We knew before posting Does Group Size Help or Hurt Ratings? that we’d hear complaints about using 6+ numbers.
Maybe the largest radio groups don’t dominate 6+ because they are too smart to worry about the 6+ beauty contest.
Maybe the big guys know that the real money is in 25-54, so that’s the demo they focus on. Maybe 25-54 is the metric by which they should be measured.
The problem is that publishing a 25-54 analysis similar to the 6+ shown below runs afoul of Arbitron restrictions on the use of their numbers. Were we or any other organization to release the results, an Arbitron Cease and Desist order would quickly follow.
But we have seen the data.
If you want to know what 25-54 looks like, just take another look at the 6+ chart and visualize the largest groups slightly weaker than they look now.
So there’s no hiding behind the “6+ doesn’t matter” argument.
The edge that smaller groups hold is there even with 25-54.
Then there’s the argument that revenue and profit are better metrics to compare competing radio companies. Admittedly, profit is the ultimate goal of every company, so perhaps it is a better metric.
The problem is the availability of the data. It does not exist in any form that enable us to compare all radio groups.
Using share and rank to compare radio groups may not be ideal, but it uses the most complete set of comparable data available, so it serves as a useful proxy for the more telling data we can’t get at.
Besides, no company regardless of size ignores potential revenue, margins, or power ratios when choosing a format. Formats are chosen expressly because their advocates believe they can become successful and generate above-average profits.
And taking into account demo differences, there is a very strong correlation between a station’s rank and the revenue it brings in–particularly in PPM markets.
But all this is beside the point.
The contrast in performance between the large national groups and the smaller groups suggests that companies are responding to radio’s new challenges in different ways. And those different ways are producing different results.
Jerry Del Colliano in Inside Music Media (paywall) suggests that radio is evolving into two industries, monopolies and local operators.
We can debate the nature of the division, but the divergence is clear.
Radio groups are reaching starkly different conclusions about radio’s future, and in many ways those contrasting visions are reshaping radio today.
And one vision seems to be producing better results today than the other. The subject of our next post.