Nielsen, Arthur Charles
NIELSEN, ARTHUR CHARLES
Perhaps no other single man contributed as much to the development of professionalism in marketing as Arthur C. Nielsen (1897–1980). Nielsen accomplished far more than developing his famous market researching system, the Nielsen Ratings, for radio and television. He also created services that reduced the costs of product distribution—marketing, sales, and advertising—involved in moving goods from the factory to the consumer. His services made it possible to price essential goods at lower costs, resulting in a higher standard of living throughout the world.
Arthur Nielsen was born in Chicago, Illinois in 1897, the son of Danish immigrant Rasmus Nielsen, a business executive, and his wife, Harriet, a teacher. After graduating high school, Nielsen attended the University of Wisconsin where he obtained a Bachelor of Science in electrical engineering. Nielsen returned to Chicago in 1919 and worked in a number of companies as an electrical engineer.
For several years Nielsen had been anxious to open his own business, and in 1923 after borrowing $45,000 from his college fraternity brothers, he opened the A.C. Nielsen Company. The company conducted performance surveys of industrial equipment, and provided manufacturers with evaluation reports. By 1930 The company's sales increased to $200,000 annually, but the Great Depression (1929–1939) caused a massive industrial slump in the United States and nearly bankrupted Nielsen. He turned to other research services, creating the Nielsen Food and Drug Index, a research service that recorded the retail flow of grocery and drug brands by regular audits of carefully selected samples of stores. Using this information, food and drug manufacturers could measure the sales of their products against their competitors.
In 1936 Nielsen learned of the existence of the Audiometer, a mechanical device that made a minute-by-minute record of when a radio was on, and where its dial was set. Nielsen bought the invention from its creators, two professors on the faculty of the Massachusetts Institute of Technology. He made some changes to the device, and in 1938 patented the Audiometer under his own company name. Slowly Nielsen began installing Audiometers in a number of U.S. homes in the early 1940s and began to offer to radio stations and advertisers what he called a "Nielsen Radio Index" (NRI). The NRI provided for advertisers a specific reading of their "share" of the market in percentages. The broadcaster and advertiser could be told accurately how many people (by percentile) were listening to their advertisements and programming every 15 minutes throughout the day.
Though Nielsen's rating system was slow to start and his competition, who used phone calls and door-to-door interviews, were often more successful in selling their data to advertisers, Nielsen's system gradually caught on. By 1950 Nielsen had installed 1500 Audiometers across the country, representing 97 percent of the United States, and in ratings surveys the Nielsen Co. had emerged on top. In order to produce his reports faster, more cheaply, and more comprehensively to his clients, Nielsen was one of the first to purchase a business computer. In 1955 the world's first electronic computer, the Univac I, was delivered to the Nielsen Co.
During the 1950s Nielsen adapted his Audiometer methodology to television and abandoned radio ratings in 1964. Nielsen and his son, Arthur, Jr., continued to refine their consumer analysis system before Arthur Nielsen, Sr. retired in 1957. His son succeeded him as CEO of the company. In his free time Nielsen turned to philanthropic activities, which included support for hospitals, medical research, and organizations devoted to conservative economics and political economy.
Arthur C. Nielsen died in 1980. The Nielsen family sold the company for $1.3 billion in 1984 to Dun and Bradstreet. The ratings service Arthur Nielsen pioneered had earned a position as the premier TV ratings service.
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Nielsen, Arthur C. Marketing Research—Past Present Future. Philadelphia, PA: Philadelphia Chapter, American Marketing Association, 1963.
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"Nielsen, Arthur Charles." Gale Encyclopedia of U.S. Economic History. . Encyclopedia.com. (November 16, 2018). https://www.encyclopedia.com/history/encyclopedias-almanacs-transcripts-and-maps/nielsen-arthur-charles
"Nielsen, Arthur Charles." Gale Encyclopedia of U.S. Economic History. . Retrieved November 16, 2018 from Encyclopedia.com: https://www.encyclopedia.com/history/encyclopedias-almanacs-transcripts-and-maps/nielsen-arthur-charles
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