Radio InSights

Nielsen to Radio: PPM is perfect. Now We’ll Fix It.

Totalitarian regimes use torturous language when admitting problems and failures. They hope that by couching confessions within reassurances they can hide the truth in plain sight.

We were reminded of this as we listened to the recent Nielsen PPM Webinar.

Officially the presentation was exclusively for Nielsen Audio clients and invited guests, namely the NAB, RAB, and MRC, but we suspect we weren’t the only gate crasher at this long anticipated extravaganza.

We’ve held off offering a detailed critique of what Nielsen had to say because Nielsen's Matt O’Grady made assurances during the presentation that it would be made available to all clients. We’re still waiting.

How long does it take to post a ten page presentation?

Maybe somebody within Nielsen decided there was too much honesty. Maybe the implications of the promises and assurances were a little too transparent.

Whatever the reason for the delay, we’re going to go ahead and examine the presentation, its claims and promises and translate all 4,400 words into plain English.

Here’s the bottom line:

Nielsen claims PPM works like it is supposed to, but it is going to make significant changes to the encoding process to fix the problems that Nielsen claims do not exist.

Nielsen also claims that extensive testing has shown that Voltair doesn’t really increase ratings, but if it does, it might do so by creating spurious codes while degrading the listening experience for panelists.

(If you’re one of the hundreds of radio stations successfully using Voltair all this may be contrary to your own experience, but Nielsen says they’ve proved it.)

In the coming days we will parse and decode the claims of Nielsen. You won’t want to miss it.

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?

 

Did Arbitron Mislead RAB About PPM's Missing Listeners?

Did Arbitron mislead the Radio Advertising Bureau about how successful PPM was in capturing listening?

You be the judge.

In 2004 the Radio Advertising Bureau investigating the technical aspects of PPM posed 188 questions (PDF) to Arbitron regarding PPM. Here’s one of them:

Question: What percentage of the transmitted codes is captured? What percentage with low volume?

Answer: In November of 2004 the PPM participated in a test where 33 radio stations were played in various environments and levels of “noise.” The PPM correctly identified 59% of the total radio sessions, in an environment where the goal was 50-70%.

The RAB seemed satisfied with the response. However, there’s no evidence that the RAB actually looked at the study Arbitron referenced.

And strictly speaking, Arbitron didn’t really answer the question. More on that after we look at the study.

The study was not conducted by Arbitron. The company played no role in it other than supplying the equipment.

Makes one wonder why the company didn’t cite its own research.

The study was funded by the U.K. radio community. We first reported on the study in 2010 because it was (and remains) the only publicly released study on PPM.

We personally spoke to the lead researcher and concluded the study was thorough, objective, and we believe well designed.

The investigators created over thirteen hundred different scenarios, testing various combinations of formats, radio listening levels, and interfering ambient noise levels.

They then divided the scenarios into categories based on how easily the meters should be able to identify the stations.

As the summary at the left indicates, PPM’s performance was mixed.

In the 28 cases where conditions were nearly perfect with the radio playing loudly in a quiet room where the meter was exposed and close to the radio, PPM got it right every time.

However, as soon as conditions dropped from perfect, success rates fell rapidly.

For example, the meter was able to identify less than three-quarters (73.4%) of the stations in the next two easiest scenarios.

At level 4, a level at which the researchers thought the meter should be able to identify the station, PPM only got 151 stations right out of 266 tries, a little better than half (56.8%) of the trials.

PPM identified only one quarter (24.0%) of the stations played in the most difficult three scenarios. These were where the stations were played at a low level in a noisy environment where the meter was tucked away in a bag or jacket.

So the response to RAB that PPM correctly identified 59% of the radio stations is somewhat misleading. In the most natural scenarios where real panelists are listening to the radio, the success rate could be considerably lower.

(It should be noted that in a comparison PPM alternatives proved no better, so PPM is not alone in failing to ID stations.)

But there’s a bigger issue here.

The only criterion used in the study was identifying the station. The sessions were ten minutes long, so the meter had ample time is identify the stations.

The Question “What percentage of transmitted codes is captured?” goes well beyond identifying a station.

The RAB was not asking what percentage of stations are identified. The question is about how often the decoding process works. And the longer it works, the more quarter-hours.

Arbitron cleverly dodged the question.

So based on Arbitron’s admission to RAB that PPM captures 59% of radio station IDs over a ten minute period, that means 41% of stations are unlikely to be identified in a ten minute period.

Let’s just round that to a quarter-hour.

Isn’t it curious that Arbitron/Nielsen report that average listening spans for all formats are ten minutes?

Is it because nearly half of stations remain unidentified after ten minutes? And is this why Nielsen cross-tuning reports show that most listeners don’t switch stations, they just disappear?

The bottom line is that we still don’t know how much listening PPM is missing. Looking more closely at the study Arbitron quoted to the RAB, it could be a lot.

We don’t think the Voltair controversy is going away any time soon.

 

Online Video: Bogus Sites, Fake Traffic, Drone Pools

A few days after Radio Insights noted the massive fraud in online video advertising, The Wall Street Journal reported that many big advertisers are being victimized:

Lured by the promise of advertising they could be sure was being seen by the right people, marketers are now contending with a deep bag of tricks that includes Web-crawling robots, server-based "drone pools" and the pixel-size video sites that has them paying for dubious Internet traffic.

The story illustrates the depth of deception by showing how just one site, USFunVideos, stole from J.P. Morgan Chase, Minute Maid, smartphone maker HTC Corp, and others by running their ads on tiny sites each the size of a single pixel, all embedded on a website playing cooking videos.

As we pointed out in our earlier post, the extent of the fraud with online video is not new. It is well documented, and virtually unstoppable.

The Wall Street Journal story is interesting because it documents how little advertisers and agencies care that they are being screwed.

This is how the three companies reacted when told their video ads played on invisible players:

A spokesman for J.P. Morgan Chase acknowledged the company inadvertently paid for the spots to appear. A spokesman for HTC said its media agencies have "robust monitoring solutions in place" to guard against fraud. A Minute Maid spokeswoman said that "known fraud is automatically stripped out" of ads counted, and billed, to the company.

That last line from Minute Maid is reminiscent of Dick Cheney’s “known unknowns” versus “unknown knowns.” Of course they don’t pay for known fraud. They do end up paying for unknown fraud.

Mike Turcotte, a senior vice president at Zenith Media, which handles J.P. Morgan Chase's online advertising said that the USFunVideos incident represented a small amount of the bank's total ad budget but declined to give any figures, or say whether the bank had been reimbursed for the fraud.

Mr. Turcotte is being coy here. Fraud experts estimate that fraud is siphoning off at least 50% of the dollars going to online video.

Yet the message is, “Nothing to see here. No big deal. We’ve got this under control.”

But of course, none of these ads were supposed to be on this rogue site, none of these ads were seen, and none of the companies had been aware of the breach before The Journal discovered them.

Perhaps the most telling line in the WSJ story came from the Zenith Media VP who confessed:

"It's always a big deal when advertisers can't control where their ads end up in the supply chain.”

Bingo.

When advertisers buy a radio schedule, it runs on a real radio station with listeners. The buy is rarely handled by more than one or two intermediators, generally human.

These video ads are being bought through electronic auctions and automated systems, and often run on foreign web sites. USFunVideos appears to be a Slovakian web site.

The HTC ad traveled through three middlemen, including the ad network OneScreen and the ad-buying tech company TubeMogul.

J.P. Morgan Chase placed its ad through AOL Inc. 's Adap.tv, and they handed off the buy to three more firms before it ended up on the rogue site. There can be as many as nine intermediators involved by the time a video ad runs.

But here’s the kicker: These advertisers are paying upwards of $30 per thousand views, more than they would pay for much of prime TV, and  considerably more than for a prime radio buy.

For the privilege of playing in a one pixel player on a Slovakian website.

These sorts of stories should make radio’s leaders livid. Major advertisers have been sold a bill of goods by digital stakeholders, and radio is doing virtually nothing to publicize the fraud and contrast it to radio's transparancy.

Where is the NAB? Where is the RAB? 

Radio Sleeps While Digital Fraudsters Steal Billions

Online video ad sales will probably be over $3 Billion this year. And according to the New York Times the majority of that money will be wasted on ads that few people see.

It’s a story that every radio sales person should carry and share with clients thinking of switching radio dollars to digital.

According to The Times:

By many estimates, more than half of online video ads are not seen, either because they are buried low on web pages or run in tiny, easily ignored video players on those pages, or run simultaneously with other ads. Vindico, an ad management platform company, deemed 57% of two billion video ads surveyed over two months to be "unviewable."

So advertisers are essentially flushing $1.7 Billion down the drain rather than spending their money on media that people actually see or hear.

The article goes on to show the numerous ways that advertisers get screwed when they buy video ads. There’s the legal ways that buyers get screwed:

The crux of the problem is that the number of video ads that agencies and brands want to run far exceeds the amount of quality inventory....When the premium space fills up, media buyers start looking for video players in less coveted online real estate.

Then there’s out and out fraud.

An agency working for a “mom-related” product placed an order paying for premium placement on premium websites. Here’s how the story described the schedule they ended up with:

Many of the ads were running in tiny players, 3 inches by 2 inches, on the sites. Some were auto-playing...(and) the list of domain names where the ads were running included pornographic websites.

The agency that placed the business claimed they were shocked, but should they have been?

No. The truth is that years of research has shown that many if not the majority of online ads are never seen.

As eMarketer reports:

Study after study shows that viewability makes for significant ad spending waste. In a survey from Integral Ad Science, roughly half of US banner impressions served on advertising networks and exchanges went unseen....The majority of ads bought never even reached a pair of eyeballs.

Half of banner impressions are illusionary and 57% of video ads unviewable. You’d think that buyers would wise-up to the scam and take their money elsewhere.

Unfortunately, the hype surrounding digital is just too great. Spending is expected to rise again this year. Mobile video ads are the hot new way to waste advertiser dollars, diverting money from effective traditional media like radio and television to digital ads no one sees.

Radio Insights recently noted three new studies highlighting radio’s strengths and its advertising effectiveness.

These studies represent the first serious efforts in decades to illustrate radio’s effectiveness, and neither the National Association of Broadcasters nor the Radio Advertising Bureau participated.

Remember NAB’s Radio 2020 campaign from 2008? Neither does anyone else.

Still use the RAB’s Radio Ad Lab 2008 study on radio spots and emotion in your sales pitches? Didn’t think so.

Radio 2010 and Radio Ad Lab are poster children for leadership's ineffectual efforts to counter digital's propaganda. In the battle to grow radio’s piece of the advertising pie the NAB and RAB are MIA.

Digital is going to continue to eat radio’s lunch until the industry pushes back against the fraud and hucksterism of digital. Is either organization up to the task?

Is the Digital Basket the Wrong Place for Radio’s Eggs?

Spot revenue flat-lined again in 2013. Radio can’t seem to move the needle when it comes to selling spots on the radio. Thank God for digital.

Digital is the one bright spot for local radio revenue. It was up again in 2013, so it is understandable that everyone from the Radio Advertising Bureau on down would crow about digital:

"Digital continues to gain momentum among advertisers looking to maximize their use of all Radio platforms," states Erica Farber, President and CEO of RAB. "Based on the recent Borrell Associates forecast of a 22% rise in Digital spending on Radio in 2014, this category is poised to surpass the $1B mark."

Everyone seems to agree that digital is the bright spot in radio’s future. Unfortunately, while a digital future may be inevitable, economic success for radio in a digital world is by no means inevitable. Quite the opposite is possible, an issue we raised back in 2009.

Putting all of radio’s eggs in the digital basket may be a trap. Instead of securing radio’s future, it may sacrifice broadcast’s enormous advantage over its digital competitors, leveling a playing field on which radio has always won.

The RAB press release to which Farber alluded in the above quote predicts a bright digital future for radio noting that digital grew 15.9% in 2013, and projecting another 22% growth in 2014.

That might sound like a lot, but as noted in the release digital contributes an anemic 3% to radio’s revenue. Take a look at the graph at left. It illustrates how little digital contributes to local radio’s revenue. That tiny sliver at the top is digital’s contribution.

Even if digital revenue continues to grow at the RAB’s wishful double digit pace, it will take over a decade for digital to approach even half of spot radio’s contribution.

And the RAB’s projections are extremely optimistic verging on the delusional. We need only look at newspaper’s attempt to cross over to the digital world to understand.

Facing precipitous declines in print revenue, the newspaper industry pinned all its hopes on digital. The major newspaper chains predicted that digital would save the medium. We questioned their strategy, and the wisdom of radio following a similar path in 2011.

What’s happened since?

In 2010, newspaper digital revenue grew by 10.9%. However, every year since the rate of growth has declined. Digital newspaper revenue barely grew at all in 2013.

Compare that to radio’s digital growth over the same period. The good news was that radio’s growth rate coming out of the recession was nearly triple that of newspaper. The bad news is that radio’s growth rate like newspaper’s immediately began to slow.

As the table at left shows, after growing 28.1% in 2010, growth fell in each of the next two years. Growth rebounded last year, but still failed to achieve the growth rate of 2010.

The graph at left shows each medium’s digital growth rate indexed to their 2010 rate. Note that with the exception of 2013, the growth rate declines of radio and newspaper seem to be following the same pattern.

Radio critics claim that the industry isn’t moving quickly enough. We’re told that digital revenues will grow faster if only broadcasters tried harder. But what evidence do we have?

Newspapers have been developing a digital strategy much longer than radio. The major chains have reallocated more resources to their digital product than radio has. And the end result appears to be only an accelerated pattern of growth then decline, not a stronger one.

If radio is following the same arc of rapidly diminishing growth in digital revenue that newspaper is tracing, then radio has to rethink its strategy of pinning its hope for growth on digital.

So if digital isn’t the right basket to put all of radio’s eggs, what’s the alternative? That’s the subject of the next Radio Insights post.

Did Radio Get Its Mojo Back?

Last week’s RAB/NAB Radio Show could well be remembered as the moment that radio got it’s mojo back.

The mood at this year's convention was several notches above the apocalyptic doom of the last few years. Determination and steely resolve have replaced fear and anxiety of the recent past.

RAB President Jeff Haley's upbeat keynote address set the tone, and that tone echoed throughout the meetings that followed.

The previous fatalistic attitude regarding the threat of new-media was replaced with an upbeat assessment of broadcast’s ability to match and even better the digital initiatives of digital pure-plays.

Broadcasters seem to have found a mental sweet spot rejecting both a nostalgic hope that the happy days of the past will return, and the belief that radio’s digital evolution will be pain-free.

Discussions focused less on the threat of digital, and more on practical ways to exploit digital.

The zealous new-media true-believer panelists of previous conventions were replaced by more practical realists willing to acknowledge new-media’s challenges and limitations.

In past broadcast gatherings, any talk about radio’s ability to survive digital's onslaught was met with skepticism and derision. This Radio Show showed more balance, without either pollyannasim or chicken-littleism regarding broadcast radio’s future.

It was refreshing to see the industry emerge from the bunker.  Looks like broadcast radio has its mojo back.

Does Radio Finally Have a Leader?

Does radio finally have a leader?

In the past we’ve lamented radio’s lack of visible leadership. Two years ago we wrote:

Where is the leadership? Who speaks for radio? We need someone willing to defend radio and put it back on the radar screen.

Leadership for us is showing a sincere belief in radio and its future. Leadership is understanding radio’s strengths. Leadership is defending radio against baseless self-serving attacks from new-media stakeholders and radio critics.

Leadership is understanding that the Internet is an opportunity for radio, not a threat.

In the brief time since joining Clear Channel Pittman has demonstrated those skills, managing to appear in the Wall Street Journal, Bloomberg, Variety, and Yahoo finance with an upbeat and positive outlook for radio.

Pittman has the credibility to say that radio has a future and back it up, having come full circle from radio to new media, and back to radio.

Pittman’s message is that broadcast radio listenership continues to be strong, but it has an image problem, a belief held by many people that radio is in decline:

Half the story is telling the story. We’ve got the consumer base. We just have to offer them the features.

In barely a month Bob Pittman has accomplished more than the NAB, RAB, and CEO’s of the major groups have done in the past three years in pushing back against the digital cabal and their attempt to misrepresent broadcast radio’s continued strength.

Maybe radio finally does have a leader.

Thanks Pandora, We'll Take it From Here.

Pandora is the face of Internet radio. By every measure it has achieved far more than any other Internet audio service. The company has over 65 million registered users, generates one-quarter billion listening sessions every week, and even generates a modest profit.

For most consumers, Pandora defines the entire category of Internet radio. There’s Pandora and the rest. You can listen to Pandora on your computer, your iPhone, Android, Blackberry, Tivo, and soon probably most Internet connected toasters.

Tim Westergren is an icon in Internet media circles. As the creator and face of Pandora he has scored interviews in mainstream media including the New York Times and Wall Street Journal.

And none of this will ultimately matter.

Pandora may have a tremendous lead over its competition, but it remains to be seen whether the service can sustain its lead. As countless Internet companies have discovered, there is no “first-mover” advantage when it comes to new-media.

Nothing that Pandora does is proprietary. Every aspect of Pandora can be replicated, and ultimately improved upon.

We are in the first inning of Internet radio. This is why Harker Research suggested that it was better for broadcasters to watch and wait for Internet radio to mature. Better to continue to invest in the broadcast product while Internet radio evolves.

Now that an Internet radio leader has emerged, broadcasters can develop a competitive strategy to defend against Pandora, and the services that might overtake it.

Broadcasters owe Pandora their thanks. Pandora’s success is a textbook example of doing a lot of things a little better than the competition, something broadcast once knew, but seems to have forgotten.

The company's success also proves that caring about listeners still matters. A fact broadcast has also forgotten.

Fortunately, even with Pandora’s tremendous on-line lead broadcasters can close the gap by adapting key elements of the company’s success.

Lesson 1: Marketing is key.

Pandora has out-marketed everybody, broadcast and on-line competitors alike.

The company has a cool laid-back persona from its logo and website to the folksy emails it sends out. It solicits user input, and takes every opportunity to thank their users for listening.

The company’s Music Genome Project has given Pandora a unique position. It is little more than a marketing gimmick, but it has effectively created the appearance of a listener benefit not found elsewhere.

Arbitron's PPM focus on exposure rather than listening has deflected broadcast’s priorities away from marketing and positioning. The importance of differentiating a radio station will play an increasingly important role as broadcasts transits to digital.

Lesson 2: Make radio personal (again).

Tim Westergren, founder and chief strategy officer, has been a tireless booster of Pandora. Like a general personally leading his troops into battle, Westergren has traveled the country meeting with users and promoting his product.

At every stop, in every interview he takes the opportunity to position Pandora as the future of radio, taking every shot at broadcast he can.

What is the face of broadcast? Too many listeners see broadcast as a business full of large corporations run by greedy suits who see listeners as a commodity.

Broadcast radio needs to understand that it has an image problem, one that the NAB and RAB efforts have only worsened (think Radio 2020).

Broadcast needs to rethink its image as a product catagory. Broadcast needs a positive face and image.

Lesson 3: Listeners want a sense of control.

Pandora claims the Music Genome Project (MGP) creates the perfect personalized radio experience. Type in an artist, and Pandora will start streaming songs by that artist along with similar artists.

Harker Research found that MGP had little to do with Pandora’s appeal. Listeners just want the ability to listen to an artist when they want to.

The message for broadcasters is that listeners want some control and the ability to listen to specific artists. This can easily be added to a broadcast group’s streaming package.

Lesson 4: Radio needs to be everywhere.

Pandora has been aggressive in making its service available on many devices. Users can stream the service on every mobile platform as well as Google TV, Tivo, and several Blu-ray players. NPR has pursued a similar strategy quickly developing apps for every device.

Broadcast streams must be available everywhere and on every device people use to listen to audio.

Lesson 5: Make it easy to listen.

People want easy access to their stations, not tens of thousands of stations they will never listen to.

The Pandora player is elegantly simple. Users can quickly find their custom streams with a minimum of distractions and clutter.

Broadcast has gone the other way, aggregating dozens and even hundreds of station on websites and applications that make it difficult to find particular stations.

Compare the simplicity of Pandora’s iPhone app to Clear Channel’s iheartradio. Pandora users hear music the moment the app launches. One has to go three pages deep in search of a radio station to listen on iheartradio.

Lesson 6: Radio is still a local medium.

Broadcast’s most powerful strength is its localism. Pandora understands this and is trying to develop a local sales strategy.

As broadcast migrates to the Internet, radio needs to remain a local medium. Services like iheartradio and AOL Music downplay broadcast’s most powerful tool, localism.

As the migration proceeds, large groups may have a more difficult time than small local groups making the transition. Small groups will feel no need to aggregate hundreds of stations into a single Internet service.

A small radio group with a single smartphone app will offer listeners a simple gateway to hear their local radio stations.

If broadcasters take to heart the lessons learned from Pandora’s success and apply them, broadcasting will prevail in the digital frontier. Thanks Pandora. We’ll take it from here.

Getting Real: Digital Revenue Reality Check

You probably saw the headlines coming out of the NAB Digital Radio Show: Digital is the future! Most growth will come from digital! Digital dollars growing six times as fast as traditional dollars! Our survival depends on digital!

According to one report:

Investing in exclusive digital content and ramping up sales efforts could increase the percentage of industry revenue derived from digital assets to 10-15% within five years.

You better stop making payments on the Benz.

The truth is that a lack of vision and sales integrity has cost radio far more than it will earn from digital for the foreseeable future.

The graph shows the latest BIA/Kelsey radio revenue projections for broadcast and digital. The company expects radio to come in at a little over $14 billion. Of that total, the company expects that nearly 97% will come from broadcast.

Take a moment to let that sink in.

Digital revenue for radio this year may be over five times what Pandora bills, yet only 3% of radio’s revenue will come from digital. Five years from now BIA/Kelsey expects digital to reach 5%. Imagine!

The only way digital will reach 10-15% is if broadcast revenues absolutely crater.

If broadcast revenues plummet to (say) $8 billion then boosters can celebrate digital’s victory of double digit growth while broadcast groups figure out how to cover a decline of $6 billion of revenue.

The disparity between broadcast and digital revenue is so great that for digital to make up for a broadcast decline of just 1%, digital has to grow 33%.

Growing broadcast revenue by less than 4% generates more revenue than all the money radio makes on digital.

Unfortunately, The Digital Radio Show didn’t have any sessions devoted to the evils of pricing for share, the destructive impact of PPM, or radio’s absence of sales leadership and vision.

Far more lucrative for NAB to sell Info Sessions to those who want to peddle a digital dream.

If Steve Jobs Ran Radio

Apple is the second most valuable company on the planet.

Every product it produces is a technical marvel, yet at the same time simple and elegant. It gets more positive coverage from the media than any other technology company.

Apple now is on top of the world, but it wasn’t all that long ago that the company was struggling. The mid 1980s through much of the 1990s were a dark period for the company. Unprofitable with an aging product line, Apple seemed doomed.

It took a reinvigorated returning Steve Jobs to make Apple profitable again.

Watch a video of Steve Jobs rolling out the company’s newest products. He’s dramatic, he’s enthusiastic, and he deeply believes in Apple’s superiority.

He’s an evangelical partisan. He pokes fun at the competition. He’s willing to stretch a point or two to exaggerate Apple’s strength.

He seems to sincerely believe that every Apple product is born perfect in every way. When talking about his products he uses words like remarkable, awesome, and amazing a lot.

Steve Jobs is obsessed about changing the world, in little ways, and in big ways. He thinks big, and he encourages his people to think big.

His goal is to create products with a big oh wow factor.

Which begs the question, what would Steve Jobs do if he ran radio?

If you want to make something really great, you have to believe in it. He would be just as enthusiastic about radio as he is about Apple.

He would understand and believe that radio can be great again. Reflecting on Apple’s turnaround he said:

Apple was in very serious trouble. Apple had to remember who Apple was because they’d forgotten who Apple was.

Despite what Jobs says, Apple products are rarely perfect. Apple tries to create perfect products, but not until they are in people’s hands can Apple make them better.

There is a myth about Jobs and Apple that they don’t do research, they don’t do focus groups. It helps promote the image of a company that makes perfect things. But it is a myth.

Watch Jobs talk about his products. When describing changes, he invariably mentions user feedback. As you watch the video, count the number of times he says, “users told us....”

Jobs may hate the word research and deny that Apple does research, but he is obsessed about understanding the user’s experience.

Apple relies on a constant flow of information coming from users to modify and improve its products. Call it what you will, it is research, and Apple would be less successful without it.

How else can you explain the evolution of the iPod nano?

Jobs would talk to listeners, not about radio stations, but about the listening experience. Why do you listen to a particular station or format? Why do you tune away, and where do you go?

He would ask about online alternatives and the differences between the digital and analog experience. How do they differ?

Understanding the user is the key to making meaningful changes. Every new generation of an Apple product is incrementally better than the previous one because users told Jobs how to make it better.

Steve Jobs would surround himself with people who believed in radio, who understood the radio experience, and who believed Steve Jobs could change radio for the better.

Radio today is like Apple in 1993, battered, beleaguered, and unsure of itself. And like Apple, radio needs leadership.

Where are radio’s evangelicals? Who among radio’s leaders are unashamed believers who talk about radio as remarkable, awesome, and amazing?

Anyone at the NAB? Anyone at RAB or Arbitron? Any radio group CEO come to mind?

More than anything else, radio needs its own Steve Jobs, someone who believes in radio.

Who will be radio’s Steve Jobs?

Could NAB Botch the FM Chip Any Worse?

When’s the last time you heard Gordon Smith say anything good about radio? When’s the last time you saw the NAB out-front promoting radio, countering the endless parade of moronic musings about the death of radio?

Go on the NAB website. Does that look like an organization that represents the best interests of radio and understands radio’s challenges? At least the NAB quietly killed the embarrassing Radio Heard Here campaign.

Go to the news section and see how many press releases the NAB has issued in the past couple of years pointing out the continued relevance and popularity of radio. You won’t find any but you will find out that the NAB is supporting the US bid for FIFA’s World Cup! They sure have their priorities straight.

Then go to the RAB website, and then the Arbitron website.

The fact is that radio’s leaders have done a terrible job combating the continuing attacks by new-media stakeholders who want to convince Congress, the FCC, mainstream media, venture capital, and the public that radio is on its death bed.

As a result, large numbers of people believe the propaganda. They believe that radio really is irrelevant in a digital world.

Radio’s leaders have let radio slip right off the radar screen. Sure 90% of Americans listen to it every week. Sure they spend as much time with radio as they do the Internet, but somehow that doesn’t matter.

Radio doesn’t matter because radio acts like it doesn’t matter.

So when the NAB and RIAA worked out a backroom deal to require an FM chip in cellphones, of course the pundits went crazy. It just looks like a couple of drowning major businesses trying to stay afloat by climbing on the backs of new-media.

Because the NAB and radio’s leaders never built a consumer-based argument for adding an FM chip, Gary Shapiro of the Consumer Electronics Association could accuse radio of being a buggy-whip business, and get away with it.  

Now at a time when radio needs the goodwill that a sustained campaign of promoting radio could have given it, we have nothing.

This episode–regardless of how it turns out, just further confirms radio’s lack of leadership and radio’s inability to adapt.

Maybe radio really is a buggy-whip business.

Did Radio Leave $7 Billion on the Table?

Seven Billion more dollars.That’s what we estimate radio stations in the top 50 markets could add to their billing if radio used Nielsen numbers rather than Arbitron PPM numbers.

We came up with the estimate after Nielsen released a summary of listening in the 51 markets they survey.

The graphs to the left compare Arbitron PPM, Arbitron diary, and Nielsen sticker diary listening estimates for three key measures: reach (cume), TSL (time spent listening), and AQH (average quarter-hour) rating.

PPM cume estimates are minimally higher than in either Arbitron’s or Nielsen’s diary, but considerably lower in more important measures.

For example, PPM estimates that TSL in PPM markets is a little under 12 hours. In markets still measured by diary, TSL is about seventeen and a half hours, almost 50% higher. Nielsen using their own sticker diary estimates TSL at nearly 23 hours a week, nearly twice Arbitron’s PPM TSL.

The most important measure from a sales standpoint is AQH rating, and here Arbitron’s PPM estimate is nearly 30% lower than its own diary estimates, and 45% lower than Nielsen’s.

Arbitron admits that PPM estimates are lower, which is why it created the misguided 70 is the new 100 sales campaign aimed at media buyers. Their goal was to convince media buyers that they could buy only 70 rating points in a PPM market with the confidence that they were really getting 100 rating points.

We called it Arbitron’s Fuzzy Math back in September  when we first wrote about it. Asking media buyers to pay more for less struck us as a little optimistic and maybe even naive.

No official word from Arbitron on how the campaign is going, but word from our clients in PPM markets is that media buyers don’t buy it. Lower PPM ratings means media buyers demand lower rates.

It stands to reason. Media buyers are not going to pay more for less. In a soft economy, most media buyers are going to try to pay less for more.A radio station switching from diary ratings to PPM who walks in with an AQH rating 30% lower than before is going to get beat up.

Either the buyer will pay less for the same number of points, or get 30% more spots than she got before. In either case, PPM has cost the station, either in cash or units.

What would happen if it turned out that Arbitron’s PPM estimates were wrong?What if radio was actually a 16.5 AQH rating medium that Nielsen says it is rather than the 9.1 AQH rating medium that Arbitron says it is?

Media buyers would have to pay higher rates, or get fewer spots. In either case, radio wins.

Radio wins financially, but equally importantly, it wins psychologically. Lower PPM numbers portray a medium in trouble. The uninformed and those who have a financial interest in perpetuating the myth that radio is in decline can point to Arbitron’s lower PPM estimates and use them to beat radio up.

In 2004 the Radio Advertising Bureau commissioned a study to examine the financial impact of PPM. The study concluded that PPM would create a positive revenue swing of $433 million.

PPM apologists will argue that PPM would have had a positive impact on revenue, but that the recession wiped out the gains. One could as easily make the argument that the transition to PPM exacerbated the impact of the recession and worsened the declines.

What is irrefutable is that since the RAB’s upbeat report on the positive impact of PPM, radio revenue has dropped nearly $6 billion, about 30%.

As we pointed out in our first post on the subject, PPM was already rolling out well before the recession hit. If PPM were going to bring new dollars to radio, we should have seen it then, before revenues started declining across the country. Instead, early PPM markets were already in a tail-spin before the recession.

Admittedly, this debate is what is called a counterfactual. It means we have no way of determining whether radio would have been better off without PPM.

In any case, it is interesting to do a “back of the envelope” estimate of what radio might be billing if PPM markets were instead using Nielsen estimates to sell time.

We estimate that in 2009 the top 50 markets billed about $9 billion. If radio could sell using the 16.5 Nielsen rating rather than Arbitron’s 9 rating, radio could generate up to an additional $7 billion at the same cost per point.

It’s just a guess, but think about the implications. Radio’s down about $6 billion. Where would radio be today if we were a billion dollars ahead instead of $6 billion behind.

Makes you wonder, doesn’t it?

Note: Arbitron does not release national estimates comparable to the Nielsen estimates, so to create the Arbitron numbers we averaged five PPM markets and five diary markets. We've found that market estimates are very similar across markets (in technical terms there is very little dispersion), so a larger sample of markets would not change the results significantly. We hope that one day Arbitron releases estimates similar to Nielsen's so we can fine-tune our numbers. If they do, we'll report them here.

Is Radio Barking Up the Wrong Tree?

Today all the talk is about growing Internet revenue. BIA/Kelsey recently declared:

While traditional media currently dominate the local ad market, a steady shift to digital will continue over the next five years.

So the key to revenue growth is selling more web space, right? Before getting too excited, let’s look at how well the strategy has worked for newspaper.

Last year, newspaper print revenue dropped about $10 billion, to about $24.8 billion. Even online revenue dropped, from $3.1 billion to $2.7 billion.

So despite investing years and millions of dollars to develop an online presence, only 10% of newspaper revenues come from their online product. Despite their efforts, nearly $22 billion of revenue has simply evaporated.

But it is hard to feel too sorry for print. In 2009, local radio revenue was only $13.2 billion. Print is all but dead and buried, and yet the medium was still able to out-bill radio by $11.6 billion in print, and another $1.4 billion online.

Isn’t radio barking up the wrong tree? Why all the focus on growing radio’s Internet revenue, when newspaper print dollars look so vulnerable?

Sure the Internet has all the attention and momentum. It’s the trendy place to advertise. Yes, one day radio may need to count on Internet dollars. However, if newspaper’s experience is any indication, radio will be trading broadcast dollars for Internet pennies.

Maybe in the short run radio should be focused more on taking newspaper’s print dollars.

One of the most theatrical moments of the traditional radio sales meeting has been the sales manager throwing a stack of newspaper ads in the middle of the conference table noting that none of the businesses are buying radio time.

Yet over the first half of this decade radio revenue as a percentage of newspaper revenue barely budged. Radio began the decade generating about 39% of newspaper’s revenue. Five years later as newspaper began to fade, radio was only at 40%.

Today radio is doing better, not because radio is growing, but because newspaper revenue is dropping faster. What would happen if radio made a concerted effort to take newspaper's money?

Radio's hyper-local Internet efforts target newspaper's online dollars, but there isn't a lot of money in it. The real money is targeting newspaper's print dollars.

In 2009, newspaper and local radio together billed $38 billion excluding network radio and online revenue. If we just pulled even with newspaper, radio would be back to the kind of money the medium was billing at the beginning of the decade. Radio won’t achieve that any time soon with online revenue.

 

Traditional Media Begin Push-back. Where's Radio?

After years of touting their digital initiatives, traditional media are beginning to rethink things. The Wall Street Journal recently took note of a new magazine campaign spearheaded by Jann Wenner, creator of Rolling Stone. In a statement that might as well be referring to radio, Wenner wrote:

A lot of us sat back for way too long and listened to all this abuse and said nothing about it. Meanwhile, we sit on top of one of the greatest mediums.

The article adds:

The spark for the campaign was a "manifesto" Mr. Wenner penned last year, in which he said that just as TV didn't kill magazines, the Internet was a threat only to publications that lost focus on what makes magazines unique. "In a certain way, this campaign is aimed at the magazine business itself," Mr. Wenner wrote.

Time Warner's Time Inc., Hearst, Advance Publications' Condé Nast, Wenner Media and Meredith are coordinating a $90 million ad campaign touting the "power of print." Nearly 1,400 pages of the ads will appear in magazines including People, Vogue and Ladies' Home Journal this year. The ads were created by WPP's Young & Rubicam. (Click ad to enlarge.)

The WSJ authors note that:

Amid a decline in spending on traditional media, other industries are making similar pitches for themselves. The Newspaper Association of America has run repeated ads to publicize the number of people who read a daily newspaper. As with the magazine campaign, the newspaper trade group says its ads are designed to counter the notion print is a dead medium.

The local-TV industry's trade group is starting an on-air ad campaign this month to encourage companies to advertise on their local TV stations.

We predicted this last year. All these digital initiatives have done more harm than good. Last November we wrote:

Newspapers responded to declining revenue by drastically cutting print expenses. They fired reporters, consolidated staffs, eliminated whole sections of the newspaper, and in many ways they began producing a print product quite inferior to the newspaper they produced in the past.

They felt the future was online, and to hell with the print product. They plundered their print product to finance their digital push. Did it reverse newspaper's fortunes? No. Now newspaper finds itself with a hollowed out print product and little to show for its digital efforts.

Traditional media is beginning to understand that revenue lost from their core non-digital product cannot be made up for in their digital product. And paying for their digital efforts by diverting money from their core product inflicts damage on both.

We closed the post with this warning:

We believe that if radio continues to debase it's terrestrial product in the belief that all that matters is radio's digital future, it will suffer the same consequences that befell newspaper.

Newspaper, local television, and magazines are all pushing back. Where is radio? MIA. The HD campaign? No one listens to HD and no one cares about HD.

The Radio Heard Here campaign? Hopelessly misguided.

The magazine campaign directly targets the Internet, comparing it to print’s strengths. Radio is still selling against satellite, as if that’s the battleground.

Once again, radio demonstrates why it is not taken seriously.

Having the Guts to Confront the Lies

Traditional radio is dying. How often have we heard that? How many seemingly sincere people say that while intelligent people nod in agreement?

Of course, the factual evidence says otherwise. We’ve recounted the results of numerous studies and listening surveys here, here, here, here, here, here, and elsewhere. Yet new-media true believers simply dismiss all this evidence, arguing (without any proof of their own) that no one listens to radio anymore.

When it comes to the battle between facts and beliefs, beliefs often win. Behavioral research shows that even in the face of overwhelming factual proof to the contrary, many people will continue to hold fast to their misguided beliefs.

Unfortunately, the willingness to accept radio's demise as truth is aided by those who’s financial interests line up with the lie. There’s a lot more money to be made on the radio is dead side.

Television fights a similar battle. New-media pundits dismiss over-the-air TV declaring (contrary to all evidence) that people don’t watch traditional television anymore.

The difference is that while radio seems to suffer from a lack of confidence problem and takes the abuse quietly, television more often pushes back. The latest example is the response to a Forrester forecast. Forrester is a "research" company that peddles pricey studies that often have an upbeat new-media theme.

Advertising Age reports that after Forrester analyst David Cooperstein predicted a decline in television advertising at the recent Association of National Advertisers, CBS Corp. Chief Research Officer David Poltrack (shown above) rose to challenge the prediction. According to Adage, here’s what Poltrack said:

This research says that advertisers are actually pulling money out of television. It is not true. In 2006 when you published this result, Forrester predicted, that 5% to 10% of advertising dollars would be taken out of television in 2007. Television advertising actually went up 4% in 2007. And since 2007, despite the recession, television has increased its share of advertising dollars two full percentage points. So advertisers are spending more of their money on television, not less.

Another account of the moment better conveys Poltrack’s frustration:

He was particularly set off by advertisers' claim (in the Forrester study) that only 41 percent of their media budgets went to TV last year versus 58 percent in a 2008 survey. Poltrack called those figures here "bullsh*t numbers." He added, "For that to happen, if advertising dollars during the recession went down 10 percent, TV advertising would have been down 30 percent. Everyone knows that didn't happen."

A review of Forrester predictions shows a pattern of understating radio and televisions strengths while predicting broad and rapid embracing of new media. The media dutifully print the Forrester predictions without bothering to look back to see how accurate their previous predictions were. (Not very.)

We raised questions about Forrester’s research in August of last year here. The company asserted listening levels were dropping precipitously and in 2009 were less than 7 hours per week. Arbitron’s PPM listening estimate was 12 hours, their diary based estimate was even higher, and both were at the low end of other estimates.

Why isn’t the NAB out front with a truth squad? Where’s the RAB? How about Arbitron supporting radio rather than just bleeding it?

Radio needs people like David Poltrack who are willing to call “bullsh*t” what it is.

Seperating Hype from Reality. A Lesson from Television.

Compared to radio, television has a significant advantage in assessing digital threats. There is a lot more money in television and other forms of video, so there’s a nearly continuous stream of research being done on what Nielsen calls the three screen world (televisions, computers, and smartphones).

In contrast, research on digital threats to radio is spotty and generally limited in scope. If the NAB or RAB had a clue, they might fill the void, but don’t hold your breath.

Fortunately, the television research provides a useful reality check, allowing us to compare the new-media hype to what’s really going on. A new study from Horowitz Associates illustrates our point beautifully.

As reported by MediaPost, a grand total of 2% of television viewing is done away from the television. Out of the 130 hours people watch video, less than three hours is spent viewing it on a computer or handheld device.

The headlines always emphasize the percentage of people using new-media, but to put things into proper perspective, we think a better headline is 98% of television viewing is done the old fashion way: on a television!

Would you have guessed that based on all the hype surrounding YouTube, Hulu, and portable video?

The other significant finding of the study was that those who use a PC or handheld device to watch video actually watch more video. While the average video viewing is 130 hours, those who use a PC watch 139 hours, and those who use a handheld device watch 143 hours.

As we noted here, Nielsen reported the same thing earlier this year. Media consumption is not a zero sum game. As options to consume media increase, so does consumption.

No similar studies have been done on radio, but the evidence suggests that something similar is happening with radio listening. Use of new audio sources is increasing while reach and TSL for traditional radio seems to be holding steady.

Radio’s Chicken Littles are convinced that new alternatives are hurting radio listening, but here is one more study that explains why this isn’t the case.

Radio is So Far Off the Radar Screen

You may have glanced at the headlines regarding the results of a major media study conducted by the Nielsen-funded Council for Research Excellence at Ball State University's Center for Media Design. The study found that the majority of video viewing was still via television. You can find the study here.

In a blog post on the Huffington Post web site, Susan Whiting, Vice Chair and Executive Vice President of the Nielsen Company, described the findings this way:

If you've come across news coverage of the media industry of late, you can be forgiven for believing that audiences are too consumed by their iPhones and the Internet to watch television. These days, suggestions that "TV is on the bubble" might lead you to think consumers are ditching their plasma screens for new platforms. There's just one problem with this — it's wrong. The fact is consumers are watching more television than ever before.

 

The table to the left (click to expand) is taken from an eMarketer article that you can read here. Mediapost reported the story this way.

So what does this have to do with radio?

Radio listening along with a long list of media was measured in the study, but you wouldn’t know it from all the stories. The follow-up reports have all focused on the strength of television or the modest growth in internet video viewing. Nothing about radio.

There are two significant points.

First, as Ms. Whiting points out, media usage is not a zero sum game. Growth in new media usage does not need to come at the expense of traditional media, like radio.

 She puts it this way:

Another misconception among some in the industry is that media consumption is a zero-sum game — with television the potential loser. Yet recent research by Ball State University on behalf of the Center for Research Excellence confirms what we at Nielsen continue to find: that people keep adding more media to their lives without abandoning their TVs.

Consumers may watch television online and on mobile devices — while discussing their favorite shows on Facebook and Twitter — but they also watch more television the way they always have: on their televisions, inside their homes.

And other research suggests that radio is in the same boat as television. Despite all this talk about how Slacker, Pandora, satellite, ad nauseam are killing radio, people continue to listen to radio. The death of television (and radio) is just new media puffery.

The second point is that radio is so far off the radar screen that none of the stories that reported the study findings bothered to even raise the issue of radio. Radio today is absolutely invisible. We simply do not exist in the minds of industry insiders.

And we have only ourselves to blame.

Where are our leaders? Who speaks for radio? This media study was funded by Nielsen. Nielsen is out there pointing out the strength of television. Where is Arbitron? Has Arbitron come to the defense of radio? What study has Arbitron done showing the continued strength of radio?

Where is the RAB? Oh yes, the Radio Ad Lab. That’s their contribution. Engagement, Emotion, and the Power of Radio. This the latest example of how out of touch we find the RAB today. It might have been an interesting study twenty years ago, but radio today is fighting for relevance and a place among our new competitors. We don’t need a geeky academic study. We need to prove that people are still using the medium.

Where is the leadership? Who speaks for radio?

The NAB? Television has always dominated the attention of the NAB. That’s why the NRBA, National Radio Broadcasters Association was created in the 1980s. The NAB ran the NRBA out of business, but maybe it is time for a new radio organization that understands the fight we’re in.

We need leadership. We need someone willing to defend radio and put it back on the radar screen.

 

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?

Radio Heard Here Thinks You’re a Fool

It is only fitting that a misguided campaign such as Radio Heard Here would present equally misguided research to prove the campaign is working. We were highly critical of the campaign when it was announced. You can read our reaction to the campaign here. We have used it several times as a poster child of what’s wrong with today’s NAB and RAB. You can read the latest example here.

Soon after the last post asking why there had been no research on the campaign’s effectiveness, the people behind Radio Heard Here announced the results of a research study that "proved" that Radio Heard Here was working. You can read what little has been released here.

 

You’ll notice that under Overall Results, there are just 13 questions mentioned, only one of which has anything to do with the campaign. Only five questions are tabulated, and even then only broken out by whether the campaign was heard. There is no explanation of methodology, no link to the complete results, questionnaire, or anything else that would give a reader an opportunity to judge the results independently.

 

In other words, this is not an objective effort to show the effectiveness of Radio Heard Here. This is a manipulated attempt to selectively show data that appears to prove the campaign is working. The presentation is so transparently deceptive and misleading that everyone connected with this effort should be fired.

 

If you thought we were too rough on the NAB, RAB, and Radio Heard Here, please read over the results of the study. Then demand your dues back. These people are wasting your money and treating you like a fool.