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Competitive
Big data and competitive advantage
advantage at Nielsen at Nielsen
Michael E. Prescott
Independent Researcher, Gainesville, Florida, USA
573
Abstract
Purpose – The purpose of this paper is to illustrate how an international company, Nielsen
Holdings, reacted to changes in their highly competitive industry brought about by advances in
technology. This case presents the strategic management decisions that enabled Nielsen to regain
its competitive advantage. This case further describes the functioning of the resource-based view
(RBV) of strategy, dynamic capabilities framework, and digital data genesis (DDG), in a turbulent
business environment.
Design/methodology/approach – The case study is based primarily upon secondary data to
include annual reports, press releases, company web site, as well as articles.
Findings – The case study provides an example of the functioning of a once durable competitive
advantage that was eroded due to advances in technology, and the steps the company took to regain
that advantage. The paper illustrates the functioning of a capability and a dynamic capability in DDG.
Practical implications – This case can be used for the teaching of decision making, business
strategy, the RBV of strategy, dynamics capabilities, and DDG.
Originality/value – This paper provides an example of the functioning of the capability and
dynamic capability of DDG.
Keywords Information technology, Competitive advantage, Dynamic capabilities,
Strategic decision making, Digital data genesis, The resource-based view
Paper type Case study

A.C. Nielsen has long been the dominant player in the collection of data for the
television industry. See Appendix 2 for a timeline of Nielsen’s history. However,
digitization and advances in big data technology (e.g. the collection, storage,
management, linkage, and analysis of very large and complex data sets) have given the
cable and satellite companies the ability to collect household-viewing data generated
from set-top boxes (STBs), along with faster internet connection allowing people to
watch television and stream videos on their computers and cell phones, has brought
about major challenges for Nielsen.
For the first time in many years, Nielsen is no longer the sole collector of data
concerning media consumption, and competitors are starting to erode Nielsen’s market
share. Nielsen must adapt not only to competitors who are eroding its competitive
advantage using digital data from sources such as STBs to provide television viewing
information to Nielsen’s customers, but Nielsen must also react to changes brought
about by advances in technology, and the different methods through which consumers
are accessing media that threaten to make it obsolete, and further erode its competitive
advantage (Nielsen, 2010).

Industry background
Television advertising is a 72 billion dollar-a-year industry in the USA (2009 figures),
and a 169 billion dollar industry worldwide (Wikipedia, 2011). The business intelligence Management Decision
Vol. 52 No. 3, 2014
that is derived from household television-viewing data are a very important and pp. 573-601
r Emerald Group Publishing Limited
necessary component for both television networks and for advertisers. This data drives 0025-1747
network television. It is the basis for making critical business decisions – from what DOI 10.1108/MD-09-2013-0437
MD price to charge for a 30-second advertising slot, to what television show gets to return
52,3 for another season or is canceled.
Television network programming is any television show, such as the nightly
news, situation comedies, documentaries, movies, etc., that are broadcast by a
television network (Discovery Channel, France24, BBC, etc.) into peoples’ homes for
viewing. In order for television networks to generate revenue, they must sell
574 advertising time slots surrounding the television network’s programming. In order
to provide value to its customers, networks need a deep understanding of the
consumer and their buying behavior. A network’s programming and ratings are two
of the main factors that attract advertisers to purchase advertising time slots.
Ratings are the percentage of TV homes in the USA tuned into television
programming. The more information available about consumer demographics (age,
gender, race, economic class, and location) surrounding the viewing of a television
program and its impact upon consumer behavior, the better the network is able to
determine the price of the advertising time slot. This information also allows the
advertiser to better target the appropriate consumer for its products, and gain a
greater return on its advertising expenditure. To be able to effectively match a
product or service to the right advertising demographic could result in increased
revenue and greater market share for an organization. But this data also provides
information about competitors and market trends, which can enable a company to
improve its advantage over its competitors.

About Nielsen Holdings N.V.

Nielsen Holdings N.V. (incorporated in the Netherlands) is the major provider of
information to its customers (media, advertisers, etc.) concerning data about
consumers’ viewing and purchasing behavior. Nielsen is truly the ratings engine for
the advertising industry. It provides data to its customers so they can determine
what decisions to make concerning programming, advertising, gaining a better
understanding of what the consumer is buying, what television shows are watched,
and what shows are not watched. Nielsen has maintained its monopoly by being
entrenched in the way its customers do business – from what television shows get
canceled or renewed for another season, to the cost of an advertising slot.
Nielsen (2010) has been in business since 1923. The company was founded
by Arthur C. Nielsen Sr who was the inventor of a methodology for measuring
sales results, and brought meaning to the term “market share.” In the beginning,
the company was focussed on brand advertising analysis. Then in the 1930s, it
expanded into radio market analysis. It was during this timeframe that Nielsen
ratings for radio programming were developed. In the 1950s, the company applied its
measurement system that it used for radio to the television market. Today, Nielsen
collects data for television ratings by two methods – the diary and people meters
(Nielsen IR, 2012).

Diaries
The methodology that Nielsen originally used to collect data, and still employs today,
is through the use of viewing diaries. The diaries are mailed to Nielsen-selected diary
households during the months of November, February, May, and July, referred to as
sweep months. The selected households write in the diary for a period of one week
what television shows they are watching, including those recorded for viewing at a
later time (digital video recording (DVR)). Once the diary is received at Nielsen, the
data are manually checked for legibility and completeness. It is then entered into Competitive
the database by Nielsen employees (see Appendix 3). The diary data obtained advantage
from the households is averaged to form a picture of what people are viewing, and to
prepare demographic information. These ratings are then made available to Nielsen’s at Nielsen
customers approximately one month after the data has been received from the
households by Nielsen.
Accuracy concerning the diary data has always been a concern for Nielsen’s 575
customers. Since the diary is filled out manually, requires a commitment of time, and is
somewhat complex to use, there is the chance that households are not accurately
recording into the diary what they are watching while they are actually watching it.
Some diaries may be completed at a later time. Also, there is the possibility that
households are recording what they think they should be recording into the diary, such
as a popular show that they hear others talk about, as opposed to what they are really
watching.
In responding to its customers’ concerns, Nielsen has worked to improve the
accuracy of the diary data. For example, Nielsen created a web site that provides
training and information for households on completing the diary (tvdiary.nielsen.com,
2011). In 2010 the diary was not re-accredited by the Media Rating Council (2011)
because of problems with its accuracy. Even though the diary is still in use today, it is
in the process of being phased out.

Meters
The passive meter generates data about what is being watched. Passive meters have
been in use since the 1970s. The passive meter technology has been updated over the
years, and now includes technology that allows active participation by the viewing
household. The active/passive meter is called the “people meter,” and is used for both
local and nationwide markets. People meters were first rolled out in Boston by Nielsen
in 2002 to track more accurately what households are viewing on television.
Nielsen’s people meter is a STB attached to the television that records what the
members of the household are watching (Media Rating Council, 2011). To gather
demographic data, Nielsen assigns each member in the household their own button on
the box, and via a remote control, they notify the system of their presence while
viewing a television program. There is also a button for household visitors. Visitors to
the household are required to enter demographic information about themselves such as
age and sex. One of the methods that Nielsen’s people meter uses to verify that
someone is actually present while the television set is tuned to a station is a series of
lights on the STB that flash to remind the household members to remain active
throughout the viewing process. The box also comes with a remote control to make
participation more convenient. The STB tracks information such as channel/program
being viewed, length of viewing, what is recorded (DVR), what is fast-forwarded
through, etc. Nielsen started tracking DVR use in 2005. DVR viewing is also referred to
as time-shifted viewing.
There are approximately 20,000 households included in Nielsen’s sample. The
minute-by-minute data are uploaded electronically to Nielsen’s databases each night.
There is also a live stream of data that are updated real time to Nielsen’s data center.
Once Nielsen receives the data, it is checked for errors using monitoring software, and
is processed into estimates of what was watched, and then turned into ratings (see
Appendix 3). The people-meter sample data viewing estimates include live viewing
and DVR playback on the same day (defined as 3 a.m.-3 a.m.).
MD Based on these ratings, Nielsen’s customers perform additional analysis and make
52,3 decisions, such as:
. What television shows to cancel or continue?
. What show is the most popular?
. What is the value of a commercial spot?
576
Changes at Nielsen
Nielsen was purchased in 2006 for approximately US$12 billion by a consortium of
investors ( private equity firms), and David Calhoun was appointed Chief Executive
Officer. Calhoun was hired away from General Electric Corporation to head Nielsen
Holdings. At GE, Calhoun was vice chairman in charge of GE’s infrastructure business.
One of the reasons that Calhoun chose to come to Nielsen was the opportunity to
revitalize the company and increase its relevance and value to its customers. He saw
this opportunity as a challenge. He wanted to turn Nielsen into a technologically
advanced and customer-focussed organization that would provide significant value to
its customers. He wanted to prepare Nielsen for the future, so that it could compete
with companies like Google (Appendix 4) and Apple (Appendix 5).
Prior to the hiring of Calhoun, Nielsen could be described as a company in which
one part of the company did not know what the other part was doing. The company
was divided into many independent, autonomous business units with vertical
communication channels. One of Calhoun’s early objectives was to reorganize the
company to be integrated, moving the company from a siloed structure to one where
the different components of Nielsen were working together.
Calhoun understands that for Nielsen to stay relevant to its customers, it must
extend its reach beyond television. As part of Calhoun’s effort to provide greater value
to Nielsen’s customers, in 2006 Nielsen began updating its methodology to capture data
from all three screens (television, internet, and mobile devices). This is part of Nielsen’s
Anytime Anywhere Media Measurement (A2/M2) initiative. Nielsen started equipping
people-meter households with internet tracking technology so it could begin collecting
data generated by internet computer use, the second screen. This approach allowed
Nielsen to not only gather data concerning television usage, but also to gather similar
data on internet usage (wn.com, 2011).
In addition to the above, David Calhoun has made growth a priority for Nielsen.
In 2008, Nielsen was eight billion in debt! Calhoun was charged by the private equity
firms that had purchased Nielsen with not only reducing the debt, but with building
operating income (see Appendices 6 and 7). The industry as a whole is undergoing
change due to digitization and the STB. These changes have allowed competitors to
finally begin to erode Nielsen’s monopoly advantage. Nielsen’s competitors can now
provide instant data on viewership, through the use of advances in big data technology
and STB data.
Calhoun understands the future of this industry is digital and interactive, with data
being generated almost instantly for analysis. With the advent of faster broadband,
both in the home and mobile, and the continuing advancements in technology, there are
more competitors and there is turbulence in the environment. Consumers are changing
the way they consume media. Not only do they continue to watch television, but they
also view television programming/movies over the internet, or on their cell phone
(mobile devices), and discuss what they are viewing with others on social media sites.
 In 2009 under David Calhoun’s leadership, the company reorganized itself into three Competitive
segments (Nielsen, 2010): advantage
(1) what consumers watch (viewing behavior) and interact with across the three at Nielsen
screens (television, computer, and cell phone);
(2) what consumers buy (purchasing behavior); and
(3) expositions (tradeshows). 577
Nielsen became a publicly traded company on January 31, 2011. Its initial market price
was $23.00 per share. It trades under the symbol NLSN on the New York Stock
Exchange. Nielsen currently employs approximately 34,000 people worldwide.

The STB
Advances in technology and the STB have changed the competitive environment for
the television advertising industry. In 2007-2008, approximately 39 million STBs
were shipped. With the advent of data generated by STBs belonging to cable and
satellite providers (Appendix 8), for the first time, Nielsen is no longer in control of
data generation. Now the cable and satellite providers own and are in control of the
data that is generated from their STBs. It is now possible for potential competitors
of Nielsen to gain access to data that previously would have been very difficult and
extremely expensive to obtain. Cable companies are selling second-by-second data
on viewing behavior, which has created an entry for competitors that previously had
not existed. These new competitors are challenging Nielsen’s dominance in the
industry. They are starting to gain an audience for their granular data that are
delivered, in some cases, real time. STB data, coupled with the internet and advances
in technology related to big data, are allowing for the capture, processing, and
storage of huge amounts of data.
Nielsen has always generated its own data, and that is one of the factors that
has given Nielsen its competitive advantage. Collection, storage, and processing of data
for customer use have been one of Nielsen’s strengths. Prior to STB data being
commercially available for purchase, it would have been necessary for potential
competitors to make very extensive and expensive investments in equipment and
technology in order to compete with Nielsen. However, since Nielsen is no longer in
control of data generated by cable/satellite STBs, to embrace this change will mean
altering its business model. This could mean that Nielsen, like its competitors, will
need to start purchasing access to data from cable/satellite companies.

Nielsen’s reaction to STB data

In an effort to better understand how to best use STB data, in 2010 Nielsen formed a
relationship with a cable company to test STB data. This relationship gave Nielsen
access to data from more than 1,000,000 households in 35 markets. Nielsen analyzed
data from only 64,000 of these households across three markets. These markets
represented a cross-section of Nielsen’s local-markets. People meters are used in one
of the three representative markets, passive meters in another, and diary in the
other. In its analysis of the use of STB data, Nielsen determined that STB data can
reduce variability in its diary data, but that STB data are not a replacement for
people-meter households. Additionally, STB data also includes viewing data on
smaller networks. One of the complaints by Nielsen’s customers was that Nielsen
is under-reporting data about smaller networks. STB data by itself may provide
MD information about what is being watched, but is incomplete as far as consumer
52,3 demographic information is concerned. However, the data provided by STB’s
provides highly granular data that can improve analysis when coupled with other
methods (Spangler, 2011).
Additionally, it was discovered that STB data still suffers from the same issues that
have plagued Nielsen data in the past. For example, just because someone is tuned into
578 a television program, or streaming a movie over the internet, does not mean they are
actually viewing that television program or movie. It was Nielsen’s experience with
these very same data-collection problems that led to its continued development of the
people-meter technology. Therefore, to equate household purchase data with television
programming viewed may or may not be providing an accurate picture. However, in
response to the STB-data issues, Nielsen increased the size of its people-meter
households.

Nielsen’s competitors
Nielsen’s main competitors are the cable/satellite companies (see Appendix 8). These
companies have a STB in every home that receives their service. They are collecting
streams of data from almost every television set. The data that are being collected is in
raw form, and therefore must be further processed to be useful. Even though these
companies have dabbled in providing the data directly to advertising agencies, it is still
a very difficult process to pull meaningful data from the data stream. These companies,
for the most part, are selling access to their raw data. Since almost all cable and some
satellite companies provide internet access, they are also collecting raw data on
internet usage.
TiVo is a STB and digital video recorder service (see Appendix 9). With TiVo the
viewer can watch a movie, while at the same time record a favorite television show
for viewing at a later time. TiVo has fused television viewing with the internet, with
an additional feature of being a DVR (digital video recorder). TiVo allows for the
recording of television shows and video for time-shifted viewing. It can also serve as a
substitute for a cable STB. Through TiVo, streaming video can be viewed from internet
sites such as YouTube and Hulu, and services such as Netflix. It also allows for
recording and streaming of music from the web. Similar to Nielsen, TiVo collects
household viewing and time-shifted viewing data for both national and local audiences.
It also collects information on commercial watching and avoidance, as well as
interaction. TiVo captures data on as small as second-by-second increments, as
opposed to the industry norm of minute-by-minute (TiVo IR, 2012).
To measure the convergence of internet and traditional television viewing, TiVo, in
conjunction with an internet measurement company, has a panel of 30,000 households
that track the fusion of internet and television viewing. TiVo is currently collecting
local data in three US cities.
In 2007 Rentrak started purchasing STB data from cable companies (see Appendix 10).
They use their proprietary software to analyze the STB data, and then deliver the data
to their customers through a web-based portal. Rentrak tracks STB-viewer data in a
second-by-second timeframe. They offer media consumption information on theater,
television, mobile, and broadband video. For example, Rentrak’s product TV Essentials
provides second-by-second viewing data for television programming and advertising, to
include time-shifted viewing and video-on-demand. Rentrak collects data from more than
500,000 cable boxes, and video-on-demand data from over 45 million cable boxes, which
means they are processing trillions of rows of data. Through their analysis of the data,
they can tell when a viewer moves from watching a program on television to listening to Competitive
a music video on the web (Rentrak IR; Learmouth, 2007). advantage
Another competitor that appeared on the scene in 2008 is TRA Inc. (see Appendix 11).
TRA has gone a step further than other Nielsen competitors by matching household data at Nielsen
with purchase data using its proprietary web-based business intelligence software. TRA
obtains data from cable/satellite providers and TiVo. It also purchases data obtained
from shopper loyalty cards. Then TRA matches the data from households with 579
loyalty-card data using their proprietary algorithms. This data are then made available
to customers for further analysis. TRA markets itself as having the added functionality
to increase advertising ROI. TRA has a database of 1.5 million households’ television
data and 55 million households’ purchase data (consumer-packaged goods). Together
that totals 370,000 households that have matched data. TRA performs analysis on
over 50 terabytes of data, based upon customer requests. They provide data on what
type of consumer watches what type of program. They provide their customers with
a dashboard consisting of reports that have been tailored to their needs showing
advertising exposure at the household level, overlaid with demographic data, location
data, and purchase data. Once the data have been processed, TRA can provide answers to
questions from advertisers, such as what was the program on a certain night most watched
by luxury car buyers. TRA also provides reports generated from STB data that reflects
television-audience viewing behavior similar to that provided by Nielsen (Islam, 2012).
In 2009, 14 of Nielsen’s major customers came up with the idea to form a
consortium. The forming of a competitor to Nielsen had been tried by Nielsen’s
customers in the past. They wanted to have more granular data that would be accurate
across the three screens. They also wanted to create competition for Nielsen so they
could negotiate better pricing, and remove Nielsen from its monopoly position.
The formed coalition is named the Coalition for Innovative Media Measurement
(CIMM). CIMM is specifically charged with tracking television/advertising across all
three screens, and works to identify better measurement methods for obtaining data
across multiple platforms (CIMM, 2012).

Nielsen’s strategy
As soon as Calhoun came onboard, he quickly understood the game-changing potential
of advances in big data technology, such as the collection, storage, management,
linkage, and analysis of very large data sets, coupled with STB data. He started
urgently moving the company forward in that direction, by putting investments into
projects related to STB data generation, as well as expanding Nielsen’s capabilities
through acquisitions and joint ventures. By understanding the business strategy set by
Calhoun, Nielsen’s IT function became the foundation for the creation of new ways to
capture data to help Nielsen adapt to changes in the industry.
Nielsen responded to competitors who were collecting data on both television
and internet viewing by adding the additional capability to track web activity in 2007.
It expanded its competency in this area of online web measurement by purchasing
BuzzMetrics and NetRatings. BuzzMetrics gathers web-based information concerning
what is being communicated about a brand on the internet, and provides answers to
questions such as:
. What do consumers think of an advertisement campaign?
. What is the reputation of a brand?
. How do consumers react to public relations events?
MD It does this by capturing, linking, and analyzing information from social networks,
52,3 blogs, user groups, online magazines, and newspapers. The customer can access data
via a web-based application called My BuzzMetrics.
The acquisition of NetRatings allowed Nielsen the capability to capture user
information on streaming video and web site usage. This enabled Nielsen to match
the offerings of its current competitors. Nielsen obtains streaming video and
580 internet-usage data by having users register demographic information on its web site.
From there, the users obtain software that will track their internet usage. Web sites
place a tag into their content, and every time a user visits a site, the data are recorded
and uploaded to the Nielsen data center. After filtering the data obtained
from the sites, Nielsen compares the web site data to the data it gathers from its
viewer-panel data and provides metrics to its customers.
To increase its reach in the telecom/mobile media information market, Nielsen
acquired Telephia in 2007. Telephia provides data concerning market share in the
telecom industry and mobile media market, as well as providing performance and
customer satisfaction data. Telephia gathers its data via surveys utilizing consumer
panels. These panels differ from Nielsen panels in that surveys are not taken by the
same panel members each time, but different people are asked to take the survey each
time Telephia gathers data. Data are gathered not only on cell phone usage, but also to
better understand the effectiveness of ads viewed on mobile devices. This allows a
better understanding of consumer behavior and experience while using mobile
media devices on the internet, such as while viewing video, playing video games, etc.
The addition of Telephia gave Nielsen an opportunity to match changes in the
marketplace and maintain its advantage over competitors (Nielsen IR, 2012).
In 2008, to further improve its offerings to its customers, Nielsen acquired IAG
Research, a company that specializes in gathering data concerning viewer
engagement. IAG research measures advertising effectiveness and product
placement. The measurement of viewer engagement advertising is currently not the
domain of any one company, and there are no real standards by which to determine
product placement effectiveness and set pricing. This acquisition will give Nielsen an
advantage over its competitors, and allow Nielsen to further embed itself into its
customers’ business. The process that IAG employs is having people count when
products appear in television shows, and the number of times a brand is shown or
mentioned. This data is being captured through data entry (Nielsen IR, 2012).
Nielsen customers have long complained about the under-reporting of viewing
outside the home. However, to track viewing when there is no people-meter
STB present, has always presented a challenge. And due to its learning on diaries,
Nielsen also understands that more passive data-collection technology is best.
In 2008, Nielsen worked with Integrated Media Measurement Inc. to create an
integrated measurement system that will track television viewing outside the home.
For example in health clubs, sports bars, workplaces, etc. These panels are in
addition to the people-meter household sample. To capture data, Nielsen provides
panel members with a mobile phone. The mobile phone captures digital (audio)
signatures of programs to which it has been exposed. This data are then sent to
Nielsen’s data processing facility where it is turned into ratings. These ratings
are available for local and national markets. The improvement of panel-collected
data will provide Nielsen’s customers with higher-quality data concerning
outside-home viewing, which should provide Nielsen with a greater advantage
over its competitors.
 Another very important challenge for competitors and would-be competitors Competitive
of Nielsen is the amount of data that is generated. For example, Nielsen’s watch advantage
segment generates over one billion records monthly. And real-time data from live
viewing yields about 300,000 rows of data per second. In an effort to keep up with at Nielsen
competitors who were linking and performing analyses on very large data
sets obtained from STBs, Nielsen acquired Audience Analytics Technology Inc. in
2008. This acquisition will allow it to process, integrate, and analyze the large 581
amounts of data that are generated by STBs, and will give Nielsen the ability to
compete with Rentrak and TRA, both of which have very robust processing
capabilities.
In response to competitors that provide the fusion of data from television and
purchase history, such as TRA Inc., Nielsen entered into a 50/50 venture with
Catalina Solutions in late 2009. The results of this venture included a product that
provides data from Nielsen television, internet, and household purchase panels,
combined with Catalina’s retail purchase data obtained from over 60 million
shoppers. This fusion of television and internet data with purchase data provides a
greater understanding and deeper insights for Nielsen’s customers into the link
between advertising exposure and products purchased. This product offering will
provide accountability for television marketing that Nielsen customers have long
demanded. It will allow marketers to better target consumers who will purchase their
products, taking into account television/advertising exposure, internet usage, and
actual purchase. It will give marketers the ability to target their marketing efforts
more effectively.
In 2010, Nielsen developed its Media-Sync platform. The Media-Sync platform
uses Nielsen’s proprietary audio watermarks, which are embedded into the video/
audio portion of television programs, to sync with web applications. Nielsen’s
Media-Sync platform allows mobile applications such as the iPad, when turned on,
to detect and synchronize with television shows. Watermarks are useful not only
for content/time of broadcast identification purposes, but they can also trigger
specific advertising or events. Media Sync provides users with web-based social
media and interactive content while watching a certain television program. Then the
viewer can interact with the program by answering questions, taking polls, etc.
The viewer can also look up information about actors and uncover facts and details
about the history of the television program. Media Sync will provide Nielsen’s
customers with greater insight into consumer media consumption. This product can
also be used to push additional advertising to the consumer. Media Sync will provide
Nielsen an advantage over its competitors, and allow it to create change in the
marketplace.
In April of 2011, Nielsen Media Incite, a joint venture between Nielsen and the
consulting firm McKinsey & Company, formed a strategic alliance with Clarabridge
Inc. This alliance will allow NM Incite to offer its customers better analysis of
text-based content. The Clarabridge software allows for the extraction of meaning
from text-based content. For example, Clarabridge collects customer feedback data
from internal and external sources. Then it pulls the meaning of the content from
the communications to better understand the customer experience, and delivers the
information to the customer via a web-based application. This alliance will give
Nielsen an advantage over its competitors.
In 2011 Nielsen Catalina Solutions formed a strategic alliance with 4INFO to
measure the impact on purchase behavior of advertising on mobile devices. 4INFO
MD tracks cell phone, internet use, application use, video, and SMS (short text messaging).
52,3 This alliance will link the 60 million shoppers’ data from Nielsen Catalina with
4INFO’S 70 million mobile users. This enables marketers to understand how well
mobile ad campaigns impact purchase behavior. This alliance will allow Nielsen to
gather information to match what is currently available in the industry.
In 2011 Nielsen also acquired NeuroFocus Inc. which uses neuroscience to measure
582 viewer attention, involvement, and memory when exposed to advertising, branding,
packaging, etc. It does this by measuring brainwave activity, eye-tracking, and
electrical conductance of the skin when exposed to an advertisement. From this
information, marketers are better able to build more effective marketing. NeuroFocus
has developed patented technologies and techniques that provide more accurate and
targeted marketing research. NeuroFocus will provide Nielsen with additional insights
into consumer behavior, and will allow Nielsen and its customers to build more
powerful and targeted advertising. This will give Nielsen a further advantage
over its competitors.

The future
As Calhoun was preparing for an upcoming board meeting, he received a call from a
new board member. They had previously met and discussed some of the current issues
facing Nielsen, and she said that she would be reading the annual reports and get
back to him before the next scheduled board meeting if she had any questions.
During the call she discussed some of her insights from reading the annual reports, and
she also had some questions for him about Nielsen’s future. She thought his answers
to her questions would also be helpful to the other board members, and asked him to
prepare and present his answers to her questions at the upcoming Board of Directors’
meeting.
The new board member asked Calhoun to prepare answers to the following questions:
. STB data, and advances in big data technology, have had a profound effect upon
Nielsen’s competitive advantage. What other new “technologies” are out there
that now, or in the near future that could have a similar impact? How is the
company prepared to take advantage of these technologies?
. How close is Nielsen to being able to provide its customers with data linking the
consumer, the media that the consumer consumes, the ads they are exposed to,
and the purchases they actually make? How close are Nielsen’s competitors
to being able to accomplish this?
. How can Nielsen regain its sustained competitive advantage that it once enjoyed?

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the delivery of information systems and services”, Journal of the American Society 583
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pp. 9-30.
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financials/annual/Directv_2011_Annual_Report_Updated_As_Printing.pdf (accessed
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downloads/DISH/3207134362x0x559869/E30F5101-7D84-4A18-B893-C0AEF4758549/
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Management Journal, Vol. 21 Nos 10-11, pp. 1105-1121.
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an empirical examination within the context of data warehousing”, Journal of
Management Information Systems, Vol. 21 No. 4, pp. 199-235.
MD Nielsen (2010), “2010 annual report”, available at: phx.corporate-ir.net/External.File?itemyt¼1
(accessed June 1, 2011).
52,3
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2011_nielsen_10k.pdf (accessed May 10, 2012).
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584 Pavlou, P. and El Sawy, O. (2006), “From IT leveraging competence to competitive advantage in
turbulent environments: the case of new product development”, Information Systems
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of the customer service process: a resource-based analysis”, MIS Quarterly, Vol. 29 No. 4,
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No. 3, pp. 297-331.
Further reading Competitive
Comcast (2013), “Comcast investor relations”, available at: www.cmcsa.com/financials.cfm advantage
(accessed June 15, 2013)
Nelson, R. and Winter, S. (1982), An Evolutionary Theory of Economic Change, Havard
at Nielsen
University Press, Cambridge, MA.
Sambamurthy, V., Bharadwaj, A. and Grover, V. (2003), “Shaping agility through digital
options: reconceptualizing the role of information technology in contemporary firms”, 585
MIS Quarterly, Vol. 27 No. 2, pp. 237-263.
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Illinois Press, Chicago, IL.
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Information Systems Research, Vol. 13 No. 2, pp. 125-146.
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wiki/Cable_television_in_the_United_States (accessed June 15, 2013).

Appendix 1. Big data and competitive advantage at Nielsen – instructor notes

Prerequisites
Students should be familiar with the resource-based view (RBV) and dynamic capabilities
framework. This case is most suitable for students at the graduate level.
Audiences
Courses/seminars in: business strategy, competitive advantage, marketing, IT, and digital data
genesis (DDG).
Case purpose/learning objectives
This case presents how Nielsen Holdings N.V., who once enjoyed a sustained competitive
advantage for many years, found that advantage being eroded. Digitization and advances in
big data technology have made it possible for firms to compete with Nielsen utilizing very large
data sets obtained from cable/satellite companies. As a result, Nielsen found itself heavily in
debt, and on the verge of becoming obsolete. Nielsen was purchased by a group of investors
in 2006, who in turn hired a CEO to help turn the company around. The CEO utilized the
assets/capabilities that the firm possessed (relationships with its customers, consumer data
residing in its repositories, its strong capability in data generation/management, R&D, M&A,
strategic alliances, etc.) and began reconfiguring, gaining, and releasing firm resources to
improve its competitive position.
In line with the RBV of strategy and dynamic capabilities framework, this case provides
examples of:
. How firms compete using “big data.”
. Strategic decision making.
. How a firm can gain a sustained competitive advantage from resources which are
valuable, rare, inimitable, and with no substitutes.
. How barriers to imitability (time compression diseconomies, asset mass efficiencies,
interconnectedness of resource stocks, causal ambiguity, etc.) function to protect an
advantage.
. How turbulence, or environmental “shocks” can erode an advantage.
. How dynamic capabilities function in turbulent environments to help a firm regain its
advantage through the reconfiguration, gain, and release of firm resources.
. The fusion of IT and business processes.
MD . The importance of a strong relationship and communication (alignment) between IT and
Senior Management concerning business planning and firm strategy.
52,3
. Examples of digital marketing and the role of big data.
. Examples of data capture methods and data linkages needed to gain a better understanding
of consumer behavior.
586 . Example of DDG, and its functioning as an IT capability in non-turbulent environments,
and a dynamic IT capability in turbulent environments.
The learning objectives for this case are:
(1) describe how Nielsen was able to dominate this industry for so many years;
(2) describe the situation facing the new CEO in 2006;
(3) as a member of the Board of Directors of Nielsen, explain your assessment of the
decisions made by Calhoun since he took leadership of Nielsen in 2006; and
(4) discuss the reasons why these management decisions appeared to be effective.
Recommended delivery
This case can be used as part of a lecture involving the RBV, dynamic capabilities framework,
and DDG. Ask the students to pre-read the paper by Esterby-Smith, M. and Prieto, I. (2008),
“Dynamic capabilities and knowledge management: an interactive role for learning”, British
Journal of Management, Vol. 19 No. 3, pp. 235-249.
Introduce the RBV
Display the RBV definition of competitive advantage and sustained competitive advantage and
review this definition with the class:
Resources that are valuable and rare can provide a firm with a competitive advantage.
Resources that are valuable, rare, inimitable, and with no substitutes can provide a firm with
a sustained competitive advantage (Barney, 1991).
Optional processing of the RBV:
. discuss what firm resources are, and the importance of path dependency;
. discuss capabilities, and what enables an advantage to become “sustainable,” and how
long an advantage can endure; and
. discuss environmental “shocks” and their impact upon a firm’s assets and capabilities.
Firm resources consist of tangible and intangible firm assets. Even though a tangible asset by
itself can provide a firm with an advantage, typically it is the combination of tangible assets,
along with their ensuing routines or capabilities (capabilities are higher order routines that
govern other routines) that provide a firm with a competitive advantage.
Once an advantage is obtained, it is protected from imitation by competitors due to isolating
mechanisms/barriers to imitation (Ingemar and Cool, 1989). A competitive advantage will endure
until it is imitated by competitors, or there are “shocks,” or turbulence in the environment. Even
though a firm may have a sustained competitive advantage, if it does not respond to “shocks” in
the environment, those very resources that once gave a firm an advantage can turn into rigidities
and cause the firm to lose any advantage it has gained.
Some possible questions to lead discussion are:
. Can a resource that is purchased in the marketplace provide a firm with an advantage?
If so, for how long?
. How are capabilities created?
 . What protects a sustained competitive advantage from being imitated? Competitive
. What happens if a firm does not respond to shocks or turbulence in the environment? This advantage
question creates a segue to dynamic capabilities. at Nielsen
Introduce dynamic capabilities framework
Display the following definition of dynamic capabilities and discuss:
In turbulent environments, organizations need to constantly match or create market
587
changes, and Dynamic Capabilities are “the firm’s processes that use resources –
specifically the processes to integrate, reconfigure, gain and release resources – to match
and even create market change” (Eisenhardt and Martin, 2000). Therefore, Dynamic
Capabilities have the potential (Esterby-Smith and Prieto, 2008) to create, to evolve, and
to recombine internal existing resources to adapt to turbulent environments (Teece et al.,
1997). This adaptability is especially required in fast-paced technological environments
(Teece et al., 1997; Zahra et al., 2006). Dynamic capabilities transform organizational
capabilities through the firm’s processes of sensing, learning, integrating, and
coordinating (Pavlou and El Sawy, 2006).
Some possible questions to lead discussion are:
. What effect do dynamic capabilities have upon organizational capabilities? (They
transform them.)
. What role does path dependency play in dynamic capabilities? (The history of the firm
shapes the boundary conditions through which future business processes, routines, and
capabilities evolve.)
. What are the sources of dynamic capabilities? (The sources of dynamic capabilities are
firm assets, firm history, and the organizational processes of sensing (environmental
scanning), learning, integrating, and coordinating.)
. What are functions of dynamic capabilities? (Integrate, reconfigure, gain and release
resources – to match and even create market change.)
. What are some examples of dynamic capabilities? (Managerial decision-making, Research
& Development (R&D), Mergers & Acquisitions (M&A), Strategic Alliances, etc.)
Introduce and discuss DDG (Piccoli and Watson, 2008; Vitari, 2009; Prescott, 2012)
In order to maintain a competitive advantage, a firm must have information concerning
its competitors, its internal operations, its interactions with customers, suppliers, partners,
etc. It is through analysis of data that the firm understands and makes sense of what is
happening in the environment so that it can react to changes (turbulence) as appropriate.
Data are an essential element of everyday firm performance, as well as firm advantage. A firm
that runs its operations on, and makes decisions from, data that are of higher quality than its
competitors, will be able to make more accurate decisions. Therefore, data that are generated
digitally at the source will provide a firm with higher-quality data than data that are captured
by other means, such as manual data entry or document scanning. Data that are manually
obtained from the data-entry process is not necessarily of high quality. It is often subject to
errors such as spelling, missing data, or the entering of incorrect information. Data obtained
manually not only suffers from inaccuracies, it must also be checked and cleaned to rid the
data of the errors. This means that if the data are not cleaned well, one could still have data
that is not of high quality. DDG is therefore a process to capture digital data at the source and
manage data so that the data can then be analyzed and synthesized. Then based on the quality
of that analysis, and the success of the strategy developed from that analysis, a firm might
gain an advantage.
MD Display the following definition of DDG capability and discuss:
52,3 A capability in Digital Data Genesis is the process of choosing IT technology to generate or
capture data digitally at the source, integrating that technology into the appropriate business
processes, managing that data once it has been captured and stored, and reconfiguring itself
in turbulent environments.
Therefore, a capability in DDG is comprised of an IT capability and an information capability.
588 The IT capability is concerned with identifying and selecting IT technology to capture
or generate data, and then integrate the selected technology into business processes.
The information capability is concerned with management of the data once it has been captured,
and making that data accessible for use.
A capability in DDG results in a firm having access to high-quality data on which analysis
can be performed, decisions made, and strategies set. A capability in DDG is also a dynamic
capability. What makes a capability in DDG a dynamic capability is that in turbulent
environments, through the organizational processes of sensing, learning, integration, and
coordination the firm is able to reconfigure existing operational capabilities to respond to
opportunities and to manage threats in the environment.
Display DDG capability model and discuss using outline below. The model below shows DDG
capability with its outputs moderated by environmental turbulence, and its contribution to firm
advantage.
DDG capability
Choosing IT to generate and capture digital data at the source. It is important that IT personnel
and consultants have current knowledge of enabling or emerging IT technologies that generate
and capture data digitally. They must also be able to pair that knowledge with business issues to
solve business problems. In this initial step in the DDG process, business management must
have a thorough understanding of the business need or problem it is trying to solve, and an
understanding of what the end result(s) will be. What does the successful project look like when
it is completed? What information will be needed? What type of benefits will the organization
receive? It is important that end users and internal customers are included in this planning
process. This type of upfront comprehensive planning is very important for assuring successful
project outcomes (Mitchell and Zmud, 1999).
Integrating business processes and IT. The IT technology that was selected for generating and
capturing digital data must be integrated into business processes. It is important to note that
when IT is integrated into other business assets, it changes processes, routines, and procedures.
When those resources are combined, it makes duplication by competitors more difficult due to
the degree of tacitness and causal ambiguity involved (Pavlou and El Sawy, 2006; Duncan, 1995;
Ray et al., 2005; Kogut and Zander, 1992).
Management of digital data are concerned with the quality and the accessibility of the data. The
information capability of a firm consists of the processes and routines necessary for receiving,
storing, and disseminating the digital data. Assuring and maintaining the quality of the digital
data is an important component of the DDG IT information capability. The information repository
is also an important DDG asset, because it allows for the use of the data that has been collected.
The information repository is “a collection of logically related data, organized in a structured form
that is accessible and usable for decision-making purposes” (Piccoli and Ives, 2005).
Reconfigurability – a capability in data generation is also a dynamic capability, which enables
a firm to react to turbulence in the environment. This is accomplished through the organizational
processes of sensing, learning, integrating, and coordinating (Pavlou and El Sawy, 2006).
DDG capability outputs
The outputs of a DDG capability are information that are accessible, accurate, complete, and
current, and that do not lead to data overload (Culnan, 1985; Grise and Gallupe, 2000; DeLone and
McLean, 2003; Gray and Meister, 2004; Hirsh and Dinkelacker, 2004; Nelson et al., 2005; Zimmer
et al., 2007; Chen et al., 2009).
 Accessibility is an important precursor to information use. Information that is most readily Competitive
accessible is chosen for use regardless of quality. Therefore, it is important that high-quality
information be made readily available for use. advantage
Accuracy implies that the data are correct, and represents that the data that were sought at Nielsen
to be generated are highly correlated with the data that were actually generated. Accuracy also
implies that the data generated through a DDG capability must be reliable, or the user will grow
to distrust the data.
Currency means that the data is up-to-date. In order for users to trust the data, it must also be 589
perceived by them as up-to-date, current. Users will experience a great degree of frustration
when analysis is performed on data that are not current, because that can lead to inaccurate
conclusions being drawn and inappropriate decisions being made.
Completeness refers to the data being inclusive of the information needed for its intended
purpose from the users’ point of view.
Information overload is the limitations of people’s cognitive ability to process high volumes of
relevant information. When people are faced with large amounts of data, they often feel burdened.
During the analysis of information, it is often necessary that individuals sift through large volumes
of data to determine what is relevant or irrelevant for the task at hand. The inability of individuals
to perform analysis on a large amount of information can lead to data overload, which could
negatively impact the analysis and, therefore, the quality of the decisions that are made from the
data. Since the data obtained from a properly implemented DDG capability is intentionally
generated, it should reduce the impact of data overload.
How a capability in DDG is created
A capability in DDG is created through the organizational processes of sensing, learning,
integrating, and coordinating. And, as with other capabilities, a capability in DDG evolves
through path dependence. Therefore, the history of the firm with regard to IT technology and
data shapes future possibilities for implementing IT technology, and accessing generated data.
The firm assets that are used in developing a DDG capability are the IT infrastructure
(Broadbent and Weill, 1997) which allows for IT to capture data and information repositories
(Piccoli and Ives, 2005) to store and provide access to the captured digital data.
The following model shows how organizational processes, firm history, and firm assets
(Teece et al., 1997) contribute to the creation of a DDG capability/dynamic capability.
Case assignment
Assign Nielsen case to students, providing an overview of the case (page 1 of Teaching Notes)
and ask them to analyze the case using the RBV and dynamic capabilities Framework, the
definition of DDG, and the DDG capability model (Figure A1 of Teaching Notes), along with
the following questions.

Environmental Turbulence

DDG Capability DDG Capability Output

Choosing IT Digital Data Accessibility

Integrating IT Digital Data Accuracy

Firm Advantage

Managing Digital Data Digital Data Currency

Reconfigurability Digital Data Completeness

Figure A1.
Digital Data Overload DDG capability
MD Why did Nielsen dominate this industry for so many years? (Its dominance was due to its ability
to generate data and provide metrics to radio and television networks and the advertising
52,3 industry. In line with the RBV of Strategy, Nielsen possessed resources that were valuable, rare,
inimitable, and with no substitutes. Valuable – Nielsen’s data-collection technology (people meter
set-top box (STB)), along with its accompanying routines, provided Nielsen’s customers with
data and analytics which were valuable to them, and therefore valuable to Nielsen. Rare – since
Nielsen created the data collection technology/routines needed to provide data and metrics to its
590 customers, Nielsen was the only one that possessed these resources. Inimitable – since Nielsen
had developed the data-collection technology/routines, they were not available for purchase
in the factor market, and Nielsen held patents on the technology. No substitutes – would-be
competitors did not possess a similar resource that could provide television networks or the
advertising industry with data similar to what Nielsen provided, or with data that would give
them benefits similar to what they were getting from Nielsen. Therefore, Nielsen possessed a
capability in providing its customers with data and metrics on television viewing that gave it a
sustained competitive advantage.)

Optional discussion on barriers to imitation/isolating mechanisms

Once an advantage is obtained, how is it maintained? (It is the barriers to imitation that protect
that advantage from being eroded. The resource position that Nielsen finds itself in today is the
result of decisions the firm made in the past. Therefore, firm history plays an important role in
acting as a barrier to resource inimitability, as well as creating the boundary conditions for future
innovation. Nielsen’s capability in providing metrics, as well as it relationships with its
customers, was developed over time using firm resources ( path dependent). Therefore, Nielsen
added to its stock of experience incrementally over many years (asset stock accumulation).
It would be difficult for a competitor to gain the experience in data generation that Nielsen
possesses without taking a similar path. And, if it was possible for a competitor to develop the
stock of experience that Nielsen possesses, it would take similar inputs, as well as time (time
compression diseconomies).
Another barrier to imitation is causal ambiguity. There can be a lack of complete
understanding, due to the tacit component of capabilities and routines, of just how they function
collectively to bring about an advantage. For example, the cable/satellite companies were having a
difficult time understanding how to use the data they had generated. It can be difficult for the firm
itself to have a complete understanding of the exact interplay of assets and capabilities that cause
an advantage. Therefore, it is difficult for competitors to have a complete understanding.
What also makes a firm resource difficult for competitors to imitate are barriers such as the
history of the firm with regards to creation or accumulation of resources; the casual ambiguity
that resides among assets, capabilities, and routines; and the complexity of relationships
between the firm and its customers (Nielsen is built into its customer’s business model), as well
as the relationships that exist within the firm, such as knowledge of the business plan and
communication between senior management and IT.
A sustained competitive advantage is obtained by having superior resources that are
durable and cannot be easily eroded by competitors trying to copy the strategy due to
isolating mechanisms. Therefore, Nielsen possessed a sustained competitive advantage for
many years.
What was the situation facing the new CEO in 2006? (Nielsen was eight billion dollars in
debt and its sustained competitive advantage was being eroded due to digitization, the
increasing availability of broadband, and advances in big data technology. Through its
capability in scanning the environment, Nielsen was aware that changes were taking place,
however it did not react. This lack of action due to leadership, agility, etc., resulted in Nielsen’s
core capabilities that once gave it an advantage, becoming core rigidities that were causing
erosion of the advantage that they once helped create. For the first time, Nielsen was no longer
the only provider of data for the television networks and the advertising industry. There were
now substitutes for Nielsen’s data, and competitors were starting to sell data to Nielsen’s
customers. This was the situation that Calhoun was facing when he took over as CEO of the Competitive
company.
How did Calhoun handle the situation with which he was faced?
advantage
It is through a firm’s dynamic capabilities that it is able to reconfigure, gain, and release at Nielsen
operational capabilities in reaction to turbulence in the environment in order to regain its
advantage. Dynamic Capabilities are created using the firm’s asset position, the firm’s history
which not only has shaped its current resource base, but also defines the boundary conditions
( paths) available for future innovation and strategy, and the organizational processes of sensing, 591
learning, integrating, and coordinating (see Figure A2). For example, it was through scanning the
environment (sensing) that Nielsen became aware that its competitors were collecting data on
internet usage. In response to this turbulence, Nielsen’s R&D function engaged in the process of
learning about collecting data from the internet, and then integrated this learning into the STB
(people meter) and its accompanying data-generation routines to accommodate collecting data
from the internet. Finally, Nielsen installed this reconfigured data-collection process/technology
into people-meter households and trained them in how to use the new data-collection technology.)
As a member of the Board of Directors, what is your assessment of the decisions made by
Calhoun since he took over at Nielsen? (This question can be processed using the RBV and
dynamic capabilities framework. Calhoun is in the process of turning the company around.
Operating income has improved from 2007 through 2010. Calhoun understood that for Nielsen to
stay relevant, it must extend its reach beyond television and into other areas such as internet and
mobile devices. Nielsen possesses a strong capability in strategic decision-making and leadership
in David Calhoun. He understood the issues facing Nielsen, and made the tough decisions
necessary to help Nielsen stay relevant to its customers and regain its advantage. The decisions
that Calhoun made (outlined in Nielsen’s strategy) were path dependent and in response to
turbulence in the internal/external environment from competitors, customers, or emerging
technologies. He did this through reconfiguration of Nielsen’s current technology using R&D, and
he added capabilities that Nielsen did not possess through the use of M&A and strategic alliances.
Not only did Calhoun use Nielsen’s dynamic capabilities to match change in the environment, he
also created change by adding capabilities in response to emerging technologies.)
Why did these management decisions appear to work?
Barriers to imitation, dynamic capabilities such as DDG, and capable senior management.
Barriers to imitation/isolating mechanisms will work in Nielsen’s favor to protect its advantage.
For example, when causal ambiguity, intellectual property rights, time compression
diseconomies, asset mass efficiencies, the interconnectedness of assets stocks, etc. However,
shocks in the environment can erode an advantage, as demonstrated in this case. Therefore, it is
through a firm’s dynamic capabilities that it can respond to turbulence and regain its advantage.
Nielsen possessed a strong capability in DDG, which is both a capability and a dynamic
capability. This capability gives Nielsen the ability to reconfigure, gain, or release its data-generation

Organizational
Processes
-Sensing
-Learning
-Integrating
-Coordinating

Firm’s History
-IT Capability Digital Data Genesis
Capability
-Info. Capability

Firm’s Assets Figure A2.

-IT infrastructure
-Info. Repositories
DDG capability creation
MD technology based on enabling or emerging technologies to match or create change. Nielsen did
this through its R&D function, M&A, and strategic alliances, as is demonstrated in the section on
52,3 Nielsen’s strategy. It is important that IT has an understanding of the business plan, and open
communication lines with senior management to enable a firm to understand its options with
regards to turbulence in the business environment.
In addition to a strong capability in DDG, Nielsen also possesses senior management capable
of analyzing/synthesizing information, and then making decisions based upon this information.
592 Senior management is a source of firm advantage. A firm’s strategy is embedded in its processes,
assets, and paths available to it, and the ability of management to create, develop, and coordinate
capabilities to assure their implementation (Teece et al., 1997).
A strong senior management team, a capability in DDG coupled with IT’s knowledge of the
business plan, and open communication channels with senior management has allowed Nielsen to
reconfigure, gain, and release resources to match, or create change in the environment.
Whether Nielsen will regain its sustained competitive advantage remains to be seen.
However, the case does show that turbulence in the environment, due to advances in technology,
will mean that competitive advantage will be of shorter duration.
Additional processing of the Nielsen case study
In processing the Nielsen case with students, you can either use the questions that they were
assigned in the case, or use the suggestions below to get the discussion going:
What are some examples of turbulence Nielsen experienced over time, and how did Nielsen
respond to these turbulences?
. In the beginning with radio, Nielsen initially collected data manually; however, Nielsen
became aware of a more efficient method to collect data digitally. Therefore, Nielsen
started using the passive meter in addition to manual data collection methods.
. Customers complaining about quality of data. Nielsen created the people meter to improve
data quality.
. Data on internet usage. Updated people meter to capture data via the computer, as well as
improving capabilities through M&A and strategic alliances.
. Data on Smartphone usage. Created new process to capture data on Smartphone usage as
well as augmented capabilities through M&A and strategic alliances.
. STB data. Nielsen changed the people meter process to match what was currently being
done by competitors, and augmented via M&A and strategic alliances.
How was Nielsen’s capability/dynamic capability in data generation built?
(It was built over time, using IT infrastructure and information repositories and through the
organizational processes of sensing, learning, integrating, coordinating.)
Describe Nielsen’s capability in Data Generation. (Display DDG capability model (Figure A1) and
use this as the anchor for the discussion. Nielsen chose IT to collect data; it then integrated IT (the
people meter) into the manual data collection processes (fusion of IT into organizational processes),
and then stored the collected data in data repositories so that it would be accessible for use.)
Using the Nielsen case study, process what makes a DDG capability a dynamic capability.
Capture the students’ responses to the question about the turbulence Nielsen experienced and how it
responded to each of the forms/examples of turbulence. (Refer to the definition of dynamic capability,
and then what makes a DDG capability also a dynamic capability (reconfiguration). Students should
understand the iterations that are going on throughout the case as Nielsen matches or creates change
in the environment, at first through R&D and then through M&A, and strategic alliances.)
How did Nielsen create a capability in DDG? (Emphasize the role of path dependency – Nielsen’s
history in data collection starting with the radio and then television allowed it to move into
collecting data by other methods – internet, Smartphone, etc. Can use the diagram DDG capability
creation (Figure A2), and ask the students to explain, using Nielsen case.)
Date Event Description Appendix 2

1960 Diaries Paper-based diary mailed to Nielsen households for collecting television-viewing demographics
2002 People meters Nielsen rolled out people meters in Boston, Massachusetts to enable matching of television viewing with
household demographics
2006 Nielsen changes Nielsen purchased by a private equity firms
ownership
2006 Nielsen hires new CEO David Calhoun hired as Nielsen CEO
2006 Nielsen updates Nielsen updates methodology to track and capture data from all three screens (television, internet, and mobile
methodology – (A2/M2) devices)
2007 Nielsen outsources IT Nielsen outsources IT to Tata Consultancy to reduce costs, as well as to integrate and manage IT technologies
and back-office services
2007 TiVo TiVo introduced two products aimed at the television industry: Stop8Watch, and Power8Watch which matches
viewing data to demographic data. TiVo generates and uses STB data
2007 Rentrak Rentrak, using STB data that they obtain from cable companies; offers media consumption information on
theater, television, mobile, and broadband video
2007 Nielsen acquires NetRatings gives Nielsen the capability to capture user information on streaming video and web site usage
NetRatings
2007 Nielsen acquires BuzzMetrics gathers web-based information concerning what is being communicated about a brand on the
BuzzMetrics internet
2007 Nielsen acquires Telephia Telephia provides data concerning market share in the telecom industry and mobile media market, as well as
providing performance and customer satisfaction data
2008 TRA TRA obtains STB data from cable/satellite providers and TiVo then matches household data with purchase data
2008 Nielsen acquires IAG IAG provides ratings on the television advertising effectiveness of product recall
research
2008 Nielsen tracks television Using a specially equipped mobile phone, panel members capture digital (audio) signatures of programs exposed
viewing outside of home to them
2009 Coalition for Innovative Nielsen’s major customers form a consortium to compete with Nielsen. CIMM will track television/advertising
Media Measurement across all three screens (television, internet, and cell phone)
(CIMM)

(continued)
advantage

Timeline
at Nielsen

593

Table AI.
Competitive
 MD
52,3

594

Table AI.
Date Event Description

2009 Nielson reorganization Nielsen reorganizes itself into segments: what consumers watch, what consumers buy, and expositions
2009 Nielsen acquires Cambridge Group is a strategy consulting firm that leverages Nielsen’s data to help customers achieve strategic
Cambridge Group objectives, greater growth, and profitability
2009 Nielsen forms relationship This relationship targets the CPGI to provide data from Nielsen television, internet, and household purchase
with Catalina Solutions panels combined with Catalina’s retail purchase data
2010 Nielsen tests STB data Nielsen collected data from STB households to determine optimal use of the data
obtained from a cable
company
2010 Nielsen develops its Allows mobile applications such as the iPad, when turned on, to detect and synchronize with television shows
Media-Sync platform
2010 Nielsen introduces online These ratings combine data from television viewing and online panel data, with demographic data derived from
campaign ratings online sources
2011 Nielsen becomes publicly Nielsen became a publicly traded company on January 31, 2011, under the symbol NLSN
traded
2011 Nielsen Catalina Solutions Measures the impact on purchase behavior of advertising on mobile devices for CPGI
forms a strategic alliance
with 4INFO
2011 Nielsen acquires Uses neuroscience to measure viewer attention, involvement, and memory when exposed to advertising,
NeuroFocus branding, packaging, etc.
Appendix 3 Competitive
advantage
Data Flow – Diary at Nielsen
Data Warehouse
Checked for Data entry Available to
TV viewing Diary
accuracy Data processed Customer for 595
Analysis

Data Flow – People Meter

Data Warehouse
Available to
People Meter
Data checked for accuracy Customer Figure A3.
Data processed for Analysis Data flow

Appendix 4. Google Inc.

Google was founded in 1998 by Larry Page (CEO) and Sergey Brin (Executive Chairman) on
Page and Brin’s idea to create a better internet search engine. They called this new technology
Pagerank. Google’s search engine is the dominant search engine in the USA. The company is
headquartered in Mountain View, California (Silicon Valley). Google went public in 2004, trading
on the NASDAQ under the symbol GOOG. Google’s stated mission is to organize the world’s
information and make it universally accessible and useful.
In early 2000, the company introduced AdWords/AdSense, a fee-based service, which allows
businesses to create ads that will appear when a keyword, similar to the keyword associated
with their product or service, is searched. An important component of Google’s advertising
measurement system is Google Analytics. Google Analytics tracks website traffic through code
that is placed upon web pages within a site. Google Analytics allows for the placement of
AdSense ads on participating web sites. Google Analytics also collects and provides information
concerning web site usage to site owners.
Gmail was introduced by Google in 2004. With the introduction of Gmail, Google can push
relevant customer ads to Gmail accounts based upon the context of an e-mail. Data obtained from
Gmail user accounts also provide Google with a better understanding of the account holder’s
interests and preferences.
In 2006 Google acquired YouTube, a video-sharing site. With this acquisition, Google can not
only push advertising to viewers of YouTube, but also make associations about what content is
being consumed, as well as provide metrics to businesses that advertise on YouTube so they can
better understand who is viewing their ads. Also in 2006, Google launched Google Checkout.
Google Checkout allows users a more convenient and secure checkout process for web purchases.
“By integrating the checkout process with search and advertising, we’re helping our users
complete the cycle of searching, finding and buying,” said Salar Kamangar, Vice President of
Product Management at Google.
In 2007 Google acquired DoubleClick. This acquisition allows for better targeting of internet
ads, taking into account the context and interests of the person doing the search. This acquisition
also gave Google access to relationships with publishers and ad agencies. Additionally, in 2007
Google’s android operating system for mobile devices was released, as well as “Adsense for
mobile” so that Google’s customers would be better able to take advantage of the mobile
advertising market.
MD In 2008 Google released its internet browser Chrome. This browser will allow Google to
obtain data on a user’s nternet behavior beyond just search.
52,3 Google made its first foray into the social network space in 2009 with the acquisition of
Ardvark, a search engine for social networks.
Google TV was launched in 2010. Google TV allows users to watch television and
browse the web at the same time on one screen. A user can search the web for television
programming and then while viewing, they can still interact with the internet. Google
596 TV is a platform and is based upon the Android operating system, and uses the Chrome
browser.
In 2011 Google introduced Google Wallet, a mobile application that allows for wireless
payments.
In August 2011, Google entered into a merger with Motorola, giving Google access to
Motorola’s products, services, and data. In 2011 Google þ , a social networking site, was
launched.
In 2011 approximately 95 percent of Google’s annual revenue of 39 billion (US$) was derived
from advertising.
Source: Annual report, Google Inc. (2012)

Appendix 5. Apple Inc.

Apple Inc. was founded in 1976 by Steve Jobs, Steve Wozniak, and Ronald Wayne. The Company
was incorporated as Apple Computer Inc. in 1977. Apple’s initial main product line was Apple
McIntosh computer, running the Apple operating system, and in 2007 the company’s name was
changed to Apple Inc. This name change signified that computers would no longer be the sole
focus of the company.
In 2001 the iPod portable music player was released. The iPod runs on a touch-based
operating system. In 2003 Apple opened the ITunes Store – an online digital media store which
sells songs, videos, e-books, and applications. iTunes is installed on a computer (Apple OSx, or
Windows operating system) and an Apple mobile device which allows for the download, playing,
and management of digital media. In 2003 Apple also introduced Safari, a web browser,
which would be Apple’s default browser for both Apple computers and mobile devices. In 2005
iTunes began offering television shows for download, and in 2006 it began offering movies for
download.
In 2007 Apple released the iPhone. The iPhone is a Smartphone that uses the Apple mobile
operating system (iPhone OS). The iPhone, in addition to functioning as a phone, also functions
similar to the iPod in that can play music, stream videos, take photos, and browse the internet.
In 2007 Apple released Apple TV. Apple TV is a digital receiver that plays digital content from
the iTunes store, Netflix, Hulu Plus, and YouTube, as well as some sports programming.
Apple TV can also access the iTunes store, which allows the customer to download and play
television programming and movies on their television sets.
In 2010 the iPad was released. The iPad runs on the same touch-based operating system
as the iPhone, and offers many of the same features as the iPhone, even though it is not
an iPhone. The iPad can perform many functions through its applications, and new
applications to increase its functionality are being developed all the time. The iPad has
played a major role in the blending of television and the internet (social television),
allowing users to engage with other viewers, or even with television networks via
applications or social media while a program is being aired. In 2010 the iBooks application
for the iPad was offered as a download from the iTunes store. The iBooks application
downloads books from the iBookstore. In 2011 the iPhone accounted for 43 percent of
Apple’s Net Sales of 108 billion (US$).
Source: Annunal report, Apple Inc. (2012)
 Appendix 6

Currency $US
All amounts are in millions of dollars Dec 31, 2007 Dec 31, 2008 Dec 31, 2009 Dec 31, 2010 Dec 31, 2011

Revenues 4,458 4,806 4,808 5,126 5,532

Cost of revenues 1,992 2,057 2,023 2,129 2,237
Gross profit 2,466 2,749 2,785 2,997 3,295
Selling, general & admin expenses 1,506 1,616 1,523 1,648 1,888
Depreciation & amortization 451 499 557 558 529
Impairment of goodwill  96 527  
Restructuring charges 133 118 62 61 84
Operating income 376 420 116 730 794
Interest income 30 17 7 5 6
Interest expense 622 701 647 660 477
Loss/gain on derivative instruments 40 15 60 27 1
Foreign currency exchange transaction gains/losses, net 105 20 2 136 9
Other expense/income, net 1 12 17 81 209
Loss/gain from continuing operations before income taxes and
equity in net income/loss of affiliates 280 271 603 103 104
Income tax expense 12 36 197 46 22
Equity in net income/loss of affiliates 2 7 22 5 3
Net income from continuing operations 290 314 428 154 85
Net income from discontinued operations 10 275 61 22 1
Net income attributable to non-controlling interests    2 2 2
Net income 280 589 491 130 84
Sources: Annual report, Nielsen (2010, 2011)
advantage

income statement
at Nielsen

Nielsen financials –
Table AII.
597
Competitive
 MD
52,3

598

Table AIII.

balance sheet
Nielsen financials –
Currency $US
All amounts are in millions of dollars Dec 31, 2007 Dec 31, 2008 Dec 31, 2009 Dec 31, 2010 Dec 31, 2011

Cash/cash equivalents – 467 511 421 319

Appendix 7

Trade and other receivables – 958 936 1,014 1,080

Prepaid expenses and other current assets – 189 195 219 266
Total current assets – 1,614 1,642 1,654 1,665
Non-current assets
Property, plant & equipment, net – 603 593 599 609
Goodwill – 7,185 7,056 7,096 7,155
Other tangible assets, net – 5,070 4,757 4,607 4,561
Deferred tax assets – 43 48 61 198
Other non-current assets – 576 493 412 316
Total assets 16,135 15,091 14,589 14,429 14,504
Liabilities and equity
Current liabilities
Accounts payable and other current liabilities – 1,020 999 962 1025
Deferred liabilities – 438 435 452 443
Income tax liabilities – 138 82 99 80
Current portion of long-term debt, capital lease obligations and short-term borrowings – 419 110 94 144
Total current liabilities – 2,015 1,626 1,607 1,692
Non-current liabilities
Long-term debt and capital lease obligations 8,896 8,073 8,548 8,464 6619
Deferred tax liabilities – 1,316 1,065 942 996
Other non-current liabilities – 786 551 520 556
Total liabilities – 12,191 11,790 11,533 9,863
Equity
Preferred stock – 1 1
Stock – 58 58 22 30
Additional paid-in capital – 4,342 4,353 4,570 6,427
Accumulated deficit – (1,095) (1,585) (1,609) (1,525)
Accumulated other losses, net of income taxes – (431) (42) (96) (299)
Total shareholders’ equity – 2,875 2,784 2,887 4,633
Non-controlling interests – 16 14 9 8
Total equity – 2,891 2,799 2,896 4,641
Total liabilities and equity – 15,082 14,589 14,429 14,504

Source: Annual report, Nielsen (2009, 2010, 2011)

Appendix 8. Cable and satellite industry Competitive
Through the use of STBs, cable and satellite companies provide television programming services
to their customers. These services are available on a subscription basis.
advantage
With the advances in big data technology and digitization, cable and satellite providers at Nielsen
are able to provide more services to customers than just television programming, and
they are also able to obtain more granular metrics on participating households. Digital
signals have allowed for pay-per-view of movies, interactive program guides, digital video
recorders, etc. 599
These companies collect granular (second-by-second) data on households concerning their
television-viewing behavior such as what channels they are tuned to, what movies they
purchase, interactive ad engagement, etc., on a second-by-second basis. When this data are
grouped with programming data, commercial time slots, and household demographics, these
companies can provide advertisers with in-depth information by household to give a more
complete view of the consumer.
The top cable and satellite companies in order of number of subscribers are:
(1) Comcast (cable) – approximately 22 million subscribers and 2011 revenue of US$ 56
billion. Trades on the NASDAQ under the symbol CMSCA
(2) DirecTV (satellite) – approximately 20 million subscribers and 2011 revenue US$ 27
billion. Trades on the NASDAQ under the symbol DTV.
(3) DISH Network (satellite) – approximately 14 million subscribers and 2011 revenue of
US$ 14 billion. Trades on the NASDAQ under the symbol DISH.
(4) Time Warner Cable – approximately 12 million subscribers and 2011 revenue of US$ 19
billion. Trades on the NYSE under the symbol TWC.
These four companies account for approximately 80 percent of subscribers.
Sources: Comcast Corporation (2011), DirecTV (2011), DISH Network (2011), Time Warner
Cable (2011), annual reports.

Appendix 9. TiVo Inc.

TiVo Inc., a US-based corporation, was founded as Teleworld in 1997, and changed its name to
TiVo in 1999. The company was founded by a computer manufacturing industry veteran named
Jim Barton, and Mike Ramsay who had previously worked with Time Warner’s Digital Video
System. In 2000, TiVo extended its reach into Europe, and in 2008 it started offering
its services in Australia. TiVo Inc. is a publicly traded company on NASDAQ under the symbol:
TIVO.
TiVo has a digital video recorder which records television programming onto a hard disk for
viewing. TiVo also makes its television recording services available through integration into
STBs owned by cable and satellite companies. The advent of broadband has allowed TiVo to
offer viewing programming from the internet via subscription services, such as Netflix and
HuluPlus, as well as videos from YouTube and internet subscription radio programming from
Pandora and Rhapsody.
The TiVo monthly subscription service allows the subscriber to download television
programming schedules, and software updates to TiVo STB. The television programming
schedule that is downloaded to TiVo is necessary for the TiVo STB to automatically record
television programming. The software updates allow for the addition of services such as Netflix,
video games, etc., as they become available.
TiVo’s patented software, which resides on the TiVo STB, is highly sophisticated in that it
automatically records subscriber-selected television programming, but also records other
programming that it thinks the subscriber may be interested in. This feature is called “TiVo
Suggestions.” TiVo also allows for the subscriber to pause a live television program, and resume
watching it later. This patented feature is called “trick play.”
MD In addition to selling STBs and monthly subscription services, TiVo also collects viewing
data on its subscribers which it sells to network television and advertising companies. This data
52,3 consists of what is viewed over the television, the internet, and mobile devices. In 2011 TiVo had
revenue of 220 million.

Appendix 10. Rentrak

600 Rentrak is a media measurement and distribution company that uses data and technology to
serve the advertising industry, television networks, and movie studios. Their goal is to help their
customers make better programming decisions and target the appropriate consumer segment,
in order to make better investment and advertising decisions. Whereas most of Rentrak’s
competitors, such as Nielsen, use sampling methods to provide media consumption metrics to
their customers, Rentrak uses the data contained in its large databases, which it refers to as its
“database currency,” to provide granular data on actual consumer media consumption. Rentrak
trades on the NASDAQ under the symbol: RENT.
Located in the USA, Rentrak was founded in 1977 as National Video, a retail video rental
chain, which allowed consumers to rent videos for overnight viewing. Due to increased
competition from competitors such as Blockbuster Video, the company founder sold the retail
video chain and renamed the company Rentrak in 1988.
In 1989, Rentrak develop a process known as pay-per-transaction, which is a video (DVD)
distribution process aimed at independent video (DVD) rental stores. Using the information
obtained from the pay-per-transaction data, as well as other sources, Rentrak provides metrics
on DVD and video game rentals to movie studios, video game developers, and retail stores.
Rentrak also tracks viewing behavior of television programming using data obtained from
STBs. It provides television viewing as well as video-on-demand, digital video recording (DVR),
and interactive television metrics to Network television and advertising firms. Rentrak processes
raw usage data from various sources, and then aggregates and formats the data for use by its
customers.
Rentrak is the industry’s only provider of content concerning purchased and rented movie
and television content downloaded/streamed over the internet. Rentrak also tracks viewing of
television programming and video viewing over Smartphones.
In order for Rentrak to provide the metrics to its customers, Rentrak uses proprietary
software, algorithms, and technology to aggregate billions of transactions on consumer
consumption of media, from the television, movie theater, mobile phone, or internet. The raw
data obtained from various sources is stored in content databases, and is then combined with
consumer segmentation and purchase data. In 2011 Rentrak had revenue of 97 million.

Appendix 11. TRA Inc.

TRA Inc. was founded in 2008 in New York City. TRA stands for “The Right Audience.”
It measures media consumption and pairs advertising-viewing data with products purchased by
household. TRA collects live second-by-second data from cable STBs, time shifted data (DVR)
from TiVo, and product purchase/demographic data from consumer-packaged goods companies.
It uses its proprietary software and algorithms to combine this data for reporting and further
analysis.
TRA developed a measurement technology product called Media TRAnalytics, which
provides advertising firms and marketers with ROI data on advertising effectiveness and media
spending. Using the second-by-second national live and time shifted tuning data from STBs,
household purchase data, and household demographic data that TRA has collected, TRA’s
algorithms then filter the data and match it to data at the household level for further analysis.
It does this by cross-tabulating data from 370,000 households. The data set is obtained through
the aggregation of television viewership data from 1.7 million households (cable and TiVo),
household purchase data from more than 57 million households, and demographic data from
more than 100 million anonymous households. Using this data TRA’s Media TRAnalytics
produces reports for its customers. These reports inform advertisers and networks of the Competitive
strengths and weaknesses of different advertisements, and how such variables as program
environment, time slots, and pod position impact return on investment so future advertising advantage
decisions can be made. TRA is privately held. at Nielsen
About the author
Dr Michael E. Prescott graduated from the Grenoble Ecole de Management with a Doctorate
in Business Administration. His interests are information technology, digital data genesis,
601
the resource-based view of strategy, dynamic capabilities, and competitive advantage.
Dr Michael E. Prescott can be contacted at: mp13500@gmail.com

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