Nielsen attended grammar school in Berwyn, Illinois, and Morton High School in Cicero, Illinois. He graduated as class valedictorian from the University of Wisconsin in 1918, with a bachelor's degree in engineering, earning the highest grades of any engineering student in the school's history.
Nielsen spent a year in the United States Naval Reserve, serving on the USS Manchuria as an ensign.
Upon returning to the United States, Nielsen worked as an engineer for several Chicago companies until he decided to set out on his own in 1923. With $45, 000 in investments from former fraternity brothers, he founded the A. C. Nielsen Company to make surveys of the performance and production techniques of industrial equipment. Although the company came close to failing on two occasions, it survived into the 1930's, when the Great Depression severely undermined the equipment manufacturing businesses that were Nielsen's biggest clients. In order to stave off bankruptcy, in 1933 Nielsen developed a new service that measured the retail flow of grocery and drugstore products.
Product manufacturers, eager to use this information to help direct their advertising and production strategies, immediately supported the venture, and the A. C. Nielsen Company's fortunes were assured.
In 1938, Nielsen responded to the suggestions of radio station owners and developed a means for electronically measuring the size of a radio program's audience. He first obtained the patent on a device that measured which station a radio was tuned to; he then instituted a system that used numerous incentives to convince 1, 000 radio listeners in the Midwest to install the Nielsen Audimeter and to send in the film that recorded the machine's results every two weeks. From these findings, Nielsen compiled the Nielsen Radio Index, then sold the results to radio networks, advertisers, and ad agencies. Unlike food and drug research, the radio ratings field was not wide open.
Nielsen had several competitors, including the network-supported Cooperative Analysis of Broadcasting (CAB), and C. E. Hooper. Hooper was the leader in the field, utilizing the relatively inexpensive system of telephone interviews to determine program ratings. When the Nielsen Company went national, however, the radio industry dropped its support of the CAB, leaving the field to Nielsen and Hooper. Nielsen, having learned the advantages of industry domination, bought out Hooper's national operation in 1950. Those in the radio business began greeting each other with, "How's your Nielsen?" instead of "How's your Hooper?" as they had previously. A. C. Nielsen Company was thus well positioned to take advantage of the interconnected explosion in television audience and consumer spending of the post-World War II era. In 1950, Nielsen adapted the Audimeter for television and quickly assumed 90 percent control of the television rating industry. Families that installed an Audimeter were asked to keep a diary of the shows they watched, and were compensated a dollar or two per week plus free television repair services. All went well for the Nielsen Company until 1958, when the quiz show scandals that had rocked Americans' confidence in the medium led to a Commerce Department investigation into possible tampering with television ratings figures. Although no action was taken at the time, congressional committees began their own investigations into the accuracy and influence of the ratings services.
In 1961 the Nielsen Company began Nielsen Media Service, a ratings service for magazine advertisers, in part because to Nielsen it seemed much less likely to incur congressional scrutiny. Nielsen pulled out of the radio ratings business in 1963, largely because the Audimeter could no longer distinguish between the ever-growing number of stations on the dial. Although Nielsen's media ratings services had received the most public attention, food and drug research brought in 80 percent of the company's revenues. Congress reopened the television ratings controversy in 1963, when Democratic congressman Oren Harris of Arkansas, who had gained fame exposing the extent of the game show scandals, launched a full-scale investigation of Nielsen and seven competitors. The investigation revealed some dramatic inconsistencies in the Nielsen Company's techniques, and the national media soon picked up the story. Magazines ranging from the Saturday Evening Post to the left-leaning Nation reiterated the charges of congressional critics that television ratings were widely unreliable, on the one hand, and responsible for television being a "vast cultural wasteland, " on the other. Many critics, from congressmen to the Saturday Review's Goodman Ace, blamed the ratings services--personified as "Mr. Nielsen"--for encouraging television executives to produce such top-rated shows as "The Beverly Hillbillies" instead of "quality productions. " Nielsen, however, disavowed playing the role of tastemaker, arguing, "We're like baseball umpires. No one likes them, but they're essential to the game. " Indeed, as one television executive explained, "Ratings are used by all the advertising agencies with which we deal. Since our sole financial support comes from payments by advertisers, " he explained, networks needed the ratings to justify advertising costs. The only alternative to depending on ratings in a market-driven economy would have been for the government to provide monetary support for network programming, which no congressman was willing to suggest. The charge about the accuracy of the ratings had more merit. Nielsen claimed that "Nielsen families" were demographically representative of a cross section of Americans, referring to his critics as "ignoramus[es] in the ABC's of statistical mathematics. " But congressional investigators found Nielsen families to be skewed toward lower-middle-income groups--those who had enough money to buy a television set, yet appreciated the small remunerations the Nielsen Company paid for the bothersome task of keeping Audiolog diaries.
The Nielsen Company's researchers were often unwilling to take the additional time needed to hunt down those who fit a specific demographic group and often substituted anyone who was willing to participate. The Audiologs provided the most graphic evidence of the unreliability of ratings. One woman wrote in her log that she kept her radio on for her dog to listen to, and "my dog enjoys it as much as a dog can. " Another wrote that she opposed Jack Paar's views on integration, so she deliberately turned to another show when he came on. Nielsen countered that these were aberrations the committee had chosen for shock value, but the weight of evidence gathered by the committee seemed to point to real flaws in the Nielsen Company's methods. Although the media and industry experts predicted the imminent death or reconstruction of the ratings business, the Nielsen Company weathered the storm and went on largely as before. In the 1970's the Nielsen Company instituted information services for petroleum companies and replaced the Audimeter with the Storage Instantaneous Audimeter, which gave the company ratings results every fifteen minutes. Nielsen retired as chairman of the board in 1976 and was succeeded by his son, Arthur C. Nielsen, Jr. , who had been president of the company since 1957. The A. C. Nielsen Company by that time had subsidiaries in twenty-three countries, with almost $400 million in yearly revenues.
Nielsen died in Chicago; he designated $2. 4 million of his $47 million estate to charity.
On June 15, 1918, he married Gertrude B. Smith; they had five children.