Tom Birch knows what it’s like to compete with Arbitron. He founded Birch Radio and ran the radio ratings company until 1990, two years before it was shut down by then-owner VNU, a company now known as The Nielsen Company. Birch tells RBR/TVBR that Nielsen will be a tough competitor in the US radio ratings business, but he also doesn’t think Arbitron will be easy to knock off as the dominant player.
“I think that it’s a very healthy thing for small market and mid-sized market broadcasters,” Birch said of the deal Nielsen cut with Cumulus and Clear Channel to measure radio in 50 markets beginning in 2009. Birch himself is a small market broadcaster these days, President of Lakes Media LLC, which owns four stations along the North Carolina-Virginia state line. He’s also gotten back into the ratings biz in a small way and recently issued a custom ratings report for that region.
Nielsen doesn’t think small, so Birch does not think the audience measurement giant is going to be satisfied with doing only 50 small radio markets. Birch is a strong proponent of telephone surveys, but he thinks Nielsen is clever to stick with the diary methodology for its radio service.
“Keeping the diary methodology is a smart business move, because now Nielsen’s data will look very much like Arbitron’s, which makes it very easy for agencies to go back and forth between the two services. That kind of portability will enable Nielsen to move into markets if Arbitron sticks to its guns and goes into markets like Raleigh, for example, with PPM. Broadcasters who don’t want to shell-out a million-plus dollars a year for audience ratings will turn to Nielsen,” Birch told RBR/TVBR. So he thinks the diary competition from Nielsen may limit how far Arbitron will be able to extend PPM.
Like the rest of us, Birch doesn’t know much about the “sticker diary” that Nielsen plans to use, although it sounds to him like a novel way to make it easier for people to keep the diary. “The less intrusive you can make a methodology, the higher the response rate,” he noted.
“What I find much more intriguing is the address-based sampling technique. I think that makes a whole lot of sense,” Birch said. “That sampling methodology…that could possibly result in differences between Nielsen’s diary ratings and Arbitron’s diary ratings. I think that more than anything else could drive some differences,” he said.
“The only criticism I would have of it [the Nielsen offering] is the lack of frequency. Only doing one measurement a year – and what really startled me was doing it over only an eight-week period of time – is going to put Nielsen at a significant disadvantage in competing against Arbitron,” Birch said.
Look for a serious battle over the coming years. “I think that Arbitron is very entrenched. They are a world class media measurement company. They’ve proven over the years – I certainly know it first hand – to be very, very competent competitors,” Birch said of the renewed competition for US radio ratings.
RBR/TVBR observation: Read all of what Birch has to say because RBR agrees with most of his analysis, due to his experience on the ratings side of the radio business. Nielsen has the name brand and technology to compete against Arbitron if they desire to do so and see a full monetary reward. And you know this is not about trying to be second best.
RBR wrote back in March 2004 on the history of radio ratings regarding any full challenger to Arbitron. RBR stated then and it stills holds true today – it all boils down to the question of money. But even more, DO THEY [Nielsen] HAVE THE PATIENCE? Click the download link below to read our full 2004 report.
In 1977, Jim Seiler, founder of Arbitron and Mediastat, projected it would cost $30 million to break Arbitron. What’s $30 million in 2008 dollars — $120 million? $250 million or more?
In this Wall Street-driven world of “I don’t care how good you were last quarter, what have you done for me this quarter” mentality, how many companies could stomach the static they’d receive from the “sages” of Wall Street on investments of that size in something that could end up being a black hole?
Another thing we can learn from history is that radio cannot force ratings on the agencies. It doesn’t matter if no station in the market buys the Arbitron service. If the Arbitron data is produced for that market, agencies will accept it over any other audience data. This may vary a touch in this case because of the Nielsen reputation.
So, will Nielsen see money at the end of the radio tunnel? And if so, can they produce the radio ratings using their technology for the same or less cost to broadcasters and add on all the bells that come with the Nielsen consumer research?
It all comes down to money.