Advertisers are willing to spend money on advertising, but want good bang for their buck. The more people they reach for their products, the more they're willing to spend. So networks care about ratings because ratings have been historically useful for getting advertisers to buy in.
The debate about whether we can "trust" Nielsen ratings is a faulty premise. It doesn't matter if we trust Nielsen ratings. The reason why fans of shows raise issues with Nielsen methodology is not because they are legitimately interested in ensuring statistical accuracy, but rather because they perceive the shows or types of shows they enjoy watching are being disadvantaged by the particular choices Nielsen makes. The idea is that we want to root for stuff we enjoy, so we do. That's fair. But it's also not really useful, because Nielsen, the networks, and the advertisers are more interested in making money.
But let's remember what they're paying for. Advertisers will never care about pirates watching the show. They don't care about the show. They don't care how popular the show is. They care about selling advertising.
A couple of notes:
One of the problems with the methodology is how ratings are collected, which is aimed squarely at old people with lots of time, who dont move homes. Nielson doesn't have boxes in dorm rooms, for example. So nobody knows how many groups of five high bros are getting together every night to watch the Daily Show. That put shows that target that kind of audience at a high disadvantage, even though theyre watching the ads and theyre the target.
Also, because their methodology requires Nielson families to do work, that again eliminates a whole bunch of people. I watch a lot of TV, make $500k, and buy a new car every month (example). Why the fuck would I waste my time on some journal?
You also ignore how valuable product placement has become. You know that ridiculous 7 second shot of the ALL NEW 2015 FORD FOCUS WITH REAR-VIEW CAMERA AND LEATHER SEATS AND OMG EVERYTHING that gets shoved down our throat? Yeah, people who skip ads and pirate are exposed to that too. Fuck, the pilot of Constantine used that as a plot point even though the character was making minimum wage as some retail jockey. Incidentally, I had Subway for lunch today. Just thought I'd share.
Theres also the issue of how much importance is placed on 19-35 market. Last I checked, Viagra doesnt spend millions on Super Bowl ads targeting that group.
Edit:
I also think advertisers are dumb.
When Hulu launched, it was THE PERFECT targeting method. For those too young to remember, when Hulu launched, you had to sign in, and give them your age and sex and location.
That means, for whetever show I watched, they could have targeted the ads DIRECTLY to me. All Axe ads, all day.
Im watching 24? Axe and Nissan. Im watching Dancing with the Stars? Axe and Nissan. Im watching CSI? Axe and Nissan.
It doesnt matter what Im watching, they know Im the target for the ad. One long in, one viewer, one impression. So smooth!
Instead, they dropped the sign in, and if you watch a feminine skewing show like Greys Anatomy, you get tampon ads, regardless of who you are, because of the assumption that if youre watching, youre a woman.
How the fuck does that make sense?