system
Given the following post, respond as if you're commenting on Reddit:
human
ELI5, how do TV ratings work?
gpt
Most television markets use Neilsen ratings. Neilsen puts a meter (box) in random homes throughout the country. The information gathered by this box is sent to Neilson who collects the information and sells it to media markets. The homes that receive this box likely volunteered to do so, and they are compensated by Neilson. A meter could be located in any type of home; from a Beverly Hills pad with satellite to a mobile home in the mountains with only one channel from an antenna.

Let's say you have a business that sells Fine Chocolates and you want to advertise on television. You talk to the television station and they tell you that you have several options; you can be charged big bucks to advertise in prime time, or for a bit less they can put you in a different (less popular) time slot. But how do they know which time slots are more popular? And just because it's a popular show (Sesame Street) doesn't mean the viewers will buy fine chocolate! So what metrics do they use to help you advertise? Neilsen's.

Neilson collects the information from homes without interference. They don't try and tell people with a box how or when to watch television, though there is a bias associated with having a box in your home. How would your viewing habits change if you knew you were being monitored? There are over 100,000,000 houses with televisions in the U.S. And in order for your local ABC/CBS/NBC/FOX/ETC channels to make money, they have to sell advertisements. They want to show your fine chocolate commercial so they can make money. So these channels buy this gathered data from Neilson to help them determine when and where to show your commercial. 

So from this point of view, Neilsen serves two purposes; they help us identify viewing habits of Americans and also help drive targeted advertising. But the system is far from perfect and that's why many media markets are looking for alternatives, or often even doing their own research. The sample audience might not be an accurate reflection of a given market.