the global level, the media side of the business has been growing a little bit faster than the buy side of the business. But the bigger reason is that all the acquisitions we have made over the past five years, a lot more have been on the watch side of the business. For instance, earlier this year, we made an acquisition of a company called Gracenote, and it’s more than $200 million revenue a year and all of this falls on the watch side of the business.
A couple of years ago, we bought a company called Exelate that is also on the watch side of the business. So, we have just tended to have more M&A activity in the company on the watch side lately.
Are some of the new age media firms disrupting the media measurement business as they measure audiences through mobiles?
Of course, if they are smaller start-up type of operators, they tend to be very effective but only on a narrow slice of the marketplace. They offer some point solution not a comprehensive measurement of the consumer. But we learn from them and we have a high degree of respect for what these solutions can do. But we feel we are in a very strong position with the comprehensive nature of our measurement.
On the other side, some big technology companies like Oracle have started to move in our direction. In fact, by acquisition, they have an Oracle data club and Oracle marketing club, and some of the things they do in that part of the business are more competitive with things that Nielsen does. And our approach to this is that we are going to compete with a lot of people and we are going to collaborate in many cases. You have to take an open view of this market. And really look for that opportunity to collaborate. These collaborate models are essential to do more and better things than you otherwise could do if you would keep a proprietory, closed-system approach. This is what our company is really good at and the real key to our success.
Do you still do paper diaries for measurement anywhere in the world?
We do but only in a few markets. Even in the United States, it is used, but it is a very tiny portion of the market. What is measured using paper diaries is less than one percent of our revenue. It has mostly been replaced by electronic measurement. Even in the US where we use paper diaries, we will replace by 2018 all of these with electronic measurement.
Why do you continue to use paper diaries?
Paper diaries have one thing going for them—they are inexpensive. Everyone wants us to replace them until they see the cost of the alternative. And then they say, ‘Ah okay, just keep the paper diaries.’ We don’t continue to use them because we necessarily think they are the best thing that we can do. But sometimes it is the best balance between the economics that the market will support and the need for data.
What we have done is improve the paper diaries quite a bit. We moved it to mobile devices, so it is still a diary but on a mobile so it is called the M diary.
For more than 90 years you have been into measurement. Have you tried to diversify into other businesses, programming for instance, since you know what works?
The funny thing is that we have, from time to time, tried to diversify beyond measurement and analytics that is closely connected to our measurement. We have, from time to time, gone into other fields. And you know what, we failed every single time. So, one of my objectives as CEO is to make sure we stay focused on measurement and the associated analytics. That’s where we have been successful throughout our history. And by the way, there is so much to do. There is really no need for us to go off on some of these side trails. There is still so much business opportunity for us close to home with measurement and analytics.
Did you ever try programming?
No. The closest we got is, we had a testing business where we worked with the networks when they would develop new pilot programmes and we would test those pilots to give them an idea of success if they developed them into a series. But no; we never got beyond programme testing.
Your early stage investment fund backs start-ups. Are some of them showing signs of taking off? Are you investing in start-ups in India?
Our incubator has technology start-ups but they are operating across many different markets for us. We are leveraging some of those capabilities right here in India. And we have had some very good success. Some of the start-ups have graduated out of the incubator and moved on to the second stage of investment. We would imagine that few of these would be a prominent part of Nielsen portfolio, 100% owned by our company at some point. The best value from the incubator for us isn’t so much the companies themselves but the learnings that we get by being close to these companies, seeing their cutting edge technology and experimentation.