Radio InSights

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

2013-05-17T12:20:56-04:00

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.

Humpty Dumpty & the Meaning of Local Radio

2013-04-14T17:45:49-04:00

“When I use a word,” Humpty Dumpty said, in rather a scornful tone, “it means just what I choose it to mean--neither more nor less.”

With that attitude, Humpty Dumpty might have been the first new-media pundit. Like Humpty Dumpty, new-media types take delight in twisting the meanings of words to illustrate their more evolved view of the world.

An example is the word local as in local radio.

Three years ago one pundit proclaimed:

There is no longer any such thing as "local" as we traditionally use the term....The definition of "local" is both expanding and shrinking at the same time.

At the time we declared it new-media rubbish.

Now Seth Godin has essentially rewritten the piece, writing:

We're discovering that when given the chance, people are a lot more interested in what they're interested in, as opposed to what their physical neighbors are doing. Going forward, then, the real kings of media will be local in a totally different sense.

Humpty Dumpty would be proud.

Godin first fabricates a past, and then declares that the future will be different from this fabricated past. And finally he redefines the word local based on this fiction.

Seth has essentially doubled-down on the original new-media rubbish about local changing, not only redefining local radio, but also distorting the notion of community.

Both the original and this copy-cat post are committing the biggest mistake that new media pundits make.

They believe that delivery systems are more important than content. They then compound the mistake by believing that new delivery systems will change what people want and value.

None of the new-media delivery systems have replaced local radio because local radio is local because of its content, not the location of its transmitter.

Yes, today it is primarily delivered through local broadcast facilities, but that is because broadcast is the means by which the majority of local media consumers want it delivered.

One day a majority of listeners may want it delivered a different way, and local radio will have to change the way its content is delivered.

Radio critics keep claiming that the latest new media product whether Twitter, Pandora, Facebook, Craig’s List, or some other new product will make local radio less relevant and ultimately render local radio obsolete.

Yet radio keeps hanging in there defying a decade’s worth of new-media death notices.

And local radio will continue to defy the critics’ predictions as long as it ignores these self-serving criticisms.

The only way that local radio could become less relevant is if radio lets it happen.

Those within the radio business who advocate homogenized centralized voice-tracked radio in the belief that local no longer matters will pay a price as long as there remains broadcasters who understand the value of real local radio.

This latest Godin effort only serves to illustrate how little new-media pundits understand about traditional media’s strengths.

But then again, why should we be surprised? He doesn’t even understand his own business.

False Prophets & the Future of Radio

2013-04-02T15:59:03-04:00

The future is a scary thing, full of unknowns and the unknowable.

That’s why pundits who claim to know what the future holds are so popular.

And predicting the future is a great business to be in. Just write a book saying everything is going to change.

Tell people that everything they’re doing is wrong, and make up a bunch of stuff on how things will be in five or ten years.

Radio people are particularly vulnerable right now because the industry seems so unsure of itself.

Consolidation, digital threats, and a soft economy have all conspired to create tremendous uncertainty in a business that was riding high just a decade ago.

New-media pundits exploit this fear by telling radio that it has it all wrong.

They tell us that no one takes radio seriously anymore. They tell us young listeners are abandoning radio, and will never come back.

They tell us that the very notion of sending radio waves through the air is antiquated and oh so obsolete.

New-media prophets tell us that everything must change if radio is to survive.

One such prophet is Seth Godin.

The author of Purple Cow and a dozen other books has become a popular go-to guy for radio critics looking for some sound-bite worthy comments to show how screwed up radio is.

As one radio person recently noted, “I’m more convinced than ever that Godin truly “gets” what we’re going through as a business.”

Before concluding that Godin “gets it,” maybe the industry should take a look at his track record.

As a highly successful author, you might think that Seth understands publishing and where it is headed.

So in 2010 when he declared he was finished with “traditional” publishing, many took note. Here’s how he explained the decision:

I've decided not to publish any more books in the traditional way. I really don't think the process is worth the effort that it now takes to make it work. I can reach 10 or 50 times as many people electronically.

Seth was through with what he called “the 1907 version of hardcover publishing.”

Good for him.

Seth was walking the walk.

He was doing what he was telling others to do, to abandon all the trappings and entrapments of traditional media and embrace new technology.

It lasted a single year.

One year later he announced that the “experiment” was over. Mission accomplished.

It didn’t sound like an experiment when he made his big announcement. He said he was through.

But today walk into a Barnes and Noble bookstore and you’ll find that Seth has a new book out. Several, actually.

And they are printed hardcover books published by the Penguin Group, the second largest publisher in the world.

What happened?

Seth’s vision of the future ran headlong into the reality that despite all the hype surround new-media, consumers and the big bucks they generate are still in traditional media.

He found that he could make a lot more money publishing books through a traditional publishing company using that old “1907 version of hardcover publishing.”

As you read Seth's solutions for radio, keep Seth’s personal experience and change of heart in mind.

He talks about radio a lot like he talked about publishing. He talks about new thinking and new-media opportunities, and abandoning the old ways.

His new ideas caused Seth to misread the future of his own business so badly that he had to reverse himself in a single year.

Can we really believe that his advice to radio is going to be any more sensible? Or practical?

Seth Godin is one new-media prophet that tried to walk the walk–-and failed. That’s one set of footsteps that radio should not follow.

Fourth Quarter Format Round Up

2013-01-15T16:05:18-05:00

Our fourth quarter analysis of Share for the months of October, November, and December compares the Share average for the three month period against the Share average for the same period last year on a station by station basis. We group stations by format and analyze the format performance overall.

News Talk

There were big hopes for News Talk in Q4 due to the 2012 election cycle. As expected, we found quite a jump in Share among spoken word formats, with News Talk Information and Talk/Personality stations showing the most growth. While the overall performance of News Talk was not a surprise, it was surprising to see a majority of the growth coming from NPR affiliates rather than stations with more Conservative leaning programming. News Talk gained just over a quarter of the growth shares.

Urban Formats

Urban formats also saw growth in the fourth quarter, gaining over a quarter of the growth shares. Urban Contemporary had the biggest gains.

Christian/Religious Formats

Heading into the holiday season, Christian and religious formats gained just under a quarter of the growth shares. Christian AC, Contemporary Christian, and Contemporary Inspirational formats performed very well overall.

The Fallen

Rock, Country, and Rhythmic formats fell overall, with AOR and Classic Rock taking the biggest hits of the quarter.

Percent change in share Q4 2011- Q4 2012

On-Line Listening Growth Anemic. Maybe Even Declining.

2012-11-13T11:19:55-05:00

The latest on-line radio ratings raise serious questions about the future of digital radio.

Aside from a couple of exceptions, on-line listening growth is at best anemic, and in some cases even declining.

Broadcast groups that are betting everything on streaming and an app may be making a very bad bet.

In 2010 Radio Insights introduced Hours-Tuned in order to create a metric that would enable the industry to compare broadcast and streaming listening levels. Hours-Tuned tells us how many hours of listening a station attracts.

Think of it as a measure of the total “consumption” of a radio service.

Hours-Tuned illustrates the fact that when it comes to on-line radio, there’s Pandora and then there’s everyone else.

Pandora alone makes up 75% of listening reported by Triton Digital. Not only does Pandora dominate Triton ratings, the service’s share is increasing, up from 66% a year ago.

But even Pandora’s growth is slowing. The first graph at left shows the monthly year-over-year percent change in Hours-Tuned for Pandora.

After six months of triple digit growth, Pandora growth has dropped precipitously. It’s still considerably higher than most other services, but well off the pace of earlier this year.

On top of that, Pandora is one tide that isn’t lifting any other boats.

The second graph better illustrates what’s happening at many streaming services.

After fourteen months of slow steady growth, AccuRadio went into reverse, losing total hours.

For seven months now, year-over-year Hours-Tuned comparisons have been negative, with the decline accelerating. (Note the difference in scale compared to the Pandora graph.)

Even a brand like ESPN isn’t immune from this trend.

The ESPN graph below isn’t pretty, with twelve of the last 16 months showing negative growth in consumption of ESPN streaming.

Clear Channel is the best performing broadcast group, but it too is showing decelerating growth. It’s growth rate is similar to Pandora’s but with a fraction of its total hours of listening.

Total Hours-Tuned for the top twenty streaming services has increased 54.5% in the past year, but most of this is Pandora.

If we take Pandora out of the picture, streaming hours have only increased 11.9%, not exactly robust growth.

Terrestrial groups have grown 8.3% in the past year, but this too is distorted by one outlier, Clear Channel. Take Clear Channel out, and terrestrial radio stream listening has declined 24%.

One of the problems in analyzing long term Triton Digital trends is the many changes that have taken place within services.

For example, CBS numbers included AOL listening until AOL moved to Slacker. The move led to an immediate decline in CBS numbers, and a gain for Slacker. Since then CBS has added Yahoo.

Interestingly, the combined listening of CBS and Slacker today is 28.4% lower than a year ago.

The September change in Hours-Tuned for several groups are summarized at the left. The numbers do vary somewhat from month to month, so the numbers might be different next month but the trend is unmistakable.

Aside from Pandora and Clear Channel, on-line listening growth is at best anemic, and perhaps even declining.

When we recently noted the precipitous decline in on-line listening spans, new-media pundits and stakeholders rose up to challenge the numbers.

One declared:

In fact, while ATSL is declining as people migrate to mobile, their number of SESSIONS per week is increasing at a FASTER rate, so that total Internet radio listening hours per consumer per week (or per month) -- i.e., TSL -- is INCREASING, not decreasing.

It sounds reasonable, but it isn’t true.

Hours-Tuned takes into account both ATSL (time per session) and Sessions, and total hours are declining for many services.

Pandora and Clear Channel are both growing, but over-all listening growth is slowing, and some services are declining.

The rosy new-media narrative of nearly infinite Internet radio potential might sound great, but the numbers paint a very different picture.

Streaming is becoming a game with many more losers than winners.

Pundits like to point to Pandora and its death-defying success story as proof of Internet radio’s inevitable dominance.

But we heard similar stories about on-line gaming and daily deals.

Is Pandora another Zynga or Groupon? These are each category leaders with what seemed like limitless possibilities.

Now Zynga is a $2 stock (down 88%) and Groupon is a $3 stock (down 89%). Meanwhile Pandora has fallen to $8, a 60% decline.

Are the declines in listening just confirming what Wall Street has already figured out?

Will iHeartRadio Kill Radio?

2012-10-29T16:42:00-04:00

Is iHeartRadio an apocalyptic doomsday machine that will ultimately destroy broadcast radio as we know it?

Or is iHeartRadio a gateway to radio’s salvation, radio’s best chance to remain relevant in a digital world?

The rate at which Clear Channel is signing up new radio groups suggests that many believe the latter.

But is iHeartRadio really the answer?

Broadcast radio’s greatest strength is a station's strong link to its community.

Radio’s local link is the medium’s most potent weapon in the battle for a listener’s heart and soul.

That personal connection between a listener and her radio station is something that national radio (both digital and analog) fails to understand, and can’t duplicate.

Yet iHeartRadio’s very essence diminishes radio’s local roots.

The service neuters local radio, homogenizing radio into interchangeable undifferentiated lumps of similarly formatted radio stations.

Don’t want to listen to New York’s Z100? We’ve got another dozen stations just like it a click away.

Were these choices really different, it might mean something, but the service offers choice without distinction.

Too often one hears the same national playlists, and the same national personalities talking about the same national contests with the same national promos.

The growing interchangeability of stations across the country is all that more apparent with the convenience of iHeartRadio. A listener is just a couple clicks away from hearing the same thing on dozens of stations.

The message of iHeartRadio is that unique local radio is dead. All local radio stations are interchangeable.

The impact of iHeartRadio is to take local radio’s insurmountable advantage, its local connection, and destroy it.

The message to listeners is that local radio is no better than anonymous generic national radio dispensed by an algorithmic driven computer.

In an effort to demonstrate that an aggregation of local stations is just as good as a national service, iHeartRadio inadvertently proves that local radio is just as bad as a national service.

Why else offer a Pandora look-a-like?

Yes, Pandora is the darling of new-media pundits, those people who can’t understand why anyone still listens to local radio.

Yes, Pandora has been growing exponentially armed with an endless array of metrics that suggest seemingly unstoppable momentum.

But the truth is that Pandora is losing money, and shows signs that it might be incapable of making money.

Last year Pandora proudly generated $240 million is sales. Broadcast radio stations generated over $400 million--in digital sales alone.

Why would a leader in an industry currently billing nearly twice the digital revenue of Pandora want to promote a Pandora-like feature, and do it on local broadcast stations at saturation levels?

iHeartRadio is just one of a number of industry actions that claim to be an effort to save radio, but instead may have the opposite effect.

Radio Insights believes this is an important issue that potentially impacts every radio station, and ultimately how local radio is viewed.

We question the wisdom of radio’s obsessive rush to focus on digital platforms, especially when they emulate trendy but failed and failing business models.

The growth of iHeartRadio could metastasize into something quite deadly for broadcast, a possibility that every broadcaster should understand.

That’s why we’ll have more on iHeartRadio and what it says about radio in the coming weeks.

Stay tuned.

Smart-Phone: Radio Salvation or Another Nail in Coffin?

2012-10-22T16:28:55-04:00

Over half of cell phones sold in the US are now smart-phones like iPhones, Androids, and Blackberry.

If the trend continues, one day virtually everyone will be able to listen to radio where ever they go.

While some have heralded this development as a huge opportunity for radio, the growing use of smart mobile devices may be at best a mixed blessing.

The reason is that compared to listening on a radio or computer, mobile listening-spans are dramatically shorter. And shorter listening-spans makes radio time harder to sell.

Even Pandora is not immune to the impact.

While Pandora regularly crows about all sorts of new records like number of subscribers, or session starts, the service never mentions TSL, the amount of time users spend with the service.

Maybe that’s because while Triton Digital ratings show average sessions and session starts growing, TSL, the average length of time a person listens to Pandora, is headed in the opposite direction.

The graph above traces Pandora’s TSL for the past three years.

In 2009 Pandora TSL was about an hour. At the time only computer listening was included in the ratings.

Then in December 2009 mobile listening was added to the service’s ratings for the first time.

Pandora TSL immediately started dropping. In just four months TSL plummeted to just 46 minutes.

Aside from a few positive months in late 2010, the service’s TSL has continued its steady erosion throughout 2011, even accelerating towards the end of the year.

Today Pandora TSL is down to 38 minutes, a loss of 34%.

The precipitous decline in TSL coincides with a dramatic increase in the number of users listening on smart-phones and iPads.

As Business Insider points out:

While 88 percent of Pandora's listening hours came from desktop use in Q1 of 2010, by 2012, users spend (sic) 70 percent of their time on Pandora listening on their mobile devices.

On a computer one can listen to their favorite station as they continue to do other work on the computer.

Multitasking on a mobile device is much more problematic than on a computer. And if one is using the phone to make and answer phone calls, listening to radio for any length of time isn’t going to be practical.

So it stands to reason that TSL will decline as more people listen on mobile devices.

Is TSL for broadcast streams following the same pattern? Sure is.

Harker Research tracks broadcast streams measured by Triton Digital, and broadcast streams are suffering a similar decline.

The second graph above reflects the combined TSL of 12 broadcast groups for which we have multi-year trends.¹ In the beginning of 2010 the combined TSL was over 35 hours, nearly three hours per radio group.

By 2011, the combined TSL was down to 24 hours, and today it is down to 16 hours, a decline of over 50%, a decline even greater than Pandora’s.

And what about Bob Pittman’s Clear Channel Communications, leading the digital charge with its iHeartRadio app?

As measured by Triton Digital, Clear Channel is the worst performing streaming service in terms of TSL, and one of the worse performing in terms of its decline.

The third graph tells the story.

Two years ago Clear Channel average sessions consistently lasted over an hour, some months exceeding 82 minutes.

As of August, TSL had fallen to 32 minutes, a decline of 61%.

If the time spent with mobile devices continues to grow at the expense of traditional computer use, we can expect TSL to continue to decline.

And that could cost radio a lot.

For Pandora who started with zero listeners and zero dollars in sales, the growth in audience more than makes up for the loss of TSL per user.

A loss of TSL for broadcast radio can’t help but hurt revenue.

Radio already reaches more than 90% of Americans. There is no more room to grow cume audience.

To grow AQH and revenue, broadcast radio has to increase TSL. And TSL is headed in the wrong direction.

Radio took a financial hit when AQH ratings dropped in the markets that switched to PPM.

Streaming is likely to be another financial hit as AQH ratings decline even further as people replace their radios with mobile devices.

Think about that next time you hear a promo for iHeartRadio.

¹The 12 groups are Cox, Cumulus, EMF, Emmis, Entercom, ESPN, Greater Media, Hubbard, Radio One, Salem, Townsquare, Univision. Neither CBS nor Clear Channel are included because of their non-broadcast streams.

Dance With the One That Brung Ya

2012-10-11T11:42:15-04:00

If you ran a company that produced two products, one that delivered more than 95% of your revenue, and a second that delivered less than 5%, which would you give more attention to?

Probably the one that produced nearly all the company’s revenue. Right?

And which product would you invest in more heavily? The one that makes all the money, or the one that doesn’t?

You’d want to invest in the product that makes 95% of your revenue, wouldn’t you?

Then why is radio cutting broadcast budgets to finance its digital follies? Why is the cash cow being sacrificed to compete with digital services that make no money and probably never will?

Revenue figures for the first half of 2012 are in and they look pretty much like the hypothetical company we’ve described. The graph below shows first half revenue.

Broadcast spot revenue came in at $6.8 billion, while digital, that tiny orange sliver on the graph, totaled less than $400 million.

In other words, running broadcast spots generated nineteen times the money radio got from digital.

(And rumors persist that groups are fudging the digital numbers to make streaming look more successful than it is.)

On top of that, digital growth has slowed. Digital only increased an anemic $22 million over the same period in 2011, an increase of only 4.7%.

At this growth rate, digital won’t surpass broadcast spot revenue until well into the 22nd century!

Compare those number to the darling of digital radio, Pandora.

Pandora closed its 2012 fiscal year proudly bragging about its advertising revenue of $240 million. Last year broadcast radio stations generated $709 million in digital sales, nearly three times as much.

Broadcast radio continues to be a huge financial success, generating margins that the NAB’s former president David Rehr once declared obscene.

Pandora, the focus of digital boosters, the subject of countless new-media success stories, has yet to make a profit, and admits it may never make a profit.

Yet broadcast radio is obsessed with growing digital dollars to prove it is just as good as Pandora.

And radio is financing this Don Quixote-worthy effort by diverting dollars that should be invested in the local broadcast product.

Yes, radio may ultimately become a product primarily delivered via computer and smartphone, but if its product is debased in a rush to be just as good as Pandora, then no one will listen to it no matter how it is delivered.

Dance with the one that brung ya is a reminder that no matter how tempting a new alternative might look, one shouldn’t forget the thing that got you there in the first place.

Radio makes those obscene profits by delivering a local product that meets the wants and needs of listeners who live in the same community.

If radio starts to ignore its local roots and historical connection to the communities it serves, then it may succeed in equaling Pandora-–as a failure.

Beating PPM Easier Than You Think

2012-09-19T15:50:24-04:00

Which strategy is better: One that has an 87% chance of growing your share, or one that might have an 8% chance?

That’s an easy call. You’d pick the 87%, right?

Then why are programmers focusing on the 8%?

Arbitron looked at PPM ratings across all 48 markets and showed that Cume is far more important than TSL, roughly ten times more important in gaining share.

Yet all the focus has been on TSL, trying to get people to listen more often.

It doesn’t work. Arbitron proved it. Harker Research confirmed it.

Our recent post The Myth of PPM Occasions showed that all stations have pretty much the same Time per Occasion, and that numbers of Occasions is a lousy predictor of share.

Some poorly ranked stations have plenty of Occasions, and some successful stations have relatively few Occasions.

With PPM, the key to success is Cume.

But don’t take our word for it. Arbitron found the same thing.

Take a look at this table from Arbitron’s Key Indicators of Hightly Rated PPM Stations (PDF).

It compares 25-54 metrics across all 48 PPM markets for average stations, the top three ranked stations and number 1 stations.

Notice that top stations have over five times the share as average stations, but TSL is only 30% higher. The real difference is Cume.

Top stations have over five times as many Cume listeners as average stations.

Five times the Cume listeners. Five times the share. Coincidence?

Comparing average stations to #1 stations isn’t very useful, however. The average includes a lot of stations that have no chance of challenging market leaders.

We think the comparison between top 3 stations and #1 stations is more useful, because to challenge the top dog, you have to be within striking distance.

Notice that there is no difference in TSL between challengers and #1 stations. None. Both Time Spent per Occasion and Daily Occasions are virtually identical.

The only difference is Cume. Top Dogs have 16% more listeners than the challengers.

The report is from 2011, but Arbitron continues to tout Occasions despite little evidence that Occasions matter.

At the latest Conclave Arbitron updated its analysis, once again comparing average, top three, and #1 stations.

And once again Arbitron’s data confirmed the relative unimportance of TSL in determining PPM ratings. Number one stations had 9% more Occasions (a whopping half Occasion per day) over average stations.

The far greater difference was in Daily Cume, where #1 stations had 70% more listeners.

But the notion that the key to winning is increased Occasions still won’t die. Reflecting on the latest data, one pundit noted:

The updated study reinforced that "how often" has replaced "how long" in driving TSL.

As if either matters when it comes to PPM.

Unnoticed was the fact that Occasions for #1 stations declined in this year’s analysis. In 2011 top stations had 5.3 Daily Occasions. Today #1 stations have only 4.7 Occasions, an 11% decline.

So a year after Arbitron declared that:

Getting people to listen longer was Old School. New School is to get people to listen more often.

And radio excitedly responded with a flurry of efforts to grow appointment listening, Occasions for top ranked stations in PPM markets actually declined.

So much for that idea.

Do you want to gain share? Do you want to beat your competitor? The only way to do it is to grow your audience. Focus on Cume.

The Myth of PPM Occasions

2012-09-06T13:22:15-04:00

One of the most entrenched ideas on how to win at PPM is the belief that increasing Occasions, the number of times a person listens to your station, makes a difference.

But is it really true? Is the key to growing share increased appointment listening?

The notion that Occasions is the key to winning at PPM is based on a well-intended, but ultimately misguided, Arbitron analysis of PPM called Key Indicators of Highly Rated PPM Stations (PDF).

Asserting that No One Wants to Be Average, Arbitron compared average station metrics to highly rated stations and declared:

Getting people to listen longer was Old School. New School is to get people to listen more often.

Thus was born the oft repeated (but never tested) mystic power of Occasions and appointment listening.

We recently collaborated with a skeptical client who wanted to better understand the relationship between occasions, listening spans, and share.

The Arbitron study looked at formats across markets, but our client just wanted to look at their own market.

After all, you compete against the other stations in your market, not similarly formatted stations in the other 47 PPM markets.

We looked at the relationship between share and three measures of listening: Occasions, Time per Occasion, and daily cume.

Three graphs shown here tell the story.

The first graph shows the relationship between share and listening spans, Time per Occasion (TpO). Each square represents a station.

Share is shown on the vertical axis. The larger the station’s share, the higher the square appears on the graph.

Time per Occasion is shown along the horizontal axis. Stations shown towards the right have higher TpO, while stations towards the left have lower TpO. The actual numbers are irrelevant, it is the direction of the numbers that matter.

Notice that nearly all the stations are stacked on two piles. The two piles represent 9 and 10 minute listening spans.

This means that nearly all of the stations in this market have virtually identical listening spans.

Arbitron found the same thing in their national study.

Arbitron found that the average listening spans for pretty much every station in every format is the same, either 9 or 10 minutes each occasion.

This curious identical listening span pattern has been repeatedly reported by Arbitron, yet it has generated virtually no curiosity, no discussion.

How can it be that the listening spans of every format from Classic Rock and AC to CHR, Country, and All News are all within a minute of each other?

Is this reasonable? Is it possible that virtually every format has the same listening span?

We’ll save this topic for another time, but give that some thought.

In any case, if it is true that listeners to every station in every format across all PPM markets listen the same length of time, the only way to increase TSL is by increasing Occasions.

Using that logic, we should find that higher ranked stations have more Occasions.

Take a look at the second graph. Based on Arbitron’s assertion, we should see stations arranged in a sort of diagonal cloud moving from lower left to upper right.

The stations with smaller shares would have fewer occasions and would appear in the lower left, while stations with larger shares would have more occasions and appear in the upper right.

We don’t see that. Stations are all over the place.

Some poorly rated stations have many more Occasions than much higher rated station. And some highly rated stations have very few Occasions.

Arbitron’s assertion that winning stations have more Occasions turns out to be untrue when we look at stations across formats in a specific market.

So much for appointment radio.

Then how do you grow share? What’s the secret? The answer can be found in the third graph.

The graph shows the relationship between share and daily cume. As with the other two graphs, share is shown vertically, while cume is shown along the bottom.

Notice that unlike the other two graphs, the cloud of stations cluster around a diagonal line. Small cume stations also have small shares, and stations with larger cumes have larger shares.

Things get a little strange towards the top, but in this market ethnic FMs and heritage AM stations distort the relationship at the upper end.

So here’s the real deal: With PPM, the only reliable sure-fire way to grow share is to grow cume.

To Arbitron’s credit, their analysis does mention daily cume as a key driver, but somehow that got buried in the excitement over Occasions.

Rather than a New School revelation about how to win at PPM, the answer to growing share turns out to be decidedly Old School.

To grow share in PPM, you have to grow your audience. You need more listeners!

Keep that in mind when you start budgeting for 2013 and corporate red-lines your marketing budget...again.

Radio’s Great Schism: Two Visions of Radio’s Future.

2012-08-24T15:40:03-04:00

There was a time not long ago when radio broadcasters were united sharing a vision of a vibrant industry full of opportunity and potential.

The recession and new-media’s growing threat has fractured this shared confidence, creating radio’s Great Schism. Today radio’s leaders are deeply divided by dramatically different visions of radio’s future.

One vision sees broadcast radio entering its sunset years. This mind-set believes that new media’s assault will prevent radio from ever recovering its former glory.

Those who share this vision believe the best is behind radio.

With a dark foreboding future facing the industry, they believe that radio’s past necessities are today’s luxuries.

Local program directors, live announcers, marketing budgets, and the other tools that every station once used to drive ratings are expenses that this faltering business can no longer afford.

Every traditional medium making the transition to digital has seen significant declines in revenue, so why would radio be any different?

As we noted in 2010 in the post Digital Dimes for Broadcast Dollars:

Even if we use the most optimistic newspaper numbers to estimate radio's future digital revenue outlook, there's still a good chance that local radio, once a $20 billion industry, will become a $6 billion industry.

If one believes that streaming will ultimately replace broadcast radio, then there’s no choice but to dramatically lower costs.

This realization is perhaps why large public groups in particular have chosen to cut expenses by abandoning radio’s unique historical strength as a personal local medium.

They believe radio’s economic survival depends on it.

But what if this pessimistic vision of radio’s future is wrong?

There are those who see radio entering a new transformational phase. While radio has faced challenges from new media in the past (and predictions of its imminent demise), it has survived by creating new products that revolutionized radio.

Believing that radio’s past is its prologue, broadcasters who hold this more upbeat view of radio’s future continue to invest in the broadcast product, with local talent, entitled local program directors, and respectable marketing budgets.

The hope is that good local programming will enable radio to hold on to its broadcast audience (along with their much higher cost per point value), while at the same time giving the industry time (and money) to develop new digital products.

We were reminded of these differing visions as we surveyed the results of a Harker Research ratings analysis looking at radio group ratings success rates.

As we reported in the post Does Radio Group Size Help or Hurt Ratings?, taking into account group size, the most successful groups are not the largest.

Presumably with greater resources, one would expect the largest groups to have the highest proportion of winners, but that isn’t the case. Smaller groups with more limited resources are outperforming some of the largest groups.

Companies like Hubbard and Cox manage to win in more markets, despite competing against much larger groups.

Obviously there are many factors that go into a radio group’s ratings performance, but could it be that smaller groups are approaching radio’s challenges differently? Are they more optimistic that radio can remain masters of its own future? More willing to invest?

It will be years before we know which vision of radio’s future is the right one. The tell-tale sign will be whether future rating winners are the homogenized products of central planning, or local radio stations that take the slogan live and local seriously.

If radio’s optimists are right, and the pessimists preparing for radio’s sunset years are wrong, the pessimists will have done irreparable harm to their companies.

Stripping stations of the tools necessary to grow audience will ultimately back-fire, driving listeners into the arms of stations that continue to evolve and improve the product.

Stay tuned.

Group Size & Ratings: What about 25-54?

2012-07-27T08:24:39-04:00

But what about 25-54?

We knew before posting Does Group Size Help or Hurt Ratings? that we’d hear complaints about using 6+ numbers.

Maybe the largest radio groups don’t dominate 6+ because they are too smart to worry about the 6+ beauty contest.

Maybe the big guys know that the real money is in 25-54, so that’s the demo they focus on. Maybe 25-54 is the metric by which they should be measured.

The problem is that publishing a 25-54 analysis similar to the 6+ shown below runs afoul of Arbitron restrictions on the use of their numbers. Were we or any other organization to release the results, an Arbitron Cease and Desist order would quickly follow.

But we have seen the data.

If you want to know what 25-54 looks like, just take another look at the 6+ chart and visualize the largest groups slightly weaker than they look now.

Yes, the biggest groups perform no better when looking at the money demo.

So there’s no hiding behind the “6+ doesn’t matter” argument.

The edge that smaller groups hold is there even with 25-54.

Then there’s the argument that revenue and profit are better metrics to compare competing radio companies. Admittedly, profit is the ultimate goal of every company, so perhaps it is a better metric.

The problem is the availability of the data. It does not exist in any form that enable us to compare all radio groups.

Using share and rank to compare radio groups may not be ideal, but it uses the most complete set of comparable data available, so it serves as a useful proxy for the more telling data we can’t get at.

Besides, no company regardless of size ignores potential revenue, margins, or power ratios when choosing a format. Formats are chosen expressly because their advocates believe they can become successful and generate above-average profits.

And taking into account demo differences, there is a very strong correlation between a station’s rank and the revenue it brings in–particularly in PPM markets.

But all this is beside the point.

The contrast in performance between the large national groups and the smaller groups suggests that companies are responding to radio’s new challenges in different ways. And those different ways are producing different results.

Jerry Del Colliano in Inside Music Media (paywall) suggests that radio is evolving into two industries, monopolies and local operators.

We can debate the nature of the division, but the divergence is clear.

Radio groups are reaching starkly different conclusions about radio’s future, and in many ways those contrasting visions are reshaping radio today.

And one vision seems to be producing better results today than the other. The subject of our next post.

Does Radio Group Size Help or Hurt Ratings?

2012-07-20T09:18:37-04:00

Are you more likely to hit the bull’s eye throwing one dart or a thousand?

A thousand, of course. The more times you try something, the more likely you’ll succeed.

You’d think it would be the case with ratings success, but it's not always true.

Harker Research looked at winner’s in Arbitron’s PPM markets and found that companies that own a lot of stations do win often, but not as often as you might expect.

Clear Channel is the largest radio group with over two hundred stations in PPM measured markets.

CBS, the second largest group in PPM markets, has half as many stations as Clear Channel. Cumulus is the third largest group with less than a third of Clear Channel’s count.

What impact does this size difference have on the number of each group’s successes?

Clear Channel has a total of 47 stations that rank first, second, or third--more than any other company.

CBS has 18, while Cumulus has only 5.

The graph at left illustrates this. It shows the number of stations ranked first, second, or third in PPM markets for eleven groups who compete in at least two PPM markets and have at least one winner.

If stations were radio darts, we would expect Clear Channel to have more winners than any other group because they have more stations. However, as it turns out, the dart analogy isn’t completely accurate for radio.

While size does matter, a few smaller groups outperform their larger competitors.

The second graph below shows how well the groups perform when we take into account the size of each group. It shows the number of winners expressed as a percentage of stations each company has in PPM markets.

Note that Clear Channel falls from first in absolute terms to third when we take into account the size of the group.

CBS falls even further, ending up 6th. Cumulus, though third in the number of stations in PPM markets, ranks sixth in absolute terms, and falls to dead last in its percentage of winners.

The two stand-out groups are Hubbard and Cox. Each group is considerably smaller than Clear Channel, CBS, or Cumulus, yet each has a better “hit rate” than their larger competitors.

Four smaller groups out-perform CBS, and eight smaller groups out-perform Cumulus.

The success of these smaller groups competing against much larger groups suggests that when it comes to local radio, smaller groups may have an under-appreciated advantage–-a topic that we’ll explore in a follow-up post.

Note: The analysis is based on the June 2012 full week total person results in 44 PPM markets using Arbitron’s publicly released data. We’ve excluded embedded markets and those with substantial out-of-market listening. Station counts are based on number of in-market stations only.

Is News/Talk Radio in Trouble?

2012-06-05T15:14:40-04:00

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.

Hot AC is Hot.

2012-05-31T17:08:41-04:00

Last Fall Adult Contemporary was struggling.

When Radio Insights last looked at formats in October, Mainstream AC was holding its own, but Hot AC and Modern AC were trending down.

What a difference a few months can make.

AC has swung 9% to the positive. Today, more than half (55%) of the 139 AC stations in PPM markets are ahead of their 2011 numbers.

Even more intriguing, virtually all the gains are coming from Hot AC stations.

Two-thirds (66%) of Hot AC stations are up over last year while Mainstream AC remains flat. Modern AC is up as well, although few stations call themselves Modern anymore.

(These are Arbitron format labels. Slightly more than half (53%) of AC stations consider themselves Mainstream, 43% Hot, and only 4% Modern.)

This is a turn-around for Hot AC. Last Fall only one-third (33.3%) were ahead of their 2010 numbers. Today the number of growing stations has doubled.

Unfortunately these changes are based on February ratings, and they will be the last complete look at AC.

We won’t be able to reliably follow the format into the future.

Arbitron has stopped publishing the ratings of non-subscribers, and Arbitron subscribers are forbidden from discussing how non-subscribers are doing in the ratings.

Consequently, Arbitron’s new policy effectively prevents Harker Research from doing similar analyses in the future.

But we digress.

There are many ways to analyze Arbitron ratings, but we’ve found that the most reliable measure of the health of a format is to determine whether the majority of stations in a format have positive or negative momentum.

That’s harder than you might think.

Most month to month changes in a station’s share are random. One month the numbers might go up for no apparent reason. The next month the numbers might go down.

That’s why Arbitron has to call ratings estimates.

Changes in Arbitron estimates are significant only if we see a persistent trend. Even as shares wobble from month to month, an over-all trend will ultimately emerge from the noise.

The concept applies to formats as well. If growing numbers of stations in the same format move in the same direction over time, a trend is emerging.

For our analyses, we look at all stations within each format in the 48 PPM markets.

We compare each station’s current share to the same month last year, and tally the number of stations ahead and behind where they were a year ago.

If the majority of stations are gaining share, we know the format is growing. If the majority of stations within a format are down, we know the format is in decline.

Since random chance alone creates a 50:50 split between gainers and losers, any format with more than 50% gainers is in growth mode.

The higher the proportion of growing stations, the greater the momentum.

With fully two-thirds of Hot AC stations ahead of their 2011 numbers, Hot AC is one of the hottest formats of the year so far.

Over the next few weeks we’ll be taking one last look at all the major formats...unless Arbitron rethinks its decision to conceal non-subscriber ratings.

Pandora: Be Careful What You Wish For.

2012-05-21T16:34:13-04:00

Pandora, be careful what you wish for.

Last year Pandora created a fire-storm by releasing its own home-grown average quarter-hour (AQH) ratings.

The company defended itself by claiming its amateurish effort was the first step in providing media buyers an apples to apples metric, “to help advertisers determine the value of running campaigns on Pandora.”

Now that Triton Digital, a reputable ratings company, has gotten involved, Pandora has finally achieved its goal of having credible listening metrics comparable to broadcast radio.

And the company may come to regret its efforts.

When the company rolled out its first AQH numbers generated by re-purposing music logs, their press release declared:

Radio is radio. Pandora is simply a smart buy for local advertisers as well as national ones.

But the numbers suggest otherwise.

It turns out that the company’s ratings confirm that Pandora isn’t a serious challenger to local radio sales.

The ratings reinforce previous Radio Insights estimates that show despite the service’s dominance in streaming, it is little more than a niche player when compared to local radio.

The first graph at the left compares Adult 25-54 Pandora AQH to the comparable leading station in each of the eleven markets for which we have Pandora numbers.

Local radio beats Pandora in six markets and ties it in a seventh. In A18-49 it's a split decision. Local radio wins in three markets, and ties in two.

Pandora easily wins A18-34, winning in nine out of eleven, and tying in the remaining two markets.

Pandora's near sweep in A18-34 AQH has gotten all the headlines, but tells only half the story.

The purpose of Pandora's local ratings was ostensibly to show why the service is a great advertising vehicle, but when it comes to media buying, AQH is only one component.

Decades of academic research has shown that an effective media buy has two components, reach and frequency.

Reach is the number of consumers who hear a message. Frequency is how often they hear it.

Reach without frequency is ineffective, but frequency without reach is even worse.

Local radio is an effective advertising medium because a buyer can easily place a buy that maximizes reach while minimizing wasted frequency.

The second graph above shows Pandora’s reach (cumulative audience) compared to the same stations shown in the AQH graph.

Note that Pandora has one-half to one-third the reach of leading local stations.

And while the graph is for A25-54, local radio stations beat Pandora in every demo in every market-–even 18-34.

So what? What does it mean?

It means that Pandora is not a good advertising vehicle. It falls well short of local radio when it comes to balancing reach and frequency. The third graph illustrates why.

The graph shows what happens when a local radio station and Pandora run a similar commercial schedule. As Pandora continues running spots, reach climbs until it hits the service’s cume, generally in the mid to high 20s.

In other words, no matter how many times Pandora plays a spot, no more than 30% of consumers will hear the spot even once.

Once the service's cume is reached, the only thing that will happen is that the same people will hear the spot over and over.

(It should not come as a surprise that the number one complaint about Pandora by its users is that they hear the same commercials over and over.)

In contrast to Pandora, as a spot schedule continues to run on a local radio station, both reach and frequency continue to grow until the station’s much higher cume is reached.

It is the relationship between reach and frequency that makes local radio a much more effective vehicle than Pandora.

Despite Pandora’s millions of users, the seemingly competitive AQH rating is a consequence of a relatively small number of heavy users spending a great deal of time listening to it.

For this reason, Pandora isn’t a good advertising alternative to popular local radio stations--unless you’re Kyle Taylor proposing to Maggie.

Social Media Stumbles: GM Pulls Plug on Facebook.

2012-05-17T11:22:59-04:00

Auto companies are radio’s biggest clients, spending $2 billion last year, so the business should take some satisfaction in GM’s decision to stop wasting money on social media.

Just days before Facebook’s IPO, GM pulled it $10 million Facebook budget. According to the Wall Street Journal:

GM plans to stop advertising with Facebook after deciding that paid ads on the site have little impact on consumer’s car purchases.

GM may be the only company to publicly pull its advertising, but it probably won’t be the last. In the New York Times story on the pull-out, a Forester analyst offered this:

My colleagues and I have spoken with several other advertisers who were already thinking of putting their dollars elsewhere. Now that GM has done so in such a large and public way, many fence-sitters will know that they’re not alone in their disappointment about their results.

A new AP-CNBC poll may explain their disappointment. In the poll, 83 percent of users said they “hardly ever” or “never” click on the ads Facebook serves up.

The Los Angeles Times notes:

Social media has yet to be time tested as an advertising tool and research has shown that people don’t really pay attention to the advertisements. Consumer goods companies such as automakers are intoxicated by the huge number of people on social media, but they don’t know what its real impact is for driving awareness and driving sales.

Ironically, BIA/Kelsey chose the very same day to release new upbeat social media ad growth projections. The company believes that social media advertising will grow at a 21% annual rate for the foreseeable future.

The problem is that even before the GM announcement, there were questions about Facebook’s revenue growth curve. The company’s revenues actually declined in the first quarter.

Not exactly the direction one would expect if the BIA/Kelsey projections are correct.

Despite rosy predictions for social media, GM’s decision may mark the moment that advertisers began rethinking the value of social media.

A display ad on Facebook is a lifeless emotionless waste of marketing dollars.

Media Buyer's (Secret) Growing Interest in Radio

2012-05-07T11:44:40-04:00

Did you realize that interest in radio is growing among media buyers?

Did you realize that radio ties television in growing interest?

Probably not. It’s apparently a secret.

A new survey of media buyers found that 25% of agency buyers are more focused on radio than they were last year, a 31% increase.

Not only did interest in radio increase, it equaled the increase in spot TV!

Given the persistence of the “Radio is Dead” meme, you’d think it ought to be big news. But it’s not.

The news was buried in a single sentence in the last paragraph of a 1000 word press release that focused almost entirely on the battle between television and digital.

The study, ostensibly a comprehensive look at agency attitudes across media, barely touched on radio. Check out the press release and a MediaPost story that completely ignored radio.

Perhaps radio got buried because the study was done by Strata, a division of Comcast that sells software to buyers. Comcast has plenty of horses in the TV versus digital race, but nary a one in radio.

But perhaps radio got buried because the business is doing a lousy job selling the value of radio.

Let’s be honest.

Think about the last time you saw another mainstream media mention radio. Rush Limbaugh calls a college student a slut, and suddenly radio becomes front page news.

Perhaps not the best PR for the medium, but at least people noticed radio again.

And within a week, it was over.

People went back to talking about singing cats on YouTube, Facebook’s IPO, and porn on Pinterest.

If buyers are thinking more about radio today, it is despite radio’s PR efforts, not because of them.

This year is shaping up to be a lack-luster year for radio if the first quarter is any indication.

Is it any wonder?

Pandora & Arbitron: Co-Conspirators in a Lie

2012-05-01T16:04:55-04:00

Joe Kennedy, CEO of Pandora, recently bragged that virtually all of Pandora’s growth came at the expense of AM/FM listening.

He reasoned that since listening to CDs, iPods, and MP3 players had increased, Pandora listening had to come from broadcast radio.

Pandora has a propensity to twist facts in the company’s favor that verges on the pathological. However in this case, the key twist should be laid at Arbitron’s feet.

Kennedy pointed to an apparent 5% decline in TSL between Arbitron’s Radio Today 2010 and 2011 reports as proof of his claim.

The problem is that it’s a lie.

Arbitron started changing the way radio is measured in 2008, and the roll-out continued through 2010.

During this period, Arbitron was forced to mingle audience data from two very different methodologies that produce very different estimates.

National estimates during this period are essentially statistical gibberish.

Arbitron pretty much admits it, declaring: Different measurement methodologies can and do produce different results.

Arbitron analyses at the time showed that TSL drops as much as 30% in markets that switch to PPM.

The first TSL number Kennedy cites is based on mostly diary estimates while the second number is based mostly on PPM estimates. He is comparing apples and oranges.

The fact that TSL declined only 5% during radio's transition to PPM suggests just the opposite of what Kennedy claims.

His assertion that Pandora's gains came at broadcast radio's expense is just wishful thinking.

If anything, research shows just the opposite. Pandora's growth seems to have little impact on local radio listening. Online listening appears to be additive radio consumption, not a replacement for broadcast radio listening.

Kennedy's claim that time spent with other audio entertainment is increasing is also demonstrably false, but we’ll save that discussion for another time.

We noted in 2009 that the transition to PPM couldn’t come at a worse time because new-media stakeholders would use the apparent losses as “proof” that broadcast radio is in decline.

Since then, our prediction has become all too true.

Want Better Ratings? Game PPM.

2012-04-30T15:18:14-04:00

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.