Radio InSights

Nielsen PPM Meets Dick Tracy

Last Week before a group of broadcasters Nielsen’s Rich Tunkel rolled up his sleeve and proudly displayed his smartwatch PPM meter.

Declaring that Nielsen was working on both a smartphone as well as a watch PPM, Mr. Tunkel brushed aside continuing questions about PPM’s ability to accurately capture radio listening.

The surprise announcement was ironic for a number of reasons.

In 2005 Arbitron’s PPM faced competition from Eurisko with a smartphone alternative as well as the GFK Radiocontrol watch. All three devices could detect radio exposure, and all three were tested by the UK’s ratings service RAJAR.

PPM won the three-way competition.

It was, however, a hollow victory. RAJAR ultimately decided that passive electronic measurement was deeply flawed. It rejected PPM and instead decided to develop an electronic diary, a measurement that the UK uses to this day.

The surprising “reveal” of both a smartphone and watch alternative to the current beeper-lite PPM meter came on the heals of a number of Nielsen missteps.

March 17, 2016 Nielsen announces the launch of Digital Audio Ratings. According to Brad Kelly, Managing Director, Nielsen Audio:

With the way people consume content in a continual state of change, it’s critical to capture all the platforms where people are listening to audio....We must provide a comprehensive view of listening behavior across all platforms.

One year later, nothing.

In November we had the “Nielsen PPM Device Connectivity” fail.

The company belatedly discovered that in moving to a new collection site a number of meters had become inactive and three months later only half of the affected meters were back on line.

Then in January Nielsen proclaimed Tampa’s WYUU’s stream number one in persons 18-34, becoming the first station in any of the 48 PPM markets to achieve this accomplishment.

It was incredible.

It was incredible not in the common way the word is used, but instead as the dictionary defines incredible: too extraordinary and improbable to be believed.

The station (like virtually every other streamed station) had never appeared in the Tampa book. It was a story-book worst to first accomplishment.

Rumors began circulating that the numbers were driven by one or two heavy users of the stream. With a reported AWTE (average weekly time exposed) of nearly 36 hours, it was clear that something was odd.

Nielsen, however, defended the ratings at first:

Nielsen has a series of rigorous compliance controls designed to ensure that PPM panelists meet eligibility criteria and their credited listening is valid.

Then Nielsen reversed course claiming:

Following the (Panel Relations Specialist) training visit, the household’s meter wearing compliance behavior did not change, and per our quality assurance procedures, we removed the home effective with the start of the March survey.

The official statement is oddly reminiscent of statements of Chairman Mao’s Red Guard during the Cultural Revolution. We can only hope that the two guilty panelists were not banished to the countryside. But we digress.

So perhaps the show of PPM bling was a diversion, a way to change the conversation.

Radio Insights has written frequently about the need for the PPM meter to “hear” a station for exposure credit to be given.

We’ve asserted that PPM is not capable of detecting all exposure and consequently PPM under-estimates listening.

Nielsen essentially admitted we were correct when they introduced eCBET increasing the sensitivity of the meter.

The irony probably escaped Mr. Tunkel as well as his audience, but his reveal took a few seconds as he first pulled up his jacket sleeve and then his shirt sleeve.

The watch was hidden below two layers of clothing.

Better hope panelists wear short sleeves.

 

Hillary Got Screwed Once. Radio Every Month.

Did you think Hillary would win the election? Her campaign certainly did.

Why wouldn’t they? Nearly all polls showed her leading right up to the election.

The final Real Clear Politics poll of polls had Hillary ahead in 12 of 13 polls it tracked.

Fivethirtyeight said her chance of winning was 71.4%. The New York Times gave her an 85% chance. British odds-makers put the chance at 80%.

Fox News, of all sources, flatly declared, “Trump is headed for the worst (Republican) defeat since 1984.”

Yet Trump won. Donald J. Trump will become America’s 45th President on January 20th.

Remember all those wrong polls next time you’re trying to make sense of the latest Nielsen ratings.

Nielsen ratings are just like the Presidential polls.

And Nielsen ratings can be just as wrong as all those polls that said Clinton would win the election.

Nielsen ratings are estimates based on polling listeners. And like every other poll Nielsen ratings have a margin of error.

The problem is that the potential mathematical error inherent in polls, the so-called margin of error, doesn’t capture the extent of the unreliability of polls including Nielsen’s ratings.

Improper weighting of responses can have a bigger impact than sample size on the accuracy of a poll. And critics point to misapplied weighting for leading pollsters astray.

Each month the political pollsters weighted their responses. They “adjusted” their numbers so that the make-up of each month's sample reflected their expectation of who would vote.

The problem is that small variations between the make-up of each monthly sample can be amplified by the weights pollsters apply to the numbers.

Misapplied weighting has the potential to exacerbate month to month swings of a poll as well as the differences between one poll and others.

That’s why even on the eve of the election the gap between polls was six points, exceeding the theoretical potential for error.

Now think about Nielsen ratings.

Nielsen ratings have their own theoretical margins of error. But do those calculations really reflect the entire uncertainty of the numbers?

As with political polls Nielsen’s listening data have to be weighted each book to better reflect population demographics of each market.

For a diary market, each diary is assigned a person-per-diary value (PPDV) that is applied to each individual’s diary based on sex, age, and ethnicity.

In PPM markets the weighting that Nielsen applies is much more complicated.

Each day each active panelist is re-weighted based on the day’s usable meters to match Nielsen’s best guess about the make-up of the market.

One day a given panelist might (say) represent 2,000 women, the next day she might represent 1,000 women. The next day it might be 3,000.

Small changes in a meter’s weighting is amplified across meters resulting in swings that are potentially well beyond the theoretical accuracy of the numbers.

Challenge Nielsen about their rating estimates and they will confidently tell you that they are accurate and any shift in the numbers from once month to the next is real.

How is this different from the pundits who confidently used the polls to claim that Trump had virtually no chance to win?

Next time you look at the Nielsen ratings think about poor Hillary Clinton and her supporters. They all trusted the numbers.

Don’t make the same mistake.

Why Good Books Look Bad & Bad Books Good

Your ratings are just like Presidential polls: Both are estimates, an approximation of something that can’t be precisely measured.

Presidential pollsters like to present their poll numbers as accurate and precise, but there is a limit to their precision and accuracy.

You may have noticed that every Presidential poll mentions a margin of error or confidence interval.

Margins of error are statistical calculations that indicates how much variance we should expect from one poll to another.

The larger the margin of error, the more the numbers are going to jump around.

Nielsen too likes to present their ratings as precise, an accurate measure of how well each station is doing.

However, like Presidential polls, Nielsen ratings are also estimates that have a certain margin of error. The "real" numbers might be higher than reported by Nielsen. They might be lower.

Unfortunately in analyzing Nielsen numbers we rarely acknowledge the uncertainty associated with polling.

We talk about "wobbles" as aberrations, but the truth is that every Nielsen number is a wobble.

Radio's problem is that while Presidential polls always clearly state their margins of error, variance of radio ratings is rarely reported.

You have to dig pretty deeply into the book to find it, and even then it isn’t obvious how much the numbers can vary and still be "within the margin of error."

Here’s one example that illustrates what you would find.

The first graph is a cume ranker of seven stations in one medium size PPM market. The ratings and stations are real but we’ve labeled them generically to avoid running afoul of Nielsen’s "fair use" rules.

They are ranked by Nielsen’s published estimates, but rather than show a single number for each station we’ve shown the range of ratings that would be accepted as "normal," that is within Nielsen’s confidence interval.

For example, Station 1 has a cume audience somewhere between 280,000 and 370,000. Meanwhile, Station 2 has a audience that could be as high as 370,000 or as low as 280,000.

This means that while Nielsen ranked the first station over the second, we really can’t say whether Station 1 or Station 2 has a larger audience anymore than a Presidential pollster can say which candidate is really leading if the lead is within the margin of error.

But it gets a lot more complicated than that.

Draw a horizontal line across at any point and see how many stations it touches.

Draw the line at 350,000 persons and it will run through three stations. That means that the top three stations are "within the margin of error," essentially tied.

Draw a line at 300,000 persons and the line runs through six stations.

It means that any one of the top six stations could be first...or sixth! We just don’t know.

You’re looking at 6+ full week numbers, the numbers with the lowest variance and we can’t definitively say which of the top six stations is number one.

Imagine what the variance is when we get into smaller demos or specific day parts.

The second graph is kind of messy but even more important. Take some time to study it.

The graph shows one station’s four month trend as you’ve never seen trends displayed. Again, the numbers are real but we can’t tell you the market or station. Here we’re looking at share.

The solid green line in the middle is the published share for each of four consecutive months. The blue line is the lower confidence limit according to Nielsen. The red line is the highest confidence limit.

The gray area is the area that falls within Nielsen’s total person estimate variance. In other words, the station’s share could be reported anywhere within the gray area and fall within Nielsen’s confidence interval.

What this means is that it is highly likely that the station’s share is somewhere between the blue and red lines, but we can’t say for sure exactly where it is within it.

So officially month 2 was a good month for the station, gaining nearly a full share. The station then lost ground for two months in a row.

But is that what really happened?

The margin of error for this station is about three shares. What that means is that the station has to gain or lose three shares before we can confidently say something real happened to the station.

(I’m simplifying here since Nielsen margins of error are asymmetrical, but you get the idea.)

The dashes show three very different trend scenarios, all equally likely to have happened.

First, the yellow dashed line shows the station flat over the four months. No change, solid as a rock.

Next look at the turquoise dashed line. It shows a steady uptrend for the station, from a mid four to nearly a six share in three months. Good job!

Now look at the purple line. From a mid six share the station has fallen below a four share!

Imagine how you would feel losing a third of your audience in a few months.

A flat trend, strong growth, or a free fall. All equally possible.

Two of the three plausible scenarios are wrong, but which two? And what if you react to one of two wrong scenarios by making changes to the station?

And keep in mind that our illustration is total week 6+ shares. You are probably studying demos, and typical programming demos have a variance two or three times the 6+ numbers.

This is why we always caution stations to resist the impulse to react to monthly changes in the numbers.

Wobbles are not aberrations. Wobbles are baked into ratings.

Next month when your new numbers roll out you might want to reread this post. And if it's a bad month you might want to make copies and pass them out.

 

Nielsen Flips Off Media Rating Council...Again

If Nielsen seemed overly anxious to quickly put the Voltair matter behind them, it is perhaps because they have bigger fires to put out.

While those bigger fires are about the way Nielsen measures video consumption, Nielsen's actions have major implications for radio.

It’s no secret that Nielsen is struggling to measure all the ways that people today consume media. It is true for both television and radio.

Radio’s dispassionate passivity regarding Nielsen’s poor performance, however, stands in stark contrast to television’s very vocal public reaction to Nielsen’s poor performance on the TV side.

Alan Wurtzel NBC’s research president has been particularly blunt in his assessment of Nielsen:

Nielsen will become increasingly marginalized. They are incapable of doing certain things and it's only getting worse.

At CES Linda Yaccarino, NBC’s chairman of advertising sales and client partnerships, described Nielsen’s current rating system as antiquated:

It's unfair to marketers, it's unfair to content creators, and it's up to all of us in this industry to take a stand. We need to reach beyond Nielsen’s C3 (the current) rating.

To Wurtzel the problem is that Nielsen isn’t measuring media the way it’s consumed today and the company's failure is hurting television:

Whether we like it or not, Nielsen winds up being a reflection of what the industry is, and what troubles me is that people, because they're looking at these flawed numbers, are getting the idea that the pie, the use of the video medium, is shrinking. Well, it's not. If anything, it's expanding. It's just not being measured.

While Mr. Wurtzel is talking about television, there’s no evidence that Nielsen is any more accurate in their measurement of radio.

Radio buyers are looking at flawed numbers and getting the idea that radio is also shrinking. Radio like television is being consumed in many new ways, and radio too is being hurt by Nielsen’s inability to measure all consumption.

In some respects radio is probably being hurt proportionately more than television because of the flaws in PPM measurement. We know that PPM is missing most streamed listening. Now we’ve discovered that PPM is missing plenty of broadcast listening too.

And if the next step Nielsen is taking in television is any indication of what Nielsen intends for radio, radio measurement accuracy could actually get worse.

You see, it is getting so expensive to measure people’s media habits by way of a survey that Nielsen is going to stop asking people.

Henceforth the company is just going to “model” television rating demographics in smaller markets using increasingly inaccurate estimates of larger markets.

As reported by MediaPost:

Nielsen is poised to make the most fundamental shift in its core currency -- national TV ratings -- since it introduced people meters in 1987. That methodological shift, which will effectively begin modeling a large portion of TV ratings instead of actually measuring them, is set to change on Dec. 28th (2015) and will be the new currency for the national TV advertising marketplace for the foreseeable future.

Local television stations in smaller markets are upset, but what choice do they have?

If Nielsen can make this move stick, why not do the same for radio? Smaller markets may have their ratings “modeled” based on what’s happening in nearby larger markets, essentially estimates based on other estimates.

In a surprising show of backbone, the Media Rating Council is not just rolling over. The MRC has expressed concerns about the accuracy of a ratings service that doesn’t even make a token effort to actually talk to media users.

The MRC has yet to vote on accreditation (PDF) for Nielsen’s modeling, but Nielsen is moving ahead without the MRC’s blessing. In discussing Nielsen's moves, MediaDailyNews notes:

It will be the first time its national TV ratings are un-accredited since the MRC began auditing them in the 1960s, stemming from Congressional hearings on the TV ratings business and a consent decree with the Justice Department.

It's a point that Nielsen disputes. However, according to Nielsen's own press release:

The MRC has yet to make an accreditation determination related to the Viewer Assignment process for persons-level viewing estimates in these markets only and therefore they will not be accredited effective Dec. 31st.

Nielsen still doesn’t have MRC accreditation in all PPM markets. If anything, the process is virtually stopped with no new markets added to the accredited list since August 2013.

And now Nielsen’s radio diary methodology is under MRC review.

Yet unlike television’s vocal critics, radio’s leaders remain silent and on the sidelines.

NOTE: The original post stated that there were fewer markets accredited today than in the past. Nielsen has yet to gain accreditation in twenty-two markets, a number that has not changed since 2013. In January 2012 the MRC revoked Salt Lake City's accreditation and the market remains unaccredited. New markets, however, have since been added keeping the total accredited markets at twenty-six.

We have also added a link to Nielsen's press release regarding the status of the company's Viewer Assignment accreditation.    

Nielsen: Let's Kill the Quarter-Hour

Little attention has been given to one important comment made by Arun Ramaswamy during the July 21st Nielsen PPM presentation. Here’s what he said:

The final point I’ll make is that the Voltair was more pronounced at the minute level than just the quarter-hour level....(Because of complimentary crediting and the smoothing system) we found that even though the Voltair product was more visible at the minute level, it wasn’t always translated at the quarter-hour level.

So even with Voltair, radio stations fail to get credit for fragmentary listening because of a quarter-hour tradition dating back to the 1940s.

In the 1940s and 1950s, radio programs were 15 minutes or longer in length. It made sense for radio ratings to be measured in 15 minute units, so the quarter-hour metric was created.

Most everything in radio has since changed, but not the quarter-hour.

The quarter-hour metric is an anachronistic throw-back to a era that radio has long passed.

We need to kill the quarter-hour. Here’s why.

Voltair enhances PPM codes so that decoders are more successful at identifying the station a panelist is listening to.

It takes at least five successfully identified minutes of listening for a station to get credit for a quarter-hour. If Voltair helps you get only four minutes credit in a quarter-hour, you don’t get a quarter-hour.

You get zero credit, despite the fact that the panelist was listening to you.

Nielsen argues that the editing rules help radio because you can get 15 minutes of credit even if the meter only successfully identifies five.

But they ignore the flip side.

A station gets no credit if the meter identifies even longer listening spans when it bridges two quarter-hours.

Say a panelist listens for five minutes from 5:00 to 5:05 and the meter successfully credits the station for all five minutes.

The station gets credit for one quarter-hour.

What if the panelist listens for eight minutes from 4:56 to 5:03?

The station gets no credit for any listening–-even if the meter credits the station for all eight minutes.

In diary markets this is hardly an issue. People are not that precise when they write down their listening, generally rounding to the quarter-hour.

PPM is different.

Because PPM measures exposure and the meters take time to identify a radio station (if at all), exposure spans are brief with gaps as the meter struggles to identify the station.

While a diary keeper is unlikely to write down 4:56-5:03, it is quite likely that meters will detect listening over odd periods of time like this.

That’s why Voltair has a bigger impact for Canadian stations than US stations. Canadian radio is measured in minutes rather than quarter-hours.

So Canadian stations get credited with listening that US stations do not.

Nielsen claims that PPM propelled radio audience measurement into the 21st century. Isn’t time to abandon the quarter-hour, an anachronistic vestige of the first half of the 20th?

 

Did Arbitron Sell Radio a Bill of Goods with PPM?

A study with Chicago listeners back in the early days of PPM had participants keep track of their listening using a diary while at the same time carrying a PPM meter.

The study is important because it was one of the few opportunities we had to see directly how the meter compared to recording listening in a diary.

When Arbitron compared the self-reported diary to what the meter reported it found that people wrote down more listening than the meter recorded.

So which was correct?

Did listeners write down listening that didn’t take place, or did the meter fail to identify listening that people were exposed to?

Broadcasters were told at the time that the meter was more reliable, that people didn’t accurately record their listening, but today we have to wonder.

We now know that the meter does not capture 100% of exposed listening in a typical setting.

If it’s true that the meter misses some listening, isn’t it possible that the participants in Chicago were right and the meters were wrong?

In light of what we know now, it’s a reasonable question, but during the early days of PPM the questioner would have been dismissed if not burned at the stake.

It was a time when Arbitron took every opportunity to present upbeat PowerPoint presentations about how buyers were excited about PPM, that they were anxious to get more timely and detailed ratings data, and that PPM would bring radio into the 21^st century.

But did Arbitron sell radio a bill of goods?

Arbitron funded a PPM Economic Impact Study that predicted gains of $700 million in annual radio revenue.

At the time Gary Fries, head of RAB declared:

Advertisers and agencies are eager to embrace electronic measurement. Moreover, it is apparent that there is a risk of loss of advertiser dollars for media that do not advance to a more reliable-and better-measurement platform.

In a 2006 stock holders letter (PDF) Steve Morris, then President and CEO of Arbitron, declared:

I believe the time is right for the radio industry to upgrade its measurement system to one that more reliably measures listening habits, does so with 21st century technology, and puts our radio customers in the position of being leaders in answering the call of major advertisers for more accountability for their media expenditures.

Is it just coincidence that both Fries and Morris use the word "reliable" in touting PPM?

In retrospect the debate over the value of PPM was never really a debate. Arbitron simply stated as fact that PPM was more reliable, more accurate, and a vast improvement over the diary.

Industry leaders supported it, the Arbitron Advisory Board rolled over buying Arbitron’s upbeat story-line, and PPM moved forward.

Yet despite all the assurances that PPM was more reliable, despite upbeat predictions about the positive financial impact of PPM, there were tell-tale signs that all was not right with PPM.

We heard a lot about reach.

According to PPM, people listened to more radio stations than diaries showed they did. PPM reach (cume) exceeded diary cume.

What we didn’t hear about were the metrics that mattered, the metrics radio sold.

We didn’t hear about quarter-hour ratings (AQH).

Presentations rarely addressed PPM’s lower time spent listening (TSL). Reviewing numerous client presentations over this period we couldn’t find a single AQH rating graph comparing diaries to PPM.

Pre-currency books were run in each new market with Arbitron producing both a diary book and a PPM book so we could compare diary and PPM ratings.

Every new PPM market was seeing a decline in AQH ratings. It varied slightly from market to market, but PPM was saying that people weren’t listening as much as the diary said they were.

The sales implications were clear.

A station working with lower PPM AQH ratings had two choices: It could either cut rates to keep cost-per-points the same, or it could pitch higher cost-per-points and hope that buyers would go along.

Despite the promise of greater credibility with agencies and larger buys if radio switched to PPM, stations were looking at the prospect of lower rates, lower revenue, and as a bonus, a 30% higher Arbitron bill.

To Arbitron,it was no big deal.The company had its increased profits baked into PPM contracts.

However, Arbitron knew it had an awkward PR problem on its hands. Lower revenue was not part of the PPM narrative, so Arbitron needed a solution.

So Arbitron told radio that it should just tell buyers that spots are going to cost more.

Just tell them!

One hundred rating points using PPM numbers is going to cost more than 100 points using diary numbers, by Arbitron’s estimate, about 43% more!

What could go wrong?

Rather than pitch it that bluntly, Arbitron got clever. They came up with the slogan,"70 is the new 100" when it comes to PPM rating points.

Arbitron put together fancy four color print brochures (PDF) with smiling panelists on the cover.

To make it look scientific, the company calculated a new set of AQH rating numbers for each market.

For example, in New York 80 points equaled 100, in Los Angeles 74 equaled 100, and in Chicago 85 PPM rating points was just as good as 100 diary points.

Arbitron justified their new math by pointing out that 0 degrees Celsius is the same as 32 degrees Fahrenheit. Really, they did.

You can imagine how well the 70=100 program was received.

At the time we called it Arbitron’s fuzzy math, because fuzzy it was.

Arbitron persisted for two years trying to sell the idea to radio and media buyers, but then quietly buried the campaign.

While the campaign is gone, the implications are still with us.

Arbitron declared that PPM was right and the diary was wrong. And radio bought it.

But given what we now know about PPM’s flaws, isn’t it more likely that the diary got it right (or at least closer to the truth) than PPM?

Isn’t it time to reopen the matter?

 

The One Person Music Test

We’ve got a great way to save you money on music testing: Test your music with one listener. Just one. OK, maybe two.

Concerned about the reliability of a one person music test? Then have that one person rate each song twice, better yet three times.

Or maybe one hundred times.

Why spend the money testing music with a hundred people, when you can end up with the same sample size having a handful of people rate each song dozens of times?

Sounds pretty silly doesn’t it?

It’s obvious that having one hundred different people rate your music is very different from having the same people rate your music over and over.

Yet, that is what some radio stations are doing.

Stations are letting just a handful of listeners determine what songs they play.

It works like this: Using minute by minute PPM data synched with the station’s music log, you can watch how your meter count changes as different songs come on.

The belief is that if the number of meters goes up, you may have a hit on your hands.

If the number of meters goes down, then maybe you’ve got a stiff.

And if you see a pattern repeated over time, like a decline in meters most every time you play a song, you can bet the song’s a stiff. Might as well dump it.

Sounds pretty powerful, doesn’t it? After all, these are actual PPM panelists essentially participating in a real-time music test.

What could go wrong?

Let’s look at the potential problems of using PPM meter flow to pick the hits.

First, PPM does not measure listening. It measures exposure.

The difference may seem trivial, but it raises profound questions about the meter’s ability to measure listener intent.

The meter can’t tell you whether the panelist is listening to the station or is simply in the vicinity of someone who is.

More troubling is the fact that repeated Arbitron analyses have shown that when panelists leave a station, they rarely tune to another. They simply disappear.

Maybe the radio station was switched off, or maybe the meter simply lost the signal because of noise and interference, or the panelist tucked the meter away.

So we can’t assume that what the station was doing at the time had anything to do with a change in the meter count, up or down.

There’s also research that shows that listening spans for virtually every format are nearly identical. Formats don’t seem to matter. Rock, CHR, Country listeners all listen for ten minutes at a time.

That suggests that meter flows are driven more by meter technical issues than listener behavior.

These issues are enough to raise serious questions about whether PPM is capable of measuring listener likes and dislikes.We also can’t forget that PPM meter counts for most stations are abysmally low.

It might seem that just trending meter counts over time could overcome the inadequacy of sample, but that defense overlooks one important point about PPM.

In the diary world participants rotate out every week. New people replace last week's participants, so the independent sample increases over time.

That's not the case with PPM. Nielsen minimizes turnover with the same panelists carrying meters week after week for years.

Over time the apparent in-tab for a song’s score may grow, but the majority of panelists are the same people.

We’re back to our one person music test with the same panelists rating a song over and over.

If that’s not enough to make you skeptical, let’s look at the meters themselves.

The 1980s technology behind the meter relies on an analog system to separate the encoded signal from the broadcast audio, ambient noise, and interference. Research has shown that PPM meters miss at least 30% of the listening that it ought to recognize.

So there’s drop-out.

Because of the drop-out, Nielsen computers use a series of editing rules to fill in the gaps. For example, you can get up to three minutes of credit for a period of time when the meter can’t ID the station if the meter later finds your station.

That’s just one of several editing rules that fill in the gaps created when the meters get confused.

As a result of the gaps and editing rules that fill them in, minute by minute is really not as precise as it might appear.

Maybe your meter count increased because of editing, and the panelist was listening all the time. Maybe the count declined because the meter could no long confirm that the panelist was still listening. Maybe the panelist wasn’t even listening to the station.

All are possible, and while these sorts of problems tend to average out over weeks and months, it makes drawing conclusions about what is happening with meters every minute questionable.

Any one of these problems ought to disqualify PPM as a tool for testing content. Taken as a whole, it suggests that randomly choosing which songs to play is as accurate as relying on meter flows.

If you really care about playing songs that your listeners want to hear, the only reliable way to do it is to ask them.

Remember the Promise of Engagement?

 
Remember Arbitron’s promise of developing an Engagement metric for radio?

As Radio Insights reported in 2009, Arbitron intended to:

Develop an ongoing measure of "affinity" that is designed to reflect the advertising value of the unique relationship listeners have with their stations. The mission of this (effort) is to design a relevant, timely and accessible metric that captures audience involvement.

At the time we noted that the company’s new found interest in measuring affinity was ironic because Arbitron had essentially stopped measuring affinity when it switched to PPM.

A year after the announcement without much explanation the idea was dead. There would be no engagement metric–at least from Arbitron.

We speculated that Arbitron may have killed the idea because engagement measures an active listener wilfully choosing one station over another.

PPM does not measures listening. It measures only “drive-by” exposure. Arbitron could not repurpose PPM ratings to create a measure of engagement.

Ironically, while PPM cannot tell us anything about engagement, the diary does.

It is a good instrument to measure engagement because the listener herself writes down the stations she listens to, and how often. If she is really engaged with a station, she is going to write it down a lot.

Now five years later, another company is rolling out an engagement metric, but not for radio. For web advertising.

And the irony is particularly telling given that the Media Rating Council (MRC) has already accredited the engagement metric. It’s from a company you’ve probably never heard of, Chartbeat.

As reported by Gigaom:

Web analytics firm Chartbeat says it is the first to be certified by the Media Ratings (sic) Council for a new way of measuring the actual attention of readers, as part of a move to get publishers and advertisers to stop focusing only on clicks and pageviews.

Chartbeat measures the amount of time a viewer spends reading online content arguing that the time spent with content is more important than things like unique viewers.

As we pointed out in the 2009 post:

We at Harker Research have found that there is a strong correlation between high Time Spent Listening (TSL) and affinity. As one goes up, the other one does too. If a listener has a natural attraction towards a radio station, she probably listens to it a great deal. She listens less to a station that she feels less strongly about.

Read the prediction of one digital ad analytics firm as reported by AdAge:

With the viewability standard in place, creative agencies should expect the ground to continue shifting toward attention metrics -- whether cost per hour, cost per 30 seconds or something else. "I don't think it will be one single metric," said Jonah Goodhart, CEO of Moat, a digital ad analytics firm. "We will see a shift on transacting on viewability in late 2014 or early 2015," he added. "This idea of buying media on the metric that makes the most sense for you is where we'll see the world going."

Yet at a time when advertisers are embracing engagement and turning away from metrics of reach and unique viewers, radio is heading in the opposite direction, using a measurement that emphasizes reach over engagement.

PPM “atomizes” radio reducing radio listening into homogenous ten minute listening spans preventing radio from capitalizing on its unique ability to engage.

Maybe Nielsen should take another look at engagement. Maybe Arbitron was on to something in 2009, but didn’t have the right tools to develop the metric.

And radio could sure use some engagement.

Ever Seen a PPM Panelist's Listening?

Have you every seen one of Arbitron’s or Nielsen’s diaries after it has been filled out by a participant?

If you have, you probably reacted with a mix of confidence and disappointment. Confidence because a listener actually took the time to write down the stations she listened to.

Disappointment because her writing probably wasn’t very neat, or she mixed up call letters and frequency, or she just drew a line down the page.

Ever seen a PPM panelist’s recorded listening?

You can’t. PPM listening patterns are invisible. They’re just digital files stored away somewhere.

A completed listening diary may seem primitive by digital standards, but it is a lasting record of which radio stations one person listened to and when.

You can look at it, feel it, and gain some confidence that the ratings estimates that you live and die by reflect what real people listened to.

And there’s a sniff test you can apply. From time to time you can spot something that just doesn’t feel right. Maybe it’s multiple diaries all filled out identically. Maybe editing mistakes were made attributing listening to the wrong station.

Radio station personnel have caught errors so great that whole books have been reissued.

It is one reason why countries like the U.K. continue to use diaries.

In contrast to the simple transparency of a diary, PPM is opaque. The process is invisible every step of the way from panelist data collection, to editing, to production of the ratings.

Now complex algorithms replace transparency and the ability to apply a sniff test at the participant’s level.

Arbitron never claimed the diary method was perfect or flawless. How could they?  Radio people could see the mistakes in the diaries, and pointed them out.

Do you think Nielsen’s PPM is perfect?

PPM’s Mysterious Ten Minutes

How long does a News-Talk person listen to a station? Ten minutes. How long does a Rock person listen? Ten minutes. How about an Adult Contemporary listener? Ten minutes. Country? Ten minutes Urban? Ten minutes.

See a pattern?

No matter the format, PPM panelists listen exactly ten minutes. Well, now and then maybe nine minutes, but you get the idea.

Identical listening durations across formats is perhaps the most enigmatic aspect of what is arguably the most enigmatic radio listening measurement ever devised.

How did Arbitron explain this phenomenon as PPM rolled-out? They didn’t.

There is no explanation. Yet study after study since has found the same thing. Everyone listens to the radio for the same length of time.

This is how the Daily Occasions meme developed. If everyone listens the same length of time, then there’s no point in trying to increase duration. Can’t be done.

So the only way to grow an audience is to increase occasions. Once the listener has used up her ten minutes, she’s gone. All we can do is to get her to come back later on.

But think about the reasonableness of an identical listening span for every format from News-Talk to Urban and everything in between.

Does that make sense?

Is it possible that maybe the meter has a hard time consistently decoding which station it is hearing for any length of time over ten minutes?

As we showed in our previous post, the meter fails to correctly identify the right station anywhere from 18% up to 77% of the time depending on how loud the radio is playing and the level of other sounds near by.

What if this is the source of the mystical ten minute duration?

And if that's true, it might explain why PPM showed lower listening levels compared to the diaries when Arbitron ran both simultaneously.

Makes you wonder, doesn't it?

Fitbits, PPM, and Arbitron's Missing Quarter-Hours

Want to better understand why PPM listening levels are lower than diary levels?

Want to see why Arbitron only asks that panelists carry their meter eight hours a day while most people are awake twice as many hours?

Want to see why PPM may be costing radio million dollars in lost revenue?

If you really want to better understand PPM’s limitations and challenges, there's a new tool you must try.

Arbitron won’t let you experience what it’s like to be a PPM panelist. The company won't even let you carry a meter for a day or two.

The good news is that the new Quantified Self movement has created an opportunity for us all to feel what it is like to be a PPM panelist.

And you won’t like what you find out.

The Quantified Self is a movement that uses new technology in portable data acquisition to document a person’s daily activity.

One of the technologies is a new category of small fitness tracker toys devices that use an accelerometer to measure our movement throughout the day. The PPM uses a similar accelerometer to determine whether a PPM is in motion.

Devices like the Jawbone fitness tracker (right) are worn on the wrist like a bracelet, while others are small clip-on devices like the Fitbit Zip.

The Fitbit Zip is particularly interesting because in many ways it can serve as a valuable surrogate for the PPM meter.

Wearing a Fitbit Zip is just like a panelist carrying a PPM meter. And the Zip will tell you how many hours in a day a PPM meter would have been able to capture listening.

A few months ago I joined the Quantified Self moment and began wearing both a Jawbone Up and Fitbit Zip. Little did I know that I would soon develop great empathy for Arbitron’s panelists.

In the beginning I made a conscious effort to wear both the Jawbone Up and the Fitbit Zip continually.

The Jawbone slips easily onto the wrist and I quickly forgot about it. Were Arbitron’s PPM meter a bracelet, it would have captured all of my radio exposure.

The Fitbit was another matter.

First, it required some effort to securely clip it to my clothing. While it is considerably smaller than Arbitron’s PPM meter, I found it inconvenient.

When I changed clothes I had to make sure I also transferred the Fitbit Zip.

As time passed, I found myself increasingly forgetting the Fitbit, leaving it in a pocket, or forgetting it was clipped to yesterday’s pair of pants.

The Fitbit Zip was capturing less and less of my activity.

Were the Fitbit a PPM meter, it would have captured less and less of my exposure.

Mornings were particularly troublesome. I kept the Fitbit Zip on the night-stand, where a PPM docking station would possibly sit.

Clipping the Fitbit Zip to my clothes was generally the last thing I did as I got dressed, which means it rarely logged my morning activity.

The graph shown above illustrates this. The graph shows my activity in quarter-hours. While I get up around 7:00 A.M., I didn't get around to attaching the Fitbit to my clothes until nearly 8:00 A.M.

Now think about a PPM panelist.

A panelist is just like a person carrying a Fitbit Zip.

It takes a conscientious effort to make sure the meter is with him/her. It is likely that from time to time the panelist is going to forget to carry it.

Arbitron must know this. How else can we explain Arbitron’s rather low bar for counting a panelist?

A panelist is required to carry his/her meter no more than eight hours a day. Just eight hours (and even less for children).

The average adult is awake 16-17 hours a day, which means that a panelist is only required to carry the meter half the day to stay in Arbitron’s good graces.

How can a meter capture all radio exposure if it is sitting at home up to half the day?

One big difference between the diary and PPM is that listening begins later in the morning for PPM. It's like PPM panelists get up later than diary keepers.

Could it be that panelists don't bother to clip-on their pager meter until they are well into their morning?

In my case, the Fitbit missed about four quarter-hours of activity in the morning before I got fully dressed.

Coincidence?

A Fitbit Zip is $60. Even if you don’t want to join the Quantified Self movement, buy one to see what a PPM panelist goes through.

Then you’ll know where all those quarter-hours went, and why PPM may be costing radio millions of dollars.

Is News/Talk Radio in Trouble?

How can this be?

How can it be that in the midst of a struggling economy and a critical Presidential election that News and News/Talk stations are losing listeners?

How can it be that a format thought to be the future of local radio, the format that offers the most irreplaceable product has the worst momentum of any major format? 

The latest Harker Research Format Momentum Analysis shows that large numbers of listeners have abandoned News and News/Talk radio over the past year, a trend that continues from last year.

As we explained in last year's analysis:

We determine momentum by looking at the stations that have been in a format for at least a year and see if each station is higher or lower than the previous year. 

If a majority of stations are higher than last year, the format has positive momentum. If the majority of stations are lower, the format has negative momentum.

Only 40% of News and News/Talk stations in PPM markets are ahead of where they were in 2011. The majority of stations have lost share in the past year.

To put that into perspective, the momentum of News and News/Talk is more negative than virtually every music format we track.

Our first level analysis combines News, News/Talk, and NPR stations, but the losses are across the board. When we look at the performance of each format, it doesn't look much better.

More troubling is the fact that these latest declines continue a trend we first noted last Fall.

In our 2011 analysis we found that 62% of News/Talk stations had lost share compared to 2010.Today 58% of News/Talk stations are lower than they were in 2011.

As bad as that looks, News stations are in worse shape than News/Talk stations. Three-quarters are lower than they were last year. (Keep in mind there are few pure News stations.)

Even NPR stations show little momentum. Only 43% are ahead of where they were a year ago.

Median shares also suggest weakness in the formats.

Median share is the "mid-pack" share of the format. Half the stations have a higher share, half a lower share.

Using median rather than average to assess the over-all performance of a format is more useful because it isn’t unduly influenced by stations that do much better than most other stations in the format. (Think of what stations like WTOP or WLW do to an average.)

NPR has a median share of 2.8, essentially unchanged from 2011. In contrast, News/Talk’s median has declined 3.3 to 3.0, a 9% decline. News has declined by a third, but again, there aren’t many all news stations.

The across-the-board declines raise all sorts of questions.

Critics will claim that the declines are a consequence of polarizing conservative talk, but how does one then explain NPR’s lack of gains?

If that were the case, wouldn’t NPR be a natural alternative? Shouldn’t NPR stations move in the opposite direction of conservative talk, not in lock-step?

As the economy struggles, and we move closer to the Presidential election, shouldn't the audience for News and News/Talk be growing, not declining?  

That's what we found in early 2008 going into the last Presidential election in our final diary-based analysis. It showed a format with strong positive momentum.

Well over half of News/Talk radio stations in the top 50 markets were ahead of their 2007 numbers. Of course that analysis was made when radio was measured using diaries.

Could there be something about the way PPM measures radio that’s behind the downward trend?

Consider that the formats with the greatest momentum in 2012 are Urban Contemporary and Urban AC. Urban gainers outnumber losers by nearly a 3:1 margin.

Spanish stations are on a roll, as well.

Share is a zero-sum game. For a format to grow, some other format has to lose. 

What does all this say about the future of News and News/Talk on the radio?

Now that Arbitron restricts the use of non-client ratings, we can no longer conduct thorough Format Momentum Analyses like this. It will become increasingly difficult to track formats and see what's going on.

It could not come at a worse time for News and News/Talk radio stations.

Want Better Ratings? Game PPM.

Want to game PPM for better ratings?

Good news! Arbitron has created a ratings system that begs to be gamed.

PPM has made it much easier for stations to impact the numbers. And it gives large radio groups a big advantage over the little guys.

Diary keepers fill out a diary for just one single week.

If your sister is dating a guy who gets a diary, it can only help a single week of a twelve week book.

That’s why gaming a diary-based book is so difficult.

On the other hand, gaming a PPM-based book is much easier.

Let’s say the guy dating your sister has a meter. He can end up carrying that meter for two years.

Not only will the boyfriend impact your ratings for two years, the extra money he earns by carrying the meter will enable him to take your sister out to nicer restaurants.

Don’t have a sister? No problem. Here’s how you too can game PPM.

First, launch a succession of contests that require listeners to register if they want to play.

They don’t even have to be your listeners, so use other media to reach your non-listeners. They just need to be (how do we say this) impressionable.

You’re looking for as many prize pigs active listeners as possible.

You need to find people who can be bought, because you are going to ultimately buy their listening.

Then you need some way to keep in touch with them.

Email is good, Facebook is even better. Remember when listeners needed to sign up for iHeartRadio through Facebook? (hint, hint)

Once you’ve got a large database of active listeners that you can contact regularly, the fix is in.

Create “secret” contests for these listeners. Make them feel special. Tell them only a limited number of listeners can participate.

The contests should be easy to play. Give them chances to win at specific times throughout the day.

The name of the game is increased occasions.

Make sure your contest players regularly win small prizes. Also give them chances to win really big prizes from time to time.

You may be telling yourself that this is no big deal.

It’s the sort of thing most radio stations have tried from time to time for a long time.

The difference is that with PPM, the odds have changed in your favor.

And if you’re part of a large radio group, your chances of impacting the ratings are even better.

In a diary market with an in-tab of say 3,000 diaries, you’ve got to influence a good share of upwards of 12,000 people a year to impact the ratings.

Now with PPM, you might have as few as 1,200 total meters in the market.

We’ve all seen what happens when just one or two PPM participants are swapped out.

You probably have fewer than a dozen panelists listening being exposed to the station.

Today with PPM you’re much more likely to run across a meter panelist during your contest registration than if you're measured by diary.

And with PPM, your lucky find is much more likely to have a lasting impact on the numbers.

On top of the math, you’ve now got psychology working in your favor.

Diary keepers might get a couple of bucks to fill out the diary, more if they are in a difficult cell to recruit.

It's safe to say that whatever ones motivation, making big bucks isn't the primary incentive for most diary keepers.

In contrast, a meter keeper makes enough that Arbitron has to send them a W-9 form at the end of the year.

Each family member can make something like $50 a month, more with bonuses. Threaten to quit and they get even more.

And to make this money, all they have to do is keep the thing in motion for eight hours a day.

PPM attracts participants who like to make money--contest players. The very people that you can buy.

Lure them to the radio station through contests. Keep them engaged by dangling money and you’ve got a fan that can influence your ratings for a year, maybe two.

Large groups benefit more than smaller operators because it is expensive to recruit listeners, maintain databases, and keep contests going.

A large group can spread the cost of entertaining these “special” listeners across multiple stations.

And once you’ve inadvertently signed up a handful of meter carriers, the contests essentially pay for themselves through higher ratings.

Is it legal?

Yes, as long as you follow Arbitron’s guidelines.(PDF)

You cannot specifically recruit PPM panelists.

Oh, and you can’t have a meter keeper attach the meter to her dog and leave the radio on at home while she's at work.

She’ll figure that trick out on her own.

Arbitron Rating Analysis Face-Plant

As if on cue, in the midst of our ratings analysis, the “most trusted news in radio” inadvertently illustrated why analyzing Arbitron numbers can be so treacherous.

And how even a leading trade publication can get things so wrong.

Each year Arbitron releases Radio Today, a look at how the top formats are doing across Arbitron’s 290 markets. This is an analysis that only Arbitron can do because it is like running the Programmer’s Package combining every market in the country.

Because shares differ between PPM and diary markets, Arbitron now releases two estimates for each format, one showing how the format is doing in PPM markets, and a second for the format in diary markets.

Devoting the entire front page to Country’s performance,“the most trusted news in radio” declared:

The format ranked first among all formats in diary markets with a 14.5 but finished fourth in PPM markets with a 7.1. Put another way, Country’s average diary share is more than double its PPM share.

The statement is factually accurate, the ciphering flawless, but in the end meaningless.

A few lines later we learn the purpose of this expose' when the author asks rhetorically, “Why do some formats perform better under one ratings system than under another?”

It's perhaps a fair question, but using Radio Today Country numbers suggests that the author really doesn't understand how to go about answering the question.

Radio Today shares are calculated just like you’d do for a single market. Share is just a format’s AQH divided by the market’s AQH. To calculate a national format share, add the AQH of all the stations, then divide by the total AQH of all the markets.

Simple, right?

But what happens when there’s no full market Country station in New York or Los Angeles? The two largest markets in the country don’t contribute any AQH to the format tally. Consequently, the format's share is much lower.

Radio Today is not designed to compare formats the way the author has tried to do.

Compounding the problems of the wayward analysis is its conclusion:

One reason why Country comes up short in PPM markets is that it often lags in cume compared to other major formats.

The analysis ignores the fact that one of radio's biggest cuming formats, CHR, also does better in diary markets. There goes that theory.

The Radio Insights analysis of Country showed that the median share for Country in PPM markets was 4.1, behind only AC and Classic Rock. More importantly, Country is one of the few formats showing significant growth.

Two-thirds of Country stations in PPM markets are ahead of where they were last year.

The bottom-line is that Country is doing quite well in PPM markets, just the opposite of what the front page story suggests.

The subtitle of Radio Today is “How America Listens to Radio.” It’s an important distinction that the author of the front page story failed to understand. 

Radio Today is not a measure of the success of formats. It is a measure of what Americans are listening to.

Admittedly, ratings analysis is not easy. Most published conclusions about ratings are misleading for one reason or another. For more on the subject, check out our discussion on how to analyze ratings here.

How's Adult Contemporary Doing?

A recent post explored the thorny issue of assessing the health of Rock. It’s not as easy as you might think.

If you didn’t read the first post, you might want to read it first for background.

Compounding the challenge is Arbitron’s transition to PPM.

Arbitron admits that there are significant differences between ratings produced from diaries and ratings produced by meters. As a result, we can only trend ratings from the same methodology.

We can trend diary measured stations. We can trend PPM measured stations, but we can’t compare the two. And even more importantly, we can’t trend stations in markets that have only recently switched to PPM measurement.

So we’ve been looking at stations in large markets that have had PPM for at least a year to see how they are doing one year later.

Having looked at Rock’s health in the first post, we turn our attention to Adult Contemporary. 

In the case of AC, only two-thirds of the ACs in PPM markets have a year’s worth of ratings. As a result, we won’t have a complete picture of how AC is doing until early next year.

And if PPM’s performance to date is any indication, we’ll have to wait even longer for the newest markets’ panels to stabilize.

With that said, what do we know about the health of AC?

Mainstream AC is doing fine while Modern and Hot AC are slipping a little.

Looking at all flavors of AC, the format is behind where it was a year ago. Only 46.3% of Adult Contemporary stations are ahead of where they were.

It turns out, however, that the over-all negative trend is driven by Hot AC and Modern AC stations. Both formats are down while Mainstream is up.

By a slim margin, a majority of Mainstream AC stations are higher than they were a year ago. Fifty-two percent are higher, while 48.0% are lower. (Click on graphs to enlarge.)

In contrast, a majority of Hot AC stations are lower. Only 44.4% of Hot AC stations are higher than a year ago.

Modern AC stations make up a very small proportion of AC stations in PPM markets, but they too are down. Only one third (33.3%) are ahead of their 2010 numbers.

If you recall from the earlier post, we calculated the median share for all Rock stations at 3.6, ranging from 4.2 for Classic Rock to 2.9 for Alternative.

Adult Contemporary stations have a median share of 4.3, easily outperforming all flavors of Rock. As the nearby graph illustrates, Mainstream has the highest share at 4.6, followed by Hot AC at 4.1 and Modern AC at 3.5.

It is interesting to note that Modern AC while a distant third up against its AC brethren, handily outperforms Alternative, its Rock relative.

Next post we’ll look at how Country is doing. (Hint: very well.)

Note: To minimize month to month wobbles, we average the last three published 6+ monthly shares for each station and compare it to the same months one year ago. Only stations that were in the format last year and this year are counted towards the gains and losses. All stations currently in the format are included in median calculations.

Want to Grow? You Need a Bigger Tent.

In a recent analysis of PPM ratings, we determined that cume has a bigger impact on share than either TSL or occasions. The natural follow-up question is the relationship between cume and TSL/occasions.

Is it true that cume and TSL are inversely related, that stations can't have a large cume and high TSL? More importantly, can a station grow both cume and TSL at the same time, or does one go down as the other goes up?

It’s a much more complex issue than you might think.

Returning to the rating data-set we used in the previous posts, we  plotted cume against TSL. (A graph of cume versus occasions would look very similar.)

 
There’s a clear inverse relationship between cume and TSL. Stations with the largest cumes tend to have the lowest TSL, while stations with lots of listening tend to have smaller cumes.

The key word, however, is tend. While the relationship tends to be inverse, it isn’t absolute. There are stations that have both above-average cume and above-average TSL.

And the chart doesn’t tell the entire story.

In long-term trend analyses, Harker Research has also found that growing stations tend to increase cume and TSL at the same time.

In fact, we have found that a good way to differentiate real growth from the more common month to month random fluctuations is to see whether both cume and TSL are growing.

If you see a spike in TSL without a spike in cume (or vice versa), it is probably a wobble. If you see both TSL and cume moving up, it is more likely to be real.

This is also true with downward trends, but more often with a lag between the two measures.

It stands to reason that TSL and cume would both grow for stations on the rise. The same elements that attract new listeners to a station also encourage existing listeners to tune in more often.

More occasions equal higher TSL. Consequently, cume and TSL grow concurrently.

One Radio Insights reader questioned whether external marketing was the only way to grow cume. It isn’t the only way, but it is an efficient way.

In diary markets, it is particularly difficult to grow an audience without external marketing.

A person typically listens to about five stations, but only writes down two or three stations in the diary. The missing stations make up a station’s phantom cume.

The goal of external marketing is to raise a station from phantom status to reported status by raising the station's top-of-mind awareness. You really haven’t gained a listener. You’ve gained a reported listener.

With PPM, listeners are replaced by exposed panelists. The meters pick up “drive-by” exposure, a few minutes at a time. That’s why cumes are higher with PPM.

External marketing is just as important in a PPM market, but it’s goals are different.

With PPM, every listener is essentially a phantom listener. You never know whether a panelist really listened to the station, or simply came in aural contact with it.

External marketing still works by raising top-of-mind awareness, but less directly.

While the goal in a diary market is to directly influence the diary keeper’s actions, with PPM you don’t care whether the external advertising works on the panelist or those around her.

The goal of external advertising in a PPM market is to grow the tent. The bigger the tent, the more people it can hold.

The more people in the tent, the more likely somebody in the tent will be listening to the station and the greater chance that a panelist will be exposed.

This difference between goals means that while external marketing is important in both diary and PPM markets, the messages need to be different.

That will be the subject of a future post.

What is a Listener Worth?

What is a listener worth?

Mel Karmazin recently compared Sirius to Pandora, bragging that Sirius makes a lot more money per subscriber than Pandora:

(Pandora) are able to generate $4.59 per year from their active users. By contrast, SiriusXM generated $141 in the year for each subscriber. I think that helps to demonstrate why we like our subscription business model.

Is this a valid way to compare Sirius to Pandora, or broadcast for that matter?

Karmazin used Pandora’s estimated active user base, but a more useful comparison is to look at Pandora’s weekly average sessions, nearly half a million in the latest reported month.

If we divide Pandora’s 2010 revenue by the service’s average sessions, it turns out that an active user is worth $467, over three times what Sirius makes from each subscriber.

So much for Karmazin’s subscription model, but how does that compare to the value of a broadcast listener?

Arbitron does not release national AQH estimates, and the current mix of PPM and diary markets makes calculating a national AQH number problematic. Nevertheless, we used Arbitron’s national RADAR estimates as a starting point.

We concluded that national full week AQH is more than four million AQH persons.

We know from the RAB that spot radio alone in 2010 totaled $14.2 billion.

This means the value of a broadcast radio listener nationally is conservatively $844, twice what a Pandora listener is worth.

Now that we have a national average, we can use this analysis to examine specific radio stations.

BIA-Kelsey recently reported 2010 station revenues for the nation’s top ten stations. If we divide the station’s revenues by their latest full week PPM AQH numbers, we can compare the stations to each other as well as the national average.

Across all top 10 stations, a listener is worth $809.44.

The graph lists the stations in order of revenue from highest on the left to the lowest on the right (click to enlarge). The height of each bar indicates how much revenue each listener generated for the station.

 

The horizontal line is drawn at the national $844 average.

What’s it all mean? First, Karmazin has made Sirius look good by making a misleading comparison.

Pandora makes considerably more per active user than he suggests, one-hundred times more using average sessions as the metric.

Karmazin didn’t bother to contrast Sirius with broadcast radio perhaps because he knew radio would look much better, six times better than Sirius.

Beyond these cross-platform issues, there is the question of the wide range of listener values even within the top ten stations.

Four stations fall below the estimated national average. Two are music, and two are news stations, all are New York stations.

Why are there so few music stations within the top 10 billers, and why do music stations within the top ten under-perform?

Commercial loads may have something to do with it, but these are full week numbers which should even things out a little better than Monday through Friday numbers would.

And why do a Washington, D.C. and Chicago station do so well compared to New York stations?

We’ll have much more to say in part two, but in the meantime, take a look at the graph and ponder the implications.

Then calculate what your listeners are worth.

Brits Know How to Measure Radio. US? Not So Much.

The US was once the world leader in broadcast radio, but no more.

As one of the first countries to welcome entrepreneurial commercial broadcasting, the US established a tremendous lead over other countries in radio broadcast innovation.

Decades before other countries had any independent broadcasters, we had nearly ten thousand radio stations operated by thousands of independent owners.

This giant collaborative network produced diverse programming, rapid technological innovation, and a well developed system for measuring and reporting radio listenership.

As other countries gradually opened the airwaves to private operators, they looked to the US to learn how competitive commercial radio was done. One country that took a keen interest in US radio was the United Kingdom.

Harker Research began consulting British radio stations in 1990, and we found an industry that had a lot to learn, but an industry eager to learn.

Now two decades later, UK radio has not only caught up. In many ways, it has quickly moved beyond US radio, leaving it in the dust.

One important area where the UK is well ahead of the US is how radio is measured and reported.

The US has a patchwork of different companies measuring the various ways people listen to the radio.

Arbitron measures over-the-air terrestrial radio using two different methodologies that produce contradictory estimates.

But Arbitron doesn’t measure the fastest growing segment of radio listening, Internet radio streaming. Triton Digital among others does.

Triton produces ratings using different listening metrics and different editing rules from the way Arbitron measures terrestrial listening, however.

Consequently, Arbitron and Triton numbers are not directly comparable. They cannot be combined as reported.

On top of that, Triton only measures the streams of those companies who pay Triton to be measured, a small percentage of US broadcast stations streaming.

This hodgepodge means that the US, once the world leader in commercial broadcasting, has no reliable measure of total broadcast radio listening.

The US radio industry does not know how many people are listening to commercial radio, how long they listen, the proportion using each platform, or even whether broadcast listenership is growing or declining.

Not a clue.

Compare the plight of US broadcasters to UK broadcasters.

In the UK, commercial broadcasters and the BBC jointly own RAJAR, Radio Joint Audience Research, a service who’s task is to measure all radio consumption.

Terrestrial, digital, and Internet listening are measured by one service owned by broadcasters using a consistent methodology that produces reliable and comparable estimates of radio listening.

UK broadcasters know how many people listen to radio and how long they listen across all the different ways people listen to radio today.

The rating service was able to recently announce that radio listening had reached an all time record high, something US broadcasters can only guess about.

While US broadcasters focused their hopes on PPM to advance US audience measurement, RAJAR was looking beyond PPM and recognizing the need for a system that could measure all platforms equally as well.

UK broadcasters have already succeeded in that goal while US broadcasters haven’t even begun discussing the need.

After years of leading the world, US radio has fallen woefully behind the UK in the innovation necessary to prepare radio for its digital transition.

The US needs a single radio measurement system that looks at radio in all the ways it is consumed. Having lent the Brits a hand in the past, maybe they’d be willing to help the US now.

We need it.

Dashboard Confession: Pandora Wants Your Listeners

Two new Pandora press releases stories outline the company’s latest assault on broadcast radio, in-car listening.

“(In-car listening) is the holy grail for us,” says pandora founder Tim Westergren. “We just have to figure out a solution to get Pandora into cars that’s as easy as radio is now.”

Bloomberg declares: Pandora needs a foothold in cars to challenge traditional radio and attract more advertisers.

Variety warns us that:

The attempt to break onto car dashboards is a stab at the heart of AM/FM radio, which, while still dominant in the field to the tune of 90% share of all radio listening, has seen troubling signs in the behavior of young consumers.

(The author then goes on to cite the discredited Edison Research study that Arbitron and the Southern California Broadcaster’s Association showed is just plain wrong.)

These two new articles join a growing pile of speculative stories on how Pandora might now finally be ready to put a dent in broadcast listening.

While these stories are PR disguised as news, they inadvertently reveal that while Pandora is a spectacular success in the context of streaming services, it is a minor player in the broader context of radio listening.

Will Pandora’s assault on in-car listening hurt broadcast?

Radio’s dominance in the car has been under assault since the 8-track tape. Each new addition to in-car entertainment has had the potential to hurt broadcast listening, yet none has had much of an impact.

Satellite radio was designed to challenge broadcast for in-car listening. After a near bankruptcy and bale-out, merger, and countless upbeat predictions by Mel Karmazin, Sirius XM finally passed 10 million subscribers, less than 4% of the registered vehicles on the road. 

While Sirius doesn't PPM encode and therefore cannot be measured by Arbitron in large markets, in diary markets where listeners can still report their satellite listening, there’s hardly any.

Pandora is already on after-market Pioneer and Alpine car radios. Ford’s Sync features Pandora. Mercedes is rolling out an iPhone app that will one day enable Mercedes drivers to cordlessly listen to their iPhone through the car’s entertainment center.

The problem for Pandora is that these systems are more expensive and complicated than radios. Today a driver can hop in the car, flip on the radio, and within seconds be listening to information and music coming out of the speakers.

Need the latest traffic report? Turn on a news-talk station. Bumper to bumper traffic? Hit the scan and find some music while you’re staring at the brake-lights ahead of you.

The majority of drivers place a higher value on convenience than capability in a car. The average commute is less than an hour, the average errand by car considerably less.

The likelihood that you are going to plug in your iPhone, navigate to the app of your favorite music service, launch it, and then select a stream in the 15 minutes it takes to drive to the grocery store to buy milk is small.

But fast-forward a few decades to the future envisioned by new-media boosters when most cars will have a high speed internet connection, and radio apps reside on the built in entertainment console of most cars.

Do you really think Pandora is going to be the only app on the dashboard? Not a chance.

We have frequently pointed out that broadcast groups are the best positioned to capitalize on the migration of listeners to online listening. By the time a significant number of drivers begin listening to radio streams in their car, broadcasters will be there.

In fact, it is already happening. Toyota just announced a mobile deal with Clear Channel to integrate iheartradio with some Toyota vehicles beginning next year.

Game on.

Digital Marketing Done Right.

Marketing has always played a critical role in the success of a radio station. This is no less true today in a PPM world than the diary world.

While it is true that PPM measures exposure, not listening, we still need to get listeners to try out the station. Every station churns listeners. Listeners drift away and need to be replaced.

Marketing raises the station’s top-of-mind status, increases curiosity, and brings new listeners to the station.

We now have potentially more persuasive new-media marketing options in addition to the traditional “brute force” methods of the past. Today with the help of digital options, we can more effectively market to listeners at a personal level by communicating with them directly.

New media marketing options offer new opportunities to strengthen the bond between station and listener. The key is to focus your energy on doing a few things very well rather than dabbling in the enture range of possibilities, particularly with the reality of today’s skeleton staffs and limited budgets.

So how do you decide how to market the station? What are the most effective new-media tools, and how can you use them in the most efficient way? Read on.

Email. Email should be the foundation of every radio station’s marketing strategy. Email has the potential to be the most powerful marketing tool at our disposal because of its ability to reach nearly every listener, its low cost, and its flexibility.

Making email an effective marketing tool requires continual attention, however. Your database of addresses has to be represent a significant proportion of your audience. It has to be regularly updated and old addresses purged.

Emails should be useful, relevant, and informative. And don’t over-use email.

Social Media. Some believe that social networking has supplanted email as the primary way people stay in touch with friends. It is a little more complicated than that. For our purposes, the two media are complimentary.

Email is the best way to touch an individual, social media is the best way to touch an entire audience.

Email should be for personally targeted messages. Listeners should feel that they are personally hearing from the station regarding something that might individually interest them.

Social media should be for general audience information. It is a broadcast, an extension of what the station does on air.

If your email efforts are up and running, then the next step is adding social media, primarily Facebook.

The challenge is creating a steady stream of station posts.

The task needs to be under the control of the program director and assigned to someone who understands the station’s listeners and what listeners will find interesting. Dull pointless posts turn listeners off and raise questions about the station’s relevancy.

Twitter has more buzz than Facebook, but it is much more difficult to overcome Twitter noise. With limited resources, investing in email and Facebook should be a station’s top priority.

YouTube has created multi-media marketing opportunities for stations, but at some risk. Viral videos are generally entertainingly quirky. Few radio stations can pull-off creating a genuinely entertaining video. Too often radio station YouTube efforts end up as desperate attempts to appear cool.

Website. Radio's first foray into digital marketing was creating a website. A station’s website is the visual symbol of the station. It should look like the radio station sounds.

Unfortunately, most radio station web sites look pretty similar, and pretty bad. They are painful to look at, too busy, visually shouting at the viewer.

The problem is that too much of the screen has been given over to the sales department. As a result, too many websites are really anti-marketing tools, undoing a great deal of the work put into creating a positive station image.

Cluttered flash-festooned riots of color and movement hawking and pitching everything from the morning show to who knows what drive listeners away. As a result, few listeners visit radio station web sites more than once, and when they do, they spend very little time on them.

Product people need to get more involved with website design and make sure the site leaves listeners with a positive impression of the station and encourages them to turn on the radio station.

 Mobile. The next frontier in digital marketing is mobile.

The telephone is becoming the Swiss-army knife of communication, but at this point, three out of four mobile users are using a plain simple phone. That means it remains primarily a tool for individuals to communicate to other individuals by voice or text.

Don’t get sucked into the hype about smartphones. With only one in four cell phone users having a smartphone, like an iPhone or Android, mobile marketing is still in its infancy.

Don’t design a marketing campaign where participants need a smartphone to participate. Your marketing needs to reach all your listeners, not just mobile early adopters.

At this point, mobile marketing should focus on voice or texting.

Texting has replaced voice as the primary means of mobile communications for younger listeners. On average, teens send an average of 3,339 texts per month.

If your station targets listeners under the age of 30, it has to have a texting strategy.In-bound texting should be part of a station’s polling, requests, and feedback.

Outbound texting offers additional marketing opportunities, but should be used carefully. Research suggests that 9 out of 10 people resent unsolicited messages.

On the other hand, texting is the most immediate means to reach young listeners. Since listeners who text generally have their phones with them and on, it can be a very effective call-to-action tool.

The key is to first make sure listeners want you to text them. If a listener has given you her mobile number, she has granted the station a privilege that you should not abuse. Use texting sparingly and only for important things.

Save outbound texting to very high value opportunities.

Regardless of the means you ultimately focus on, remember these important rules:

• Regularly communicate with listeners.
• Make sure listeners understand how important they are to the station.
• Be sure your messages are relevant, useful, and entertaining.
• Integrate social networking to make your communications a two-way street.