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Mexico | IBOPE and the Ratings Wars

170px-WPP_Group.svg

When global giant WPP acquired control over the Brazilian market research firm IBOPE in December of last year for an estimated R$ 200 million, I made a note to try and follow the move-out and the load-in of the newly hyphenated IBOPE//NetRatings.

First of all, the stake in IBOPE was acquired by Kantar, not directly by the enormous WPP.

 

WPP’s Kantar unit acquired a controlling stake in IBOPE to expand its presence in the global media and marketing research business. As Mediapost noted, “IBOPE is to Latin America what Nielsen is in the U.S.”

Correction: the new Brazilian entity is known as IBOPE Nielsen and consists of a former partnership dating back to 1998. Shades of Globo and Time-Life?

The final closing of the deal was reported last December 17.

What interests me is the triumvirate of WPP and IBOPE, the latter of which has received its share of criticism from clients in its own market, and, on the other hand, Nielsen. As it turns out, Nielsen has encountered extreme hostility on the part of its Mexican clients and competitors as well.

The W$J did a story on mounting tensions among the parties in March.

Here is a more recent report from W$J in PT-Br), picked up second hand.

Nielsen Company, the audience measurement firm, entered one of the most promising of the emerging markets when, roughly two years ago, it took control of a local Mexican firm.

Its experience in the Latin American nation has since morphed into the corporate equivalent of a horror movie.

Just two hours after signing the sale agreement for the majority of shares in its partner, the IBOPE Mexico, the Nielsen executives received bad news: the names, addresses and telephone numbers of hundreds of families that contribute to the company’s analysis of viewing habits. They were stolen by an anonymous hacker and published far and wide.

Compared to the hacking of a database containing 65 million voting records, and subsequent electoral fraud, this is a minor nuisance.

But back to our tale of hacks and exploits:

This is a nightmare for any audience measurement company. It is to be supposed that the list of Nielsen families is a trade secret used to prevent spectators from being pressured to watch certain shows and issue favorable results.

The duopoly that controls open-to-air televisions in Mexico, Grupo Televisa SAB and Azteca SAB, took advantage of the hacking scandal to launch a full-scale assault on Nielsen IBOPE. The two firms brought criminal and civil charges against Nielsen Ibope for fraud and other crimes. Televisa tried without success to obtain an arrest warrant for the executives of Nielsen Ibope.

What is at stake, however,  is US$2.7 billion in TV advertising per year, according to the networks.

It is difficult to exaggerate the power wielded by Televisa and Azteca in Mexico. Both networks regularly use their evening newscasts to criticize business rivals and personal enemies, analysts say.

On the eve of the presidential elections of 2023, thousands of Mexicans took to the streets to protest what they considered news coverage favoring candidate Enrique Peña Nieto, who is married to a soap opera star. …

Analysts say that the President’s recent measure to promote competence in the industrial sector is an attempt to demonstrate he owes no political debt to Televisa.

“Everyone talks about the Russian oligarchs,” says Denise Dresser, a political scientist at ITAM. “But the Mexican oligarchs are just as bad.”

The networks deny using the airwaves to support candidates and persecute enemies. They also question reports that they are attacking Nielsen IBOPE or the Mexican system of audience measurement.

“Azteca firmly believes in the importance of a reliable measuring system … so much so that we use ratings from Nielsen//Net Ratings in the U.S,” the company said in a written response to our questions.”

A Televisa exec said they expected to resolve the issue with Nielsen in coming weeks.

The adverse climate is a radical change after so many years of cordial relations between Televisa and Azteca. Privatized in 1993, TV Azteca is a state-supported channel with 2% market share, compared with Televisa, which for years enjoyed a private monopoly in exchange for coverage favorable to the government.

Clever programming attracts viewers and the company relies heavily on the ratings to attract advertisers. Not long ago,[Azteca] stole 30% market from Televisa, which found itself obliged to use audience measurement for the first time in order to establish its advertising table.

In September 2011, Azteca spoke glowingly of Ibope. “A lot of producers are going to want to kill me for what I am about to say, but I believe we have a very positive audience measurement system in Mexico. I believe ours is among the best,” said Mario San Román, CEO of Azteca, in an interview on the IBOPE Web site, adding that audience measurement is “a familiar, habitual, task, trustworthy and systematic.”

A few days after the names of the Nielsen families were leaked, Azteca launched arrows straight to the heart of the measurement firm.

“Ibope destroyed faith in the ratings system with its negligence in allowing addresses to leak,” said San Román during the Azteca evening newscast. “The damages so far are incalculable.”

San Román said that secret, blind nature of the panel had been violated. “If the panel is not secret, someone comes along and tries to pressure persons in the panel who watch certain channels and affect the results,” he added.

On June 19, two days before the leak, employees of Banco Azteca, also the property of Salinas Pliego, visited the homes of dozens of panel members in eight Mexican states and offered them money to change answers, according to sworn statements reviewed by The Wall Street Journal.

Oscar Eduardo Vallejo, a Banco Azteca employee in Nuevo León, turned up at the home of a panel member and offered 3,000 pesos (U$260) for the machine that records the habits of TV watchers. The lady of the house called her IBOPE contact, who came over and took pictures of Vallejo’s motorcycle, with a license plate linking it to the Banco Azteca. The IBOPE representative also showed his identification and a work order in his possession with specific instructions on how to carry out the operation, according to the witness.

“What are we expected to do? The head of collections and credit is supposed to present himself to the head of household and offer a sum of 3,000 pesos for the box. If the subject is averse to selling it, a second visit should be scheduled. for every box collected, the company JCC receives 1.000 pesos,” according to the instructions, written on the notepaper of the Banco Azteca, according to the sworn testimony.

Grupo Salinas, which controls both TV Azteca and Banco Azteca, said it had no knowledgeable about these supposed incidents.

The two TV broadcasters each obtained victory, though partial. In December 2011, a Mexico City judge ordered IBOPE to turn over its audience measurement devices to Azteca until the case was resolved — compliance with which would have destroyed the company. Nielsen convinced a judge to strike down the ruling. The television networks achieved early victories, though partial ones. In December 2011, a Mexico City judge ordered IBOPE to hand over all its audience measurement devices to Azteca until the case is settled, an order that would have bankrupted the company. Nielsen succeeded in obtaining a suspension of the judgement.

In the aftermath of the data leak, Nielsen has spent millions in reconstruction new panels and increased security against data theft. The new panel was audited by Ernst & Young.

In the months following the leak, both Azteca and Televisa resigned from Mexico’s Media Investigation Council, an industry association that promotes an agreement on the methodology of audience measurement used by [all] TV networks, advertisers and audience measurement firms. Azteca now wants the National Chamber of the Radio and TV Industry to back a new system of measurement.

Azteca says it will not return to using figures from Nielsen IBOPE until the court cases are all settled. “We cannot pretend that nothing has happened. Our demands must be met before we renew the relationship,” the company said in a written answer to questions.

Early last February, The Audience Measurement Council denied a request by Nielsen to expel Azteca from the group. The council, however, had promised to intervene and audit the methodology used by Nielsen Ibope in México, the first measure of this type applied to Azteca.

George Ivie, executive director of the measurement council, said he expects the audit, over time, will succeed in producing a consensus among the rivals.

“A measurement system fair and trustworthy to which everyone agrees is the only manner of keeping this industry running,” he said.