Throw Out Arbitron

[TakeItFromMe]

radioandrecords.com is worth a read today!

I used to work in Dallas and have watched stations (MIX and others) automate shifts and cut back to meet the bottom line. Seems one of the biggest costs is arbitron, which hardly anyone believes anymore. With PPM my company is struggling to figure out how to pay for the huge increases.

Before Dallas I worked in Syracuse and my former company just threw out arbitron and saved seven air-staff jobs. I know this is odd, but it is worth discussion. Can't we sell radio based on results rather than ratings that are shaky at best? Or use this other ratings service? Kudo's to Galaxy for having the guts to drop arbitron. I am sure they put some dollars to the bottom line, but they also saved some jobs. The article is worth a read and some thought, for folks (like me) that lost their jobs in budget cutbacks. I landed on my feet in Seattle, but many friends are still out of work while arbitron makes millions.

 

[arnoldevns]

I think audience measurement in both Radio and Television is of dubious credibility. In television, Nielsen has a little more credibility with their local people meter service. They still don't measure all the TV's in a household and do a poor job measuring out of household viewing.

Someday someone will come up with a system that can be used for both radio and TV - no matter where someone is watching it.

 

[KPLEXCOMPLEX]

My question is how do you know the results of your station without an independent and objective ratings service? Mere sayso? Arbitron is flawed,no doubt, and regretably many get fired over a poor book,or several. It's a crap shoot. I think some stations manipulate arbitron with their threats of cancelling the service ( ie Clear Channel a little over a year ago),and other means. So do we know they are accurate? Researchers spin numbers and manipulate results as well showing their client in a favorable light in most cases. The competitors are shown being down,then they express a need for a change,when one is most likely not needed.

A better system is needed definitely,but when you have a monopoly,you stay complacent.

 

[djdan]

As an agency rep, that buys across the country, I can tell you that Arbitron is not going away. Remember agencies buy the books too. In the top 40 markets arbitron's PPM will be the standard of measurement, not perfect, but better than diary. Do you really want a 25 year old media buyer in LA making decisions based on "feel?" Ratings are a necessity.

Does in have to be arbitron? In markets 1-40 it is the standard. Under market 40, like Syracuse, there will be no PPM, so going to Eastlan makes some sense. You can save several hundred thousand a year and in markets under 40, that is big bucks! Eastlan is in 100 markets and the numbers look a lot like the arbitron. Good money saving alternative in markets under 40, will never happen in major markets.

 

[317C50KW]

As an agency rep, that buys across the country, I can tell you that Arbitron is not going away. Remember agencies buy the books too. In the top 40 markets arbitron's PPM will be the standard of measurement, not perfect, but better than diary. Do you really want a 25 year old media buyer in LA making decisions based on "feel?"

One of the large problems ARE the agency media buyers (I've bought and supervised the purchase of media myself). They usually are the low rungs of the ladder at most agencies and are treated with the same amount of respect as a lot of radio and TV positions.

They're told what to do and expected to do it. They have no feel for older demographics because their superiors have no feel either.

Large market TV for example gets overnight ratings every night, delivered by 8:30 AM.
Yet the agencies are totally uncomfortable with anything but "sweeps" periods, which is why every November, February, May and some cases July, TV networks and stations go overboard with pablum and tripe. It takes something totally outrageous to pull the kind of numbers today that were standard 10-15-20 years ago.

I'd rather make my advertising decisions on numbers over a 6 to 12 month period rather than "one book."

 

[davideduardo]

My question is how do you know the results of your station without an independent and objective ratings service? Mere sayso? Arbitron is flawed,no doubt, and regretably many get fired over a poor book,or several. It's a crap shoot. I think some stations manipulate arbitron with their threats of cancelling the service ( ie Clear Channel a little over a year ago),and other means. So do we know they are accurate? Researchers spin numbers and manipulate results as well showing their client in a favorable light in most cases. The competitors are shown being down,then they express a need for a change,when one is most likely not needed.

A better system is needed definitely,but when you have a monopoly,you stay complacent.

A random probability sample is the best system available. However, the cost and the failure to get cooperation and returns of diaries makes such a sample each year more "randomless" than random. But the underlying methodology is very solid and very reliable... none better.

Arbitron is audited by the MRC each year. Since the MRC is essentially a committee of the buying community, it wants to insure that the methodolgy, implementation and end results as accurately as possible show where the audience is in each market so advertisers get reasonable value for their money. In addition, any change in methodlogy has to get MRC approval. When you have such a strict compliance requirement, it is hard to envision any discrepan cies.

As to the Clear Channel suggestion, that is absurd. Clear heald out to get addtional services for less money... things like regional ratings. Just like we might hold out for the upgraded radio /CD player in a car we are looking to buy. No chicanery, just negotiation. Since every diary is available for review, the possibility of favoritism or bias is just not there.

The PPM solves the response issue by using a panel. The same people (and far less of them) every week, for up to 2 years. No new diarykeepers (actually, meter keepers) unless somebody stops cooperating or drops off. Perfect stratification variable balance is possible, but we have to realize that the PPM is not really any better at measurement than the diary is... it is just a faster delivery system and it picks up a lot of incidental, 5-minute listening to very secondary station. Other than that, what you have now is as good a system, statistically, as you can get for the money.

 

[davideduardo]

Someday someone will come up with a system that can be used for both radio and TV - no matter where someone is watching it.

The Arbitron PPM measures radio, TV, cable, satellite, internet streams, storecasts, etc. If it produces audio and can be encoded, it is measurable.

 

[Robert Bass]

[EDIT]
[EDIT-inflammatory]

Oh boy, here we go again. it was only a matter of time...

David has a right, just as any other poster here does, to respond to what you or anyone else around here says. To quote one of your aliases, "If you don't like what my posts say, don't read them".

'Nuff said.

R

 

[BigBob]

I agree that the Clear Channel opinion about affecting their numbers is absurd. If you go back to the year when CC held out, Arbitron made the very public statement as to how their financials would be affected. They lowered their earnings to Wall Street. Then when CC came back, they took them right back to where they were before CC held out. If CC got such a great "deal", why would Arbitron take their numbers back to their original level. Especially when you consider what a large percent of their business comes from CC. If there was a huge drop in their price, it would have affected their financials.

I used to run a radio station where we had no Arbitron (or Birch or Accu-Ratings) and sold by "results". The problem with that is...when everyone sells by results (remember, there are no ratings), then lower bidder wins. How many stations do you compete with in your market? Imagine everyone being on the same playing field...with their unique promotions and ideas (I'm being facitious here). Unless you have some way to prove your value is higher than someone else's...and ratings do that...then you need a ratings service to separate the stations. If you don't believe that a credible service is necessary, look at how much local cable television ad rates go for. Nielsen does not do a very good job rating local inserts (yes, they do the networks, but not the local inserts)...and the last time I looked there were not huge money-making opportunities in the local cable ad sales area. Certainly nothing in the programming area.

Let's all count our blessings.

 

[KPLEXCOMPLEX]

Robert:

Please donot "assume". Second I did ask Politely. Third Please don't jump to a conclusion about myself. Thank you

 

[davideduardo]

Let's all count our blessings.

That's the truth. I was in what is now a Top 15 market over 30 years ago when we had no ratings for two years. Market revenues fell by about 50%. Ad agencies said, "well, there is no way to tell how many listeners you have, so you can take our offer or leave it." Obviously, rates fell and it took three to four years to recover once we got ratings (Pulse, at the time). So, it took a total of 5 years to get market revenue back to where it had been in 1973... and 6 years to get any growth. The losses in jobs, salary levels and such were extreme.

 

[redneckriviera]

In markets without Arbitron, radio advertising is bought & sold on relationships more than anything else. That puts a premium on having bright, likeable, customer-focused long term sales people. But in that arena, programming performance becomes a secondary consideration.

In markets where Arbitron is entrenched, having that same kind of sales staff (above) can be helpful, but it isn't critical. The premium is on programming performance--along with marketing & technical competitiveness.

Arbitron's costs are based, at least to a certain extent, on the relative size of a station/cluser's audience. Cume, not AQH. So if sales revenue mirrors programming performance--particularly if programming converts cume into proportionate AQH--those costs stay proportionate to the competition.

In most markets, Arbitron costs--however distasteful it may be to pay them--are not back-breakers. At this point, health insurance tends to be the single largest operational expense. Any company claiming that Arbitron costs are putting them out of business--or blaming Arbitron costs for cutting staff positions--is likely spending too much elsewhere. Like maybe CEO compensation.

Sort of like blaming the kicker for losing a game on a missed 55-year field goal attempt. The rest of the team had 4 quarters to avoid putting him in that spot, but a game full of missed tackles and interceptions are forgotten when the kick goes wide right...

 

[Robert Bass]

Speaking of ratings, what's everyone's consensus about this report from NPR, in particular the part where it talks about Arbitron's methodology flaws as well as how raitings data is based on the "past"?

http://peacockresearch.com/Papers/NPR Guide to Radio Research - Full Report-update.pdf

R

 

[davideduardo]

In markets without Arbitron, radio advertising is bought & sold on relationships more than anything else. That puts a premium on having bright, likeable, customer-focused long term sales people. But in that arena, programming performance becomes a secondary consideration.

But such markets are relatively small. And rates are based on what the market will bear.

Having a wonderful sales staff, beautifully trained and gifted with the best relationships will not help in a competitive, agency-dominated market when there are no ratings. The agencies will simply use the lack of metrics to say, "take it or leave it." And they will impose thier own rate goals.

In markets where Arbitron is entrenched, having that same kind of sales staff (above) can be helpful, but it isn't critical. The premium is on programming performance--along with marketing & technical competitiveness.

Even in the largest markets and with high percentages of agency transactional buys, salesmanship is critical. I have seen top 5 stations in the biggest market in the US go from 20th in billing to half that with a change to better sellers and better sales management.

Arbitron's costs are based, at least to a certain extent, on the relative size of a station/cluser's audience. Cume, not AQH. So if sales revenue mirrors programming performance--particularly if programming converts cume into proportionate AQH--those costs stay proportionate to the competition.

No, this is not so. Arbitron rates are based on market.

Sales revenue seldom exactly mirrors share, and NEVER mirrors cume. Agencies don't buy cume.

In most markets, Arbitron costs--however distasteful it may be to pay them--are not back-breakers.

Yes they are. And they are increasing 60% in PPM markets starting next year.

At this point, health insurance tends to be the single largest operational expense.

Not even close. Biggest single expense is sales commissions, and then there are items like music licencing, salaries, rent, etc., which are much more than insurance.

Let's say that insurance is, in a group package (and this is higher than I could get individual insurance for myself) $10,000 a year and an Dallas station has (per station) 35 employees. That is $350,000. On the average billing of the top 20 stations (around $17 million each) ASCAP and BMI and SESAC are about $400 k. Rent will be in the same range, including studios and transmitter. Sales commissions may be as around as $2.5 million, including sellers, reps and agency cuts. Arbitron is more than the (exaggerated) health care scenario I present.... In fact, the manager may make (at a cluster) more than the sum of th ehealth care cost.

Any company claiming that Arbitron costs are putting them out of business--or blaming Arbitron costs for cutting staff positions--is likely spending too much elsewhere. Like maybe CEO compensation.

In most markets, it is likely that the Arbitron costs are greater than the manager's salary. It is a big amount.

Sort of like blaming the kicker for losing a game on a missed 55-year field goal attempt. The rest of the team had 4 quarters to avoid putting him in that spot, but a game full of missed tackles and interceptions are forgotten when the kick goes wide right...

Whatever.

Please try to inform yourself about the real costs of running a radio station. You assumptions are very flawed.

 

[davideduardo]

Arbitron's costs are based, at least to a certain extent, on the relative size of a station/cluser's audience. Cume, not AQH. So if sales revenue mirrors programming performance--particularly if programming converts cume into proportionate AQH--those costs stay proportionate to the competition.

No, this is not so. Arbitron rates are based on market.

And I should have added, based on billing. So within a market, rates per station are based on billing. A station with top billing will pay more than a low billing AM daytimer (who probably will not subscribe anyway). My point, which I did not calrify well enough in the first post, is that ratings costs are not based on how MUCH audience you have but on a combination of market size and station billings... not listenership.

 

[redneckriviera]

David--

Whew, you've give me a pretty good butt-kickin'--sorry to have intruded. In fact, the only reason I crashed your party was that the moderators used this thread as a headline--for all participants in all markets.

But I'm far from a rookie. I've been an Arbitron customer--as GM, Market Manager, COO & owner--in markets #45 & smaller for 30 years; never had the pleasure of working in major markets, where--no argument--things are different. Bigger buildings. More traffic. Bigger money.

Beyond that, in considering expense, I was admittedly thinking beyond payroll.

In the six-station cluster I currently run in a small rated market, health insurance is the largest single expense-- more than music licensing... more than Arbitron. But this is BFE, not DFW. And we have a lot of humans running around. I suppose firing a bunch of them will solve the health insurance problem, huh?

My sincerest apologies. It won't happen again.

Oh, one more thing. Great salesmanship does make a difference in any market. If the buyer likes you and hates the other guy, she'll buy you if the numbers are close. But if you're pushing zeros in a rated market, nothing short of major bribery--in whatever form--is gonna get you the buy.

 

[davideduardo]

David--

Whew, you've give me a pretty good butt-kickin'--sorry to have intruded. In fact, the only reason I crashed your party was that the moderators used this thread as a headline--for all participants in all markets.

I appologize If I came across as rude. In fact, I do agree with your main point... anyone who blames the cost of Arbitron for not being able to have a staff will not do well in Arbitron anyway! You have to invest in the product, and then use ratings to show the value of advertising to the customers.

But I'm far from a rookie. I've been an Arbitron customer--as GM, Market Manager, COO & owner--in markets #45 & smaller for 30 years; never had the pleasure of working in major markets, where--no argument--things are different. Bigger buildings. More traffic. Bigger money.

I have pretty much the same set of titles but in markets of, mostly, over a million, untill I managed to find a programming related position with a group that allowed me to spend 100% of my time on my favorite part of radio. Strangely, I built my first station just so I could also be the PD.

In the six-station cluster I currently run in a small rated market, health insurance is the largest single expense-- more than music licensing... more than Arbitron. But this is BFE, not DFW. And we have a lot of humans running around. I suppose firing a bunch of them will solve the health insurance problem, huh?

You must give exceptionally good benefits for that size market. I am seeing more and more smaller markets pushing off a bigger percentage of insurance costs onto the employee. Unfortunately, the bigger companies have a cost advantage in getting the best insurance rates.

My sincerest apologies. It won't happen again.

None required. It was probably my tone that was inappropriate.

Oh, one more thing. Great salesmanship does make a difference in any market. If the buyer likes you and hates the other guy, she'll buy you if the numbers are close. But if you're pushing zeros in a rated market, nothing short of major bribery--in whatever form--is gonna get you the buy.

Absolutely. No more than good sellers can not make a bad format viable can bad sellers optimze good ratings. And maybe the hardest thing is avoiding arrogance when you have good numbers, as they buyers and clients will spénd a good part of their time figuring out how to buy around you. When I have been GM or GSM, I would make the time to visit 3 or 4 clients a week to just insure that our service and performance was as good as we were capable of giving. Since few stations do this, it built up a lot of goodwill, and the sellers knew that satisfying the client was my biggest concern. I think this is more common in smaller markets, but the hot shots in the bigger ones seem to think they deserve to get a buy!