HOW DOES
NIELSEN
HELP OUR
CLIENTS?
2012 YEAR IN REVIEW
HOW AM I DOING VERSUS MY COMPETITORS?
WHAT IS MY MARKET SHARE?
WHAT PRODUCT MIX WILL MAXIMIZE MY SALES?
HOW CAN I IMPROVE MY PRICING AND
PROMOTION TO DRIVE PROFITABILITY?
HOW DO I KNOW WHAT AUDIENCE
I AM REACHING?
HOW DID MY ADS
INFLUENCE AUDIENCES?
DID THEY BUY MY PRODUCT?
WHAT IS THE VALUE OF
DIGITAL ADVERTISING?
HOW CAN SOCIAL MEDIA ENHANCE
AUDIENCE ENGAGEMENT?
HOW CAN I INCREASE THE ROI
OF MY ADVERTISING SPEND?
Nielsen’s mission is to help our clients
have the most complete understanding
of consumers worldwide. Our focus on
the consumer provides information and
insights that enable clients to make
crucial business decisions every day.
With innovation at the forefront, we strive to add
value for clients across both the developed and
developing worlds as media is consumed in new
ways and as clients enter new geographies. Our
promise to our clients is to help them make faster,
smarter and more confident decisions, driven by
consumer foresight.
NIELSEN 2012 YEAR IN REVIEW / 3
“ WE WORK AT THE
INTERSECTION
OF BIG DATA AND
BIG DECISIONS.”
DAVID L. CALHOUN
CHIEF EXECUTIVE OFFICER
DEAR
SHAREHOLDERS
Despite some dire predictions, the world did not end in 2012. The
European Union did not unravel. The U.S. did not throw itself over
the “fiscal cliff.” Certainly, we are all still adjusting to the more
complicated economic environment of the past few years. But we
continue to move forward, propelled by consumer demand—the most
powerful financial driver in the world. That force and the remarkable
efforts of our 35,000 associates made 2012, Nielsen’s 90th year
providing measurement services, a successful one. Our particular
success was marked by unprecedented expansion of our measurement
services for the media and retail industries, and by seizing a number
of important Big Data opportunities, all fueled by innovation.
4 / NIELSEN 2012 YEAR IN REVIEW
Every day, seven billion consumers work, learn, eat, sleep, relax — and spend hundreds
of billions of dollars buying the products and services they see featured on every screen
and in every store in their daily lives. This demand will only increase in the coming
years, as there will be another billion consumers by 2025 — and at least two billion of
the total consumer population will join the middle class, predominantly in emerging
markets including China, Latin America, India and Africa.
At the same time, demand will shift, in part because nearly 500 million people are
projected to move into cities in search of better opportunities in the next dozen years.
By one estimate, annual household consumption in the 600 largest cities will increase
by more than $20 trillion1 over that period — and urban consumers buy differently
than rural ones. Technology is accelerating the shift in demand and will drive more
information and interaction as it becomes cheaper and even more pervasive.
I’ve yet to meet any leader who would bet against these projections. The only
strategic question we all face is how to capitalize on the opportunity presented. All of
this was foreseen by Arthur C. Nielsen, Sr., who described the ultimate mission of his
young company’s measurement activities as “the increasing of the standard of living in
the free countries of this world.” We continue to embody that commitment today.
As our founder recognized, companies that understand who and where their
consumers are can reach more of them more efficiently, achieving greater economies
of scale and spending less on distribution. Competition intensifies and innovation
flourishes. In short, consumer measurement facilitates growth.
At Nielsen today, we embrace our founder’s passion as we continue to invest
in creating the world’s most complete picture of what consumers watch and buy. This is
what we do, and we do it for more than 20,000 clients in approximately 100 countries
around the world. We work on behalf of some of the most sophisticated companies
on the planet, and on behalf of those, large and small, that aspire to join their
ranks. We are fully committed to bringing our clients the most accurate and timely
information we can generate about their consumers.
OUR CORE BUSINESSES
97% of our revenue comes from two fundamental consumer activities we call Watch
and Buy.2 The former serves media interests, the latter supports manufacturers and
retailers. The core of each business is measuring the activity of the world’s consumers.
In each area, we also offer a set of analytic services designed to help our clients meet
their most important challenges and seize their biggest opportunities.
Our Watch and Buy businesses are highly scalable. Both have posted growth3
during every one of the past six years including 2012, despite the ups and downs of
the business cycle. The stability of these businesses reflects just how deeply Nielsen’s
information is embedded in our clients’ ongoing operations and in their decision-
making processes. Our multi-year client relationships provide us with the incentive and
the flexibility to keep improving and extending our measurement activities every year.
As we define and expand measurement, we consider the open-air marketplaces of
Nairobi as important as the grocery stores of Main Street USA, and watching video
on a tablet as important as watching TV.
We work at the intersection of Big Data and big decisions. This is crucial for
clients, whether they have millions or billions in sales. Their decisions drive high-stakes
investments, and must be made on the very best data available. We provide much of
that data, and work with our clients to integrate it into their systems and workflows.
Our teams — who are often deeply integrated into our clients’ daily activities — are
world class at helping them extract unique insights from giant datasets, that ultimately
help them grow.
For us, Big Data starts with massive volume. We collect enormous amounts of
consumer purchasing data all over the world, from all types of retailers, e-commerce
providers and consumer households. We also measure how thousands of monthly
and weekly changes in product offerings, pricing, promotion and marketing programs
influence sales across every retailer and distribution channel. At the same time, we
capture incredible data variety as we measure media consumption by millions of
1 McKinsey Global Institute (2011); Urban World: Mapping the Economic Power of Cities
2 The Expositions segment, an unparalleled collection of business-to-business trade shows and related properties,
makes up the remaining 3% of the company’s revenues.
3 Growth measured in constant currency.
NOW TO 2050
FROM 2010–2020:
EMERGING MARKETS WILL REPRESENT
70%
OF OVERALL GROWTH IN
CONSUMER SPENDING.
Source: McKinsey & Company, 2011
BY 2020:
THE GLOBAL MIDDLE CLASS WILL BE
52%
OF THE WORLD’S POPULATION.
Source: Brookings Institution Press, 2010
BY 2030:
THE NUMBER OF MIDDLE-CLASS PEOPLE
IN THE DEVELOPING WORLD WILL REACH
1.2BILLION
Source: World Bank
BY 2050:
NEARLY
80%
OF THE WORLD’S GDP GROWTH
WILL OCCUR OUTSIDE EUROPE
AND NORTH AMERICA.
Source: Goldman Sachs, 2013
NIELSEN 2012 YEAR IN REVIEW / 5
consumers across a multitude of different programs and campaigns, on platforms from
broadcast to cable to digital to mobile, through devices from TV to tablets to smart phones,
in dozens of countries. And we are constantly measuring the velocity of change, as content
distribution becomes fragmented, as consumers shift their purchasing behavior, as rural
consumers become urbanized and as changing demographics influence consumption.
But data alone isn’t sufficient. Our ability to help clients unlock value from
data has become even more important, as the world transitions from huge databases
to high-volume streaming data that flows in real time. One estimate suggests that
90 percent of the world’s existing data has been created in the last two years. Think about
what that means for the years ahead, and the rich opportunities it will create for the
companies in any industry who develop the ability to mine vast streams of information
for competitive advantage.
Our experience also reminds us that Big Data isn’t just about powerful computers
processing lots of information. It is also about creating new data by sending people
into places to measure activity where there is no point-of-service data capture. We are
aggressive in using technology to drive accurate measurement. But much of the world
is not even on the grid, let alone the Internet. Most of the world’s population are not
scanning items, surfing online, texting friends or swiping cards as they seek their next
meal. No technology is present to help measure their activity, and yet that activity is
becoming increasingly important to our clients, whether they are expanding in the
developing markets they grew up in, or expanding into them from the developed world.
We will go just about anywhere, using just about any technology, to expand our
measurement reach. As a young Nielsen associate in India put it, “We aspire to be
the guide of choice to the hotspots of the global bazaar.”
WHAT CONSUMERS BUY
Nielsen’s Buy segment represented 61% of total revenues in 2012. Our retail measurement
and consumer panel services help packaged goods companies and retailers determine
what consumers are buying in terms of categories, brands and products. Most of the
largest companies in the global consumer packaged goods industry are longstanding
Nielsen clients.
We measure the sales of fast-moving consumer goods represented by more than
18 million physical retail locations in the world, from roadside stands to big-box chains.
That number is growing every year. Only Nielsen collects data in approximately 100 countries
on how much of any given product is sold across many diverse distribution channels, and
combines it with household panel data that captures every item brought into the home to
better understand product loyalty, buying behavior and purchase influences.
Our measurement capabilities are extensive by any assessment. But our clients
constantly ask us to expand our coverage of consumer spending as they expand their
own product portfolios and distribution. We are continuously building new capabilities
and making additional investments to achieve this goal.
We marked many important milestones in 2012:
•
Integrating sales from the world’s largest retailer: We were delighted with Walmart’s
decision to resume sharing their retail sales information in the U.S. Walmart has
transformed the global retail industry, and the industry at large will benefit from the
more comprehensive view of U.S. retail sales their participation makes possible.
• Expanding our global measurement footprint: We made substantial enhancements
throughout the year to our measurement of consumer shopping in China, India and
Africa, to keep pace with our clients’ needs in these expanding consumer markets.
• Extending our coverage into new channels: We invested to expand our measurement
of online retail for fast-moving consumer goods. While e-commerce represents a
small portion of our clients’ sales, it is growing at a rapid pace. We are committed
to continuing to invest in capturing data from this channel as it grows in strategic
importance to both retailers and manufacturers.
WE MEASURE THE
SALES OF FAST-MOVING
CONSUMER GOODS
REPRESENTED BY MORE
THAN 18 MILLION PHYSICAL
RETAIL LOCATIONS IN
THE WORLD, FROM
ROADSIDE STANDS TO
BIG-BOX CHAINS. THAT
NUMBER IS GROWING
EVERY YEAR.
61%
2012 REVENUE
FROM BUY
6 / NIELSEN 2012 YEAR IN REVIEW
CONSUMER INSIGHTS FOR
FASTER, SMARTER AND
BETTER DECISIONS
Nielsen’s reach, breadth and depth of expertise help deliver consistent
results to clients. We provide end-to-end consumer insights, helping clients
make strategic business decisions at every step of the way. Nielsen provides
effective strategies that enable clients to reach their desired consumers
today as well as work to evolve these strategies and identify breakthrough
opportunities to stay ahead of their competitors.
86%
IN RETAIL SPEND GROWTH
WILL BE DRIVEN BY
MULTICULTURAL CONSUMERS
OVER THE NEXT TEN YEARS.
80%
OF ACTIVE INTERNET
USERS VISIT SOCIAL
NETWORKS AND BLOGS.
60%
OF BRAND PURCHASE
DECISIONS ARE MADE
IN-STORE.
I O N
T
A
V
O
IN N
I A L
C
S O
P E R
P
O
S H
IDENTIFY
DESIGN
COMMUNICATE
DISTRIBUTE
S
E
G
M
E
N
T
ATION
S
S
E
T I V E N
M
A
RKETING E F F
C
E
T
N
M E
A
U
DIENCE M E A S
E
R
U
90%
OF PRODUCT LAUNCHES
FAIL. AT NIELSEN, WE
HELP OUR CLIENTS BEAT
THE ODDS.
15–30%
OF MARKETING
DOLLARS MISS
THEIR MARK.
85%
OF TABLET AND
SMARTPHONE OWNERS
USE THEIR DEVICES
WHILE WATCHING TV.
SEGMENTATION
SOCIAL
SHOPPER
The world is a fragmented place. Nielsen helps
identify unique consumer segments that are
relevant to our clients’ businesses.
Nielsen provides a view into the social world
by tracking social media conversations that
can help media companies and advertisers
understand audience engagement. Social media
is changing consumer behavior and we are at
the forefront of providing real-time metrics to
enhance marketing strategies.
Understanding a shopper’s path to purchase is
critical to our retailer and manufacturing clients.
Nielsen provides insights into not only who their
shoppers are, but also what they are buying,
where, when and why. We deliver actionable
insights to meet the needs of consumers and
improve the performance in stores, categories
and brands.
INNOVATION
MARKETING EFFECTIVENESS
AUDIENCE MEASUREMENT
Clients rely on our ability to provide innovative
approaches for successful product offerings.
This not only includes insights into packaging
and distribution but also a roadmap to expand
offerings to meet consumer needs.
Our insights into what customers watch and
buy help manufacturers, retailers and media
companies prioritize advertising spend and
create effective marketing plans. We help
clients determine the best strategy to reach
their audience to ultimately maximize return
on investment (ROI).
Our audience measurement data provides a
comprehensive view of how, when and where
consumers are connecting with content. Clients
rely on Nielsen to determine the best way to reach
the right audience on the right platform.
NIELSEN 2012 YEAR IN REVIEW / 7
HEALTHCARE
MEDIA
TECHNOLOGY
ONLINE PUBLISHERS
FINANCIAL SERVICES
OUR CLIENTS
TELECOMMUNICATIONS
CABLE AND
SATELLITE
PROVIDERS
BROADCASTING–NATIONAL
AND LOCAL
RETAILERS
ADVERTISING
AGENCIES
CONSUMER PACKAGED GOODS
(CPG) MANUFACTURERS
DEFINING OUR REACH
Purchasing habits and content consumption have changed drastically over the past
several years, providing our clients with countless opportunities to reach customers
in both new and traditional ways. We help them better understand where, how and
when media is consumed and products are purchased. Clients around the world,
large and small, across various industries rely on Nielsen to provide the information
and insights to help them succeed in the marketplace.
AUTOMOTIVE
MANUFACTURERS
8 / NIELSEN 2012 YEAR IN REVIEW
OUR JOB IS TO MEASURE
AND ANALYZE THE
TOTAL CONSUMPTION
OF MEDIA FROM ALL
OF THE POSSIBLE
DISTRIBUTION POINTS.
36%
2012 REVENUE
FROM WATCH
• Creating a more detailed understanding of consumer shopping behavior: We
introduced a powerful consumer loyalty platform to U.S. retailers, with Safeway as
our first client. This service, enabled by our Answers on Demand platform, provides
access to billions of store transactions that can be matched to each customer
segment. Retailers and manufacturers can see whether a specific product is being
stocked in the right amount at the right price with the right type of promotional
support to help drive loyalty for those customer segments. It also allows retailers
such as Safeway to create a unique relationship with each and every one of
their customers.
• Applying neuroscience to assess consumer response: Consumer neuroscience
offers a different approach to assessing consumer responses to advertising messages
and other forms of marketing. By simply measuring the brain’s activities with
regard to attention, emotional engagement and memory encoding, this pure form
of research eliminates survey and question biases.
• Adding category coverage: We acquired The Perishables Group in the U.S. to
add sales and market share of fresh produce, dairy and meats to a retailer’s view
of each store.
Measuring retail consumption may be the largest part of our Buy business, but our work
providing analytical insights is also an integral part of our relationships with manufacturers
and retailers. In a world where innovation is paramount, we have more than 30 years
experience evaluating tens of thousands of new product concepts, helping companies
make products more attractive to consumers. We also help our clients optimize the
mix of product features, media spend, pricing and packaging — all to find new ways
to unlock growth and deliver increased profitability to their businesses.
WHAT CONSUMERS WATCH
Nielsen’s Watch segment represented 36% of total revenues in 2012. Our measurement
shows that the average consumer in the U.S. engages with media six hours per day,
and it informs how advertisers, agencies and media players trade billions of advertising
dollars each year. We capture what consumers are watching on a range of devices in the
household: televisions, computers, tablets, smartphones, gaming consoles and other
entertainment devices — any way that consumers are viewing what was once called TV,
better described more broadly today as video content.
Our major Watch clients include most of the world’s leading media companies,
Silicon Valley giants and startups, digital publishers and technology players. Our
audience measurements of what we call Reach — how many people see programming
and advertising and how often they see it — facilitate commerce among advertisers,
agencies, content providers, distributors, publishers and advertising platforms.
The growth opportunities inherent in our Watch businesses are easy to see. Start
with the explosion in video content available from thousands of distribution channels,
whether it’s TV broadcasters, cable networks, subscription providers, online publishers
or social networks. Now multiply that increase in video content by the ever-expanding
universe of devices that can access it. Our job is to measure and analyze the total
consumption of media from all of the possible distribution points.
Our Reach activities in 2012 included a number of important milestones:
• Expanding the breadth of our television ratings across countries: We now provide
TV audience measurement and ratings (the reach of a program and its advertising
known as Gross Ratings Points or GRPs) in 32 countries, and became the preferred
measurement provider in three new markets in 2012.
• Extending our measurement of the digital world: We extended our reach metrics
with Nielsen Online Campaign Ratings, which include digital advertising audience
metrics that are directly comparable to overnight television ratings. Our digital
measurement services are designed to utilize the advantages of a Big Data world,
incorporating census-like measurement techniques that provide an unprecedented
level of accuracy in understanding consumers’ digital viewing behavior.
NIELSEN 2012 YEAR IN REVIEW / 9
Publishers and other media content owners are now using these services to
provide guarantees to advertisers for the online reach of video advertising. Major
advertisers and their agencies are also using these new services directly to optimize
their advertising spend in the U.S. and the U.K., and we plan further expansion
to other markets in 2013.
• Adding the consumption of radio: In December 2012 we announced an agreement
to acquire Arbitron, a leader in measuring radio audiences, which will allow us
to represent an additional two hours a day that consumers engage with media —
most of it in automobiles, close to stores. Pending final regulatory approval, we will
be excited to welcome the Arbitron team to Nielsen during 2013.
As noted earlier, we offer our Watch clients a range of analytic services that extend
beyond measuring Reach. We also marked important milestones in 2012 in expanding
our capabilities to measure Resonance, which is our approach for analyzing how content
influences an audience:
• Expanding our ability to measure social media impact: We acquired SocialGuide
to strengthen our ability to analyze how consumers interact with social media while
watching television. These capabilities support our collaboration with Twitter to
develop social TV ratings, capturing the powerful link between social media activity
and television engagement as advertisers seek to measure earned media in all
its forms.
• Measuring the effectiveness of digital advertising: Our acquisition of Vizu allows
us to help advertisers and publishers assess and optimize the effectiveness of digital
advertising by analyzing its impact online in real time.
Reach and Resonance tell you who saw your advertising and how well it connected with
them. But to determine return on investment (ROI), you must connect what people watch
with what they buy. We define this as Reaction, which completes the 3R model we use to
assess marketing investments and return for our clients.
WHERE WATCH MEETS BUY
Because Nielsen measures both what consumers watch and what they buy, we have been
able to pioneer ways to bring them together. Doing so allows us to measure Reaction —
what viewers do after exposure to advertising. We consider this another Big Data
opportunity: matching enormous consumer credit, debit and loyalty-card datasets with
massive data streams of activity and information from our TV, digital and household
purchase panels using stringent privacy protections. We can now show our clients how
anonymous groups of consumers saw certain advertising campaigns and then bought
the advertised goods.
This allows us to provide our clients with a comprehensive view on how marketing
spend affects consumer actions, which they particularly value in a climate of proliferating
marketing choices and shrinking marketing budgets. Nielsen aims to be the leader in
Reach, Resonance and Reaction, leveraging the strength Reach provides to underpin our
investments in more comprehensive Resonance and Reaction services. Our work in these
areas makes it clear that maximizing marketing ROI is never about choosing one advertising
medium over another, but about how they work together to achieve marketing goals.
OUR WORK IN THESE
AREAS MAKES IT CLEAR
THAT MAXIMIZING
MARKETING ROI IS NEVER
ABOUT CHOOSING ONE
ADVERTISING MEDIUM
OVER ANOTHER, BUT
ABOUT HOW THEY WORK
TOGETHER TO ACHIEVE
MARKETING GOALS.
$5.6BILLION IN 2012
TOTAL REVENUES
10 / NIELSEN 2012 YEAR IN REVIEW
SEEING AROUND
THE NEXT CORNER
Delighting our clients compels us to continually stretch our
understanding of what consumers will demand — and how
companies in our industry can meet that demand with innovative
products, services and technologies. During 2012 we invested
in several areas to nurture innovation and help enable our clients
develop consumer foresight to see around the next corner.
We launched The Demand Institute, a non-profit organization
jointly founded with The Conference Board. The Institute’s
long-term agenda is focused on how major shifts in consumer
demand across countries and industries will unlock new
opportunities for business and government leaders over the
next decade. The first major Demand Institute project during
2012 was an in-depth look at the U.S. housing market and its
impact on adjacent industries. Future work will examine other
influential global consumer markets undergoing substantial
evolution or reinvention.
We also invested in several new ventures that will enable us
to connect a broad and vibrant network of entrepreneurs in
our industry who are leading innovation in marketing and
measurement ideas and technologies. These activities include a
collaboration with the Stanford Graduate School of Business to
spur advancements in advertising effectiveness; a joint venture
funding innovations in marketing technology with the Israeli
Government and other private investors; an anchor investment
in an early-stage venture fund focused on commercializing
marketing technology and advertising effectiveness tools; and
a Singapore-based innovation hub that seeks to help clients
invest for growth in new ways across Asia.
This set of strategic investments broadens our visibility into
new consumer trends and opportunities across the developed
and developing world, more deeply integrates Nielsen with the
entrepreneurial capabilities that surround our industry, and
further supports our goal of helping our clients capitalize on
the future as it arrives.
MARKETING
PERFORMANCE
GLOBAL
STRATEGY
MEETING
DEMAND
DEVELOPING CONSUMER FORESIGHT
CONSUMER
FOCUS
MARKET
SEGMENTATION
INNOVATION
DATA
ANALYSIS
NIELSEN 2012 YEAR IN REVIEW / 11
20,000
CLIENTS
35,000
ASSOCIATES
OUR VALUES REPRESENT
A PERSONAL AND
COLLECTIVE COMMITMENT
TO BEING SIMPLE,
BEING OPEN, AND
BEING INTEGRATED IN
EVERYTHING WE DO.
FINANCIAL RESULTS
Our advances in our measurement and analytics capabilities help sustain our growth in
revenue and profitability, our improved cash flow and our reduction in leverage. Full year
2012 revenues were $5.6 billion, a 4 percent increase from 2011 on a constant currency
basis. Adjusted EBITDA grew to 28.5 percent of total revenues. We also grew free cash
flow by growing adjusted EBITDA and reducing our weighted average interest rate through
debt repayment and refinancing. Our commitments to financial flexibility and cost
leadership enable our ongoing investments for growth.
LOOKING AHEAD
Our future lies directly where our 20,000 clients are headed. The heart of our business is
measuring the consumption of products universally viewed as essential by consumers in
any culture: food, beverages and household products as well as media and entertainment.
Today’s two biggest trends of global population growth and the explosion of technology
adoption will be essential to the shape of the future.
Modern consumer demand in its simplest form — the exchange of money for
goods — has built up over several hundred years since the invention of the first general
stores and the printing press. That consumer demand constantly changes over time as our
clients invent new types of stores, new products and new ways to deliver the information
we all crave for understanding our world and entertaining our minds. Change that was
once described as evolution has become revolution in the digital age. Fragmentation is
a common way to describe the increasing variety and velocity of challenges most industry
participants face.
This is a world we are inspired by. Our mission demands that we keep up with
consumers and measure all that they consume, through all modes of distribution, in all
geographies around the world. Our clients are most interested in clarity about the rate of
consumer change and in forward-looking analytics that can improve their probability of
success. The world moves fast, and so must we.
• • • • •
In this digital age, where Big Data and fragmentation rule, we believe a company’s values
and mission provide the real keys to success. Our values represent a personal and
collective commitment to being simple, being open and being integrated in everything
we do. Beyond what we do, we must bring these values to all the great people with whom
we interact: clients, partners, all members of the value chain, our communities, our
shareholders and, most importantly, each other. These values are hard to achieve. Just like
the consumers we measure, who strive for a better life every day, our pursuit of a more
values-driven culture will sustain us in a way numerical measures alone never could.
As we look ahead, it is our team of 35,000 associates that ultimately provides us with
unwavering confidence in our future. The kernels of many of our best ideas come from
young people who join Nielsen as we build our businesses in vast, developing countries,
reinforcing why our top priority and most important investment every year is leadership
and talent development. We know if we get that right, everything else is achievable. Just as
consumers know no limits, neither will Nielsen.
All of us who represent Nielsen are proud of what we accomplished together in 2012,
and we look forward to helping our clients around the world achieve even greater success
in 2013 and beyond.
David L. Calhoun
Chief Executive Officer
12 / NIELSEN 2012 YEAR IN REVIEW
FINANCIAL HIGHLIGHTS
TOTAL REVENUES
($ millions)
ADJUSTED EBITDA (a)
NET DEBT LEVERAGE RATIO (b)
($ millions)
$5,532
$5,612
$1,602
$1,546
5.8
$5,126
$1,411
4.0
3.75
2010
2011
2012
2010
2011
2012
2010
2011
2012
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
($ millions)
Net Income
(Income)/Loss from discontinued operations, net
Interest expense, net
Provision/(benefit) for income taxes
Depreciation and amortization
EBITDA
Equity in net income of affiliates
Other non-operating (income)/expense, net (c)
Restructuring charges
Stock-based compensation expense
Other items (d)
Adjusted EBITDA
2012
$ 273
—
409
140
520
1,342
(5)
135
84
34
12
2011
$ 86
(1)
471
22
529
1,107
(3)
219
84
27
112
2010
$ 132
22
655
(46)
558
1,321
(5)
(28)
61
18
44
$ 1,602
$ 1,546
$ 1,411
(a) Adjusted EBITDA is not a presentation made in accordance
with GAAP. We use Adjusted EBITDA to consistently measure
our performance from period to period both at the consolidated
level as well as within our operating segments, to evaluate and
fund incentive compensation programs and to compare our
results to those of our competitors.
(b) The net debt leverage ratio is defined as net debt (gross
debt less cash and cash equivalents) as of the balance sheet
date divided by Adjusted EBITDA for the twelve months
then ended.
(c) Non-operating expense for twelve months ended December 31
reflects debt extinguishment/pre-payment charges of
$121 million in 2012 and $231 million in 2011.
(d) Other items primarily consist of Sponsor Advisory Fees
(including termination payments of $102 million for the full
year ended December 31, 2011), and costs related to public
offering and other transaction-related fees.
ANNUAL SEGMENT REVENUES ($ millions)
$1,850
WATCH
$1,944
WATCH
$2,009
WATCH
2010 TOTAL
$5,126
$3,108
BUY
2011 TOTAL
$5,532
$3,409
BUY
2012 TOTAL
$5,612
$3,420
BUY
$168
EXPOSITIONS
$179
EXPOSITIONS
$183
EXPOSITIONS
TOTAL RETURN PERFORMANCE
The following graph shows a comparison of cumulative total shareholder return since year-end 2011 of our common stock, the
Russell 1000 and the SNL U.S. Financial Technology, Media & Content Index. The comparison assumes that $100 was invested
in the Nielsen Holdings N.V. common stock and each of the indices as of the close of market on December 31, 2011, and that
dividends were reinvested.
$120
)
s
r
a
l
l
o
D
(
$100
$80
SNL U.S. Financial
Technology, Media
& Content
Russell 1000
Nielsen
Holdings N.V.
12/31/11
2/29/12
4/30/12
6/30/12
8/31/12
10/31/12
12/31/12
\
By 2020,
emerging markets
will represent close to
50%
of total
consumer spending
Source: McKinsey & Company, 2011
LATIN AMERICA
Middle-class
households increased
26%
between 2006
and 2010
GLOBAL
FOOTPRINT
Nielsen supports clients in over 100 countries, providing them
with the most comprehensive view of the consumer and markets
worldwide. Our 35,000 employees across the globe focus on
creating value for our clients and the global consumers they serve.
Today, clients are looking to increase their presence and business
in the developing world following trends such as the growth of the
middle class and demographic shifts.
14 / NIELSEN 2012 YEAR IN REVIEW
\
INDIA
The middle class
will grow more than
35%
in the next two
decades
AFRICA
Gross Domestic
Product has grown
26%
in the last
10 years
CHINA
From 2012 to 2050,
the population aged 60
and above will grow to
460million from
186 million
FOCUS ON
DEVELOPING
MARKETS
Nielsen is committed to investing in these
regions to expand coverage. Whether it’s
improving in-store sales in China, optimizing
advertising plans utilizing social media in India
or understanding advertising effectiveness in
Brazil, Nielsen provides the information and
insights that allow clients to make meaningful
business decisions every day.
LEVERAGE
MARKET
TECHNOLOGY
CREATE NEW
METHODOLOGIES
CENTRALIZE
AND SIMPLIFY
ANALYTICS
NIELSEN DEVELOPING
MARKETS REVENUE
($ millions)
NIELSEN EMPLOYEES
IN DEVELOPING MARKETS
$1,132
+18%
19,353
2012
$796
16,362
2009
2009
2012
NIELSEN 2012 YEAR IN REVIEW / 15
WHAT
CONSUMERS
BUY
Nielsen’s Buy segment provides consumer packaged goods
manufacturers and retailers with the most comprehensive view
of their consumers and their market activity. Operating in over
100 countries, we provide clients with measurement and analytics
to enhance media, pricing and promotion strategies, optimize
product innovation and performance and understand consumer
shopping and purchase behaviors to win in the marketplace.
Our long-lasting customer relationships demonstrate our ability
to identify economic opportunity for clients and help drive
growth while maximizing return on marketing investments.
ASSORTMENT
Nielsen helps manufacturing clients find growth opportunities
for their brands and product categories. We deliver insights on
consumer response to changes in product assortment and analyze
the incremental value of new products introduced into a particular
category. We help clients optimize their product portfolio mix to
manage shelf space and increase sales volume.
CASE STUDY
WHAT IS THE RIGHT
PRODUCT MIX TO
MAXIMIZE MY SALES?
A leader in the consumer packaged goods industry was faced with the
issue of limited shelf space at many retailers due to new entrants to
the category. The client wanted to grow its line of frozen food entrées
without increasing its SKU count.
Nielsen conducted an extensive study of the category and helped identify
products that contributed most to the brand’s overall profitability.
• The client eliminated several SKUs from the store shelves and
increased distribution of new products that complemented other
offerings within the line.
• These changes in product portfolio expanded the client’s reach
into new customer segments and our insights helped increase their
credibility with retailers and channel partners.
14 / NIELSEN 2012 YEAR IN REVIEW
5%
INCREASE
IN SALES
RESULTS: Increased sales by up to 5% in the designated
retailers, without increasing its total SKU count. The
product portfolio also surpassed its main competitors in
sales dollars, volume and sales velocity.
PRICING AND PROMOTION
Nielsen helps clients enhance their brands’ growth by determining
the right pricing and implementing the optimal in-store
promotions to achieve sales and profit goals. We evaluate shopper
spending habits, using a store-level modeling approach to help
clients calculate the true net effect of promotions and optimize
allocation of promotion spend. We help clients succeed with
insights that help improve margins for their product
portfolios while using pricing strategies to drive volume.
CASE STUDY
HOW CAN I DETERMINE
THE EFFECTIVENESS
OF IN-STORE PROMOTIONS
AND DISPLAYS?
A multinational beverage company utilized Nielsen’s store audit
capabilities to analyze the impact of in-store promotions and displays
within their category across a wide range of retailers.
Nielsen conducted analyses of the beverage line across hundreds of
stores over a six-week period in a region selected by the client.
• The study determined that pricing variances within their category
and across competitors created challenges in this market.
• Different uses of in-store promotions and displays were driving
different outcomes.
RESULTS: Implementing a
combination of demos and
displays in stores increased the
client’s sales by 18% vs. 6% in
display-only retailers.
18%
INCREASE
IN SALES
NIELSEN 2012 YEAR IN REVIEW / 15
WHAT
CONSUMERS
WATCH
Nielsen’s Watch segment helps media and advertising
clients better understand their audiences. As
consumption of media is rapidly evolving and
fragmenting, Nielsen provides innovative solutions
that help clients improve advertising and media plans
in real time. We provide audience measurement,
advertising effectiveness and analytical insights for
television, digital, mobile and social activity, to help
clients achieve their business objectives.
MARKETING PERFORMANCE (ROI)
Nielsen’s in-depth knowledge of what consumers buy and watch
positions us to help clients understand the effectiveness of an
advertising campaign. We deliver insights on reach, resonance
and reaction for television, digital, mobile and social media.
Advertisers gain a deeper understanding of how much and which
part of their advertising dollars are working. That enables our
clients to optimize marketing spend and go-to-market plans to
drive profitable growth.
REACH
RESONANCE
REACTION
Who did the program
or ad reach?
Did it change
attitudes?
Did it change
behavior?
16 / NIELSEN 2012 YEAR IN REVIEW
RESONANCE
REACTION
CASE STUDY
REACH
HOW CAN I
ADJUST MY
ADVERTISING
CAMPAIGN TO
REACH MY TARGET
CONSUMER?
A large beverage company used Nielsen
Online Campaign Ratings to understand its
campaign’s true audience delivery and optimize
the campaign in real time. The client discovered
that only 16% of campaign impressions were
reaching the intended audience, and took
steps identified in collaboration with Nielsen
to improve campaign effectiveness.
• Secured better placements from
underperforming publishers to improve
audience delivery.
• Optimized the campaign by reallocating
impressions from lower to higher
performing sites.
DID MY ADS
INFLUENCE MY
AUDIENCE’S
OPINION OF
MY BRAND?
A personal care brand ran a campaign to drive
awareness for a new hair care product line.
The client wanted to better understand how
their campaign was influencing the viewer’s
opinions about the product. Nielsen provided
the solution to measure and optimize brand
lift in real time.
Using Nielsen Online Brand Effect, the client
was able to view brand lift performance and its
drivers for each of the creative components as
the campaign was executed.
• The higher performing creative was driving
60% of the brand lift while the lowest
performing creative was not providing any
brand lift.
• The client immediately identified an
opportunity to improve performance in-flight
by reallocating impressions to the higher
performing creative units.
RESULTS: Increased on-target impressions
to 41% of the campaign, driving higher
performance without incremental spend.
RESULTS: The modified campaign improved
brand awareness by 53% and increased the
impact of their media spend by $100K+.
DID MY
ADVERTISING
CAMPAIGN
DRIVE SALES?
A large consumer products company invested
in a broad scale digital campaign targeted to
reach males age 21–29. The client ran a mix
of banner advertisements, online video and
interactive media on multiple sites. The client
wanted to determine how their campaign
influenced consumer behavior.
• Nielsen tagged the digital advertisements
using Nielsen Online Campaign Ratings to
understand how many of the impressions
reached the desired audience.
• The sales lift was measured through
off-line purchase panels among people who
were exposed to the ad versus those
who were not exposed.
RESULTS: Determined that the campaign
delivered +22% sales lift among those
exposed to the advertisements. Based
on that insight, the client reallocated
advertising spend to the higher performing
ad formats and sites to achieve optimal
impact on sales volumes.
EXPOSITIONS
Nielsen Expositions is a leading organizer of business-to-business
tradeshows, serving various industries including apparel,
sports, jewelry and design. Through publications, trade shows
and conferences, and digital products and services, Nielsen
Expositions offers insight, analysis and face-to-face contacts to
help professionals better understand their markets, serve their
customers and grow their businesses.
NIELSEN 2012 YEAR IN REVIEW / 17
Nielsen believes corporate sustainability is an opportunity to
maximize our impact on the communities we live in and that we
represent to our clients. Our commitment to our communities
and our clients is advanced in three primary ways:
• Being a responsible supplier across environmental, social and
economic dimensions
• Collaborating around key causes
• Providing marketing analytics that help clients validate and
optimize their own corporate social responsibility efforts
MAKING AN ENVIRONMENTAL, SOCIAL AND ECONOMIC IMPACT
Every day, Nielsen empowers its global associates to lead and participate in projects that
make a positive impact in their communities.
OUR CORE BUSINESS
We create products that make an uncommon impact and align our business interests with
positive environmental, social and economic results.
We are making operational and cultural changes that reduce our environmental
impact around the world: greening our travel, our offices and our supply chain.
IN-KIND GIVING
We donate our services to organizations whose missions bring about positive change in our
communities and who can make different uses of the information and analytics we provide.
SKILLS-BASED VOLUNTEERING
As a global measurement provider, we identify opportunities for our employees to lend their
unique skill sets to not-for-profit and community organizations, while serving as ambassadors
for our brand.
FINANCIAL CONTRIBUTIONS
On a limited basis, we contribute financially to relevant causes and encourage
employees to donate as well, especially during natural disasters.
Nielsen associates are focused on making a positive social impact through the
causes we know most about:
ENVIRONMENT
HUNGER &
NUTRITION
TECHNOLOGY
ACCESS
EDUCATION
DIVERSITY &
INCLUSION
FOCUS ON DIVERSITY AND INCLUSION
Nielsen’s business is built upon increased understanding and
inclusion of diverse communities everywhere we operate.
We work on behalf of clients and industries, and in our own
business practices. Through our Diversity & Inclusion efforts,
we embrace the voices and choices of diverse people and
communities via a five-prong approach: Accountability, Supplier
Diversity, Retention, Career Development and Education.
Specifically, our Corporate Supplier Diversity Initiative provides
economic development opportunities for certified minority-
and women-owned businesses, and is critical to Nielsen’s success.
CORPORATE
SUSTAINABILITY
GLOBAL IMPACT DAY
On June 14, 2012 we held our first global
day of volunteering. In our inaugural year,
more than 17,000 Nielsen associates from
80 countries stepped outside of our offices to
make an impact on a scale that few companies
can do. We created a library in Brazil, repaired
roofs in Egypt, taught classes in nearly every
country and fed the sick and malnourished
in some of the most struggling places
around the world.
18 / NIELSEN 2012 YEAR IN REVIEW
MEASURING IMPACT
How do we help clients measure the impact of their cause marketing efforts on
their brands?
Recently we began supporting some of our largest clients by helping them
evaluate and optimize their cause marketing efforts. By strengthening the ROI
of social investments, we can help brands validate and improve their efforts to
make an impact.
For example, in 2012 we worked with a major consumer packaged
goods company to measure the impact of a hunger relief program in
the United States. We supported this client’s efforts by measuring:
CONSUMER EXPOSURES
Who did the campaign reach across paid
and earned media?
CONSUMER AWARENESS AND LINKAGE
Was the campaign memorable and strongly
linked to the company’s brands?
CONSUMER IMPACT
Did the campaign influence behaviors and
drive sales impact?
Quantifying the positive results provided
further validation of the company’s cause
marketing efforts, and helped them identify
opportunities to strengthen the program in
the coming year. Efforts such as this make an
impact with our clients and our communities.
THE PRIMARY
OBJECTIVE OF MARKET
RESEARCH IS “THE
INCREASING OF THE
STANDARD OF LIVING IN
THE FREE COUNTRIES
OF THIS WORLD.”
— Arthur C. Nielsen, Sr.,
1940
SOME OF OUR
GLOBAL PARTNERS INCLUDE:
A BILLION + CHANGE
In 2012, Nielsen joined a group of prominent
U.S. companies committed to pro bono work
in a campaign called A Billion + Change, a
national campaign to mobilize billions of dollars
of pro bono and skills-based service in 2013 to
address core issues our communities face across
the country and around the world. As a global
measurement company we focused on providing
organizations with information unique to Nielsen,
such as data on food pricing and new research
on after school STEM (Science, Technology,
Engineering and Math) education programs.
JUNIOR ACHIEVEMENT WORLDWIDE
Junior Achievement Worldwide (JA Worldwide)
is a global organization dedicated to educating
young people about workforce readiness, financial
literacy and entrepreneurship. In 2012, Nielsen
associates donated their professional skills,
working with JA Worldwide in classrooms across
13 countries to reach approximately 8,000
students. We are proud to support JA Worldwide’s
mission to inspire and prepare young people to
succeed in a global economy.
THE WORLD FOOD PROGRAMME
Nielsen began its relationship with the World
Food Programme in 2011. We continue to support
its marketing and research objectives with our
unique information assets and global consumer
understanding to help the organization achieve its
goal of ending hunger in our lifetimes.
NIELSEN 2012 YEAR IN REVIEW / 19
LEADERSHIP
TEAM
C
F
I
A
D
G
J
B
E
H
A DAVID L. CALHOUN Chief Executive Officer
B SUSAN WHITING Vice Chair
C RICK KASH Vice Chair
D MITCHELL HABIB Chief Operating Officer
E BRIAN WEST Chief Financial Officer
F MITCH BARNS President,
Global Client Service
G STEVE HASKER President,
Global Product Leadership
H MARY LIZ FINN Chief Human
Resources Officer
I
JAMES CUMINALE Chief Legal Officer
J ITZHAK FISHER Executive Vice President,
Global Business Development
CORPORATE
INFORMATION
CORPORATE OFFICES:
Nielsen Holdings N.V.
85 Broad Street
New York, NY 10004
United States
Nielsen Holdings N.V.
Diemerhof 2
1112 XL Diemen
The Netherlands
WEBSITE: www.nielsen.com
FORM 10-K AND OTHER REPORTS:
The Form 10-K, along with other Nielsen
SEC filings and corporate governance
documents, are available without charge on
www.nielsen.com/investors.
COMMON STOCK INFORMATION:
Nielsen�s common stock trades
on the New York Stock Exchange under
the symbol “NLSN”.
INVESTOR RELATIONS:
Phone: +1-646-654-4602
E-mail: ir@nielsen.com
Website: www.nielsen.com/investors
TRANSFER AGENT, REGISTRAR:
Nielsen Holdings N.V.
c/o Computershare
P. O. Box 43006
Providence, RI 02940-3006
United States
TOLL-FREE NUMBER: +1-866-332-7309
OUTSIDE U.S./CANADA: +1-201-680-6578
HEARING IMPAIRED – TTY PHONE:
+1-888-269-5221
SHAREHOLDER ONLINE INQUIRIES:
www-us.computershare.com/investor/contact
WEBSITE:
www.computershare.com/investor
INDEPENDENT ACCOUNTANTS:
Ernst & Young LLP
5 Times Square
New York, NY 10036
United States
All paper in this report is certified to the
Forest Stewardship Council TM (FSC®) standards.
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Nielsen Holdings N.V.
85 Broad Street
New York, NY 10004
United States
Nielsen Holdings N.V.
Diemerhof 2
1112 XL Diemen
The Netherlands
www.nielsen.com