Arbitron We Have a Question: Where are the Success Stories?

Not long ago we questioned PPM’s financial value to radio in the post, What is PPM’s Real Economic Value? You can read it here. For this series of questions to Arbitron, we revisit the question from a slightly different angle.

 

PPM was supposed to bring radio listening estimates into the 21st century. We were told that electronic measurement would enhance radio’s credibility. It would make radio more competitive with television and Internet measurement and offer media buyers more sophisticated tools to buy radio.

 

The Forrester/RAB Task Force study The Economic Impact Study of PPM on the Radio Industry seemed to back it up. That’s at least how Arbitron saw it. They hired James Boyle, an investment analyst covering radio, to interpret the findings. Here’s what he wrote in 2005:

The Radio Industry should potentially generate 3% of added, incremental growth. Conversely, the Forrester study predicts that if Radio stands still with Diaries, that Radio should prospectively see about 2% lower growth rate. That’s a substantial 5% point swing between PPM and Diaries.

Looked like a slam-dunk. Over 70% of agencies declared that radio advertising would gain greater credibility from electronic measurement.

 

Fast forward a few years, and now PPM is a reality. Radio stations can sell PPM numbers and media buyers can buy off PPM numbers. So where are the radio success stories? Where’s the greater credibility? Has PPM ushered in a new era for radio? If it has, we haven’t heard about it.

 

Why not? The central problem is that compared to diary numbers, PPM estimates are lower. It may be because of greater accuracy, or because of flaws in the methodology, or perhaps an actual decline in listenership. There’s no way to know. Whatever the reason, the numbers are lower.

 

PPM’s lower listening estimates have made radio more expensive to buy. And we fear that lower listening estimates reinforces the conventional wisdom that radio is in decline.

 

Arbitron understands the negative implications of lower listening estimates, which is why it brought out the 70 is the new 100 campaign. The goal of the campaign was to convince buyers that buying fewer points off PPM numbers was the same as buying more points off diary numbers. In Planning & Buying Radio Advertising in a PPM World, Arbitron states:

Different measurements methodologies can and do produce different results. We upgraded our measurement methodology, and the scale has changed accordingly.

Arbitron then presents their solution: Just pretend the numbers are higher than they are, using a conversion factor that they invented. No word on how that’s going, but we suspect not well.

 

An advertising recession is a perfect time to evaluate PPM’s economic value. If PPM gives radio greater credibility and better helps us to compete with other media, then there is no better time to have PPM than during an advertising recession. So where are the success stories?

 

Stations know exactly how much PPM is costing them in increased Arbitron expenses. Now let’s see the numbers on the other side of the ledger. How much additional revenue has PPM brought in? Has it produced the 5% positive swing that the RAB predicted?

 

Here are our questions for Arbitron:

• What evidence do you have that PPM has financially benefited stations?
• Has the effort to reset target rating points worked?
• Has the positive image of PPM with agencies resulted in bigger radio budgets?
• What evidence do you have that additional revenue from PPM more than offsets your 60% rate hike?