We wanted to get to the bottom of the PPM issue and come up with some solutions for the radio industry. Should PPM be accredited before it goes into the market and why? In the roundtable discussion, Cox Radio CEO Bob Neil drilled Arbitron’s Pierre Bouvard: “Yeah but Pierre let me ask you this, okay? You’ve got an accredited system in Houston. If the differences in Philadelphia are as small as you’re making it seem like, why would you have such a problem getting the same system with a minor change approved in Philadelphia? The sample size in Houston is pretty substantial and it appears to be working there. So if this is a minor change, why is it so hard to get Philadelphia accredited?”
If you haven’t listened to the entire RBR/TVBR interview in our Media Center, now you can read it. The entire interview has been transcribed for your easy access. The participants:
KC = Kathy Crawford, MindShare’s President of Local Broadcast
JG = Janice Finkel-Greene, Initiative Media EVP of Local Broadcast & EVP/Director Futures & Technology
PB = Pierre Bouvard, President, Sales & Marketing, for Arbitron
BN = Bob Neil, President & CEO of Cox Radio
JC = Jim Carnegie, Publisher RBR & TVBR
JM = Jack Messmer, Executive Editor, RBR & TVBR
CM = Carl Marcucci, Managing Director & Senior Editor, RBR & TVBR
Recorded June 2, 2008
JC: Hi everybody, this is Jim Carnegie, Publisher of RBR & TVBR. Welcome to the Roundtable. Our guests today: Kathy Crawford, MindShare’s President of Local Broadcast; Janice Finkel-Greene, Initiative Media Executive Vice President of Local Broadcast and Executive VP/Director of Futures & Technology. We also have Pierre Bouvard, President of Sales & Marketing for Arbitron, and Bob Neil, Cox Radio President & CEO. Along with myself are Jack Messmer of RBR/TVBR, our Executive Editor, and Carl Marcucci of RBR/TVBR, our Senior Editor.
Our first question is for Kathy Crawford. We’ll keep it a friendly conversation. Congratulations by the way, [on your retirement], I really hope you enjoy yourself after June 12th.
Q: Should PPM be accredited before it goes into the market and why? Kathy.
KC: The PPM is replacing, not an addition to an existing diary methodology. Let’s not make any mistake about it. The diary is not the end-all be-all by any manner or means. Certainly we would like to think that the PPM would be head and shoulders above the diary. However, there are issues with the PPM. We feel that since the accreditation set standards by which Arbitron needs to be able to deliver, and since there is a change from the methodology of Houston and we have some other issues with the PPM, we believe it needs to be accredited before it becomes currency.
JC: Interesting, Bob how about you?
BN: Well, obviously we’re well on record on that issue in believing that it does need to be accredited. I would just add to what Kathy said there are some issues here that make this different from the television situation. I won’t get into that. The biggest issue in my mind is that accreditation has been rejected. When this originally went forward, when Philadelphia went forward, and the industry more or less said we’ll let you go ahead with Philadelphia without accreditation, the implication on that was that accreditation was going to come fairly quickly. We certainly were led to believe that by Arbitron that this wasn’t that big of a change and that the accreditation would come through fairly quickly. Well it’s a year and a half later, we don’t have any accreditation and in fact accreditation has been rejected by the MRC. We have to go back to the beginning again and start the audit process. I think given that issue, given the fact that accreditation has been rejected once, given that there have been continuing sampling problems that haven’t been solved to everyone’s satisfaction that that makes a lot of sense in terms of the confidence that we can have in the currency and knowing that the science is right. We’re not research experts. MRC is there to help us and to look at the science. Obviously we feel like the currency would be best served if we had that accreditation and knew that the science was right before we go ahead.
PB: We think accreditation is a goal, but not an obstacle. Our customers have told us repeatedly through the Advisory Council to pursue accreditation, but don’t wait. Radio is surrounded by competitive media that have a very thriving buy/sell currency that are not accredited. The key with MRC is if you are a company and you agree to participate in the process, it is a tremendous discipline that imposes throughout every nook and cranny of the organization. The process is rigorous. What the process pounds into you is the mantra of continuous improvement. We’ve been going through MRC for the diary for 40 years and there is a constant flow of new initiatives that are suggested either by us or the MRC to improve PPM or improve the diary. We think it’s the journey that’s really the big news of continuous improvement, not the plaque that you get when you get your accreditation. It is a mantra of continuous improvement.
JG: There are in fact many products used widely in research among agencies and stations that are not accredited by the MRC. I would evidence the recent issues with [Nielsen’s TV] commercial ratings plus three, the C-3 ratings through National, which are not yet accredited, but still widely in use. It is very difficult to go forward if you wait until everything is perfect. The MRC really strives for perfection. It is rigorous, it’s detailed and I think it’s just wonderful work, but I don’t see the necessity to wait for their stamp of accreditation before going forward with a product like this, which is clearly better than diaries.
JC: You mentioned Nielsen. That was our second question. Nielsen C-3 isn’t accredited yet.
JG: It is not.
JC: Why is it different from PPM? If you could explain that to me, because I’m lost here.
JG: Why is it? It is not different.
CM: We talked to Kathy about this.
KC: I think it is different and I’ll tell you why I think it’s different. In the case of the C-3 ratings you already have live ratings sitting there in the wings. We don’t have that once the PPM goes into currency, we don’t have anything in the wings. We just have PPM. All the other methodology, I mean yes we have a grace period and all that other happy stuff, and I certainly wish that I felt the same way that Janice does. My feeling about this – and I’m not a researcher Janice is far better at that than I am – but my feeling about this is there are enough issues that if we – and Pierre made an interesting statement of continuous improvement – and one of the issues that I understand is, there are many issues and I’m sure Bob knows what those are better than I, but one of the issues is the difference in the methodology between Houston and Philadelphia. In addition to that we still have a very low SPI. I’ve talked to Pierre about this I understand all the rationale, I understand the reasons, but we have been through enough problems of recall and issuing things back and forth that and I’m with Janice on the idea that it’s far better than the diary. If we go out there accepting second best we will never get first best even on the attempt in all the other markets. We need to accredit Philadelphia for what it is, because Philadelphia is the method by which we are going to continue on the PPM rollout.
PB: I’ll jump in here a little bit because you know one of the misconceptions in the market is that Houston is all door-to-door.
KC: No I never thought that, Pierre.
PB: It’s a misperception we hear from broadcasters and what most are stunned to realize is that the majority of Houston is recruited on the phone. The phone is obviously what we use for all the other markets. There is a portion of Houston that is done door-to-door. But door-to-door is good if you want small samples. It’s perfect for Nielsen because they are running, you know, 800 households in New York, we’re running about three times as many. If you want big samples, which obviously radio loves big samples, you go with the phone. Therefore we are running panels in New York that are three times a big as Nielsen and in fact just in today’s Crain’s New York there was an article about how the New York TV stations are upset with the sample sizes and young and ethnic. That shows you that the door-to-door is not a magic bullet.
BN: Yeah but Pierre let me ask you this, okay? You’ve got an accredited system in Houston. If the differences in Philadelphia are as small as you’re making it seem like, why would you have such a problem getting the same system with a minor change approved in Philadelphia? The sample size in Houston is pretty substantial and it appears to be working there. So if this is a minor change, why is it so hard to get Philadelphia accredited?
PB: It’s just like Janice was saying, you look at Nielsen had an accredited national TV ratings service and they were cranking out program ratings and live numbers and they made, you know one could argue, a small change to go to three-day ratings just on commercial minutes. It doesn’t seem like that big of a deal, but a couple of years into it they’re still working on it. That’s why I think it’s good not to get hung up on the when are you going to get accredited? Just focus on the process and the diligence and the continuous improvement that come with that because that’s the goal and if you look at it that way, then if a company has committed to the process, then everyone wins.
JG: Here’s a question for Pierre. Maybe if we were to wait for commercialization until this was accredited and if you were able to make all of the changes you wanted and if the SPI sat well with everybody and the response rates were where they were, where television is or some other yardstick that somebody makes up based on I don’t know what, how much would the ratings change? How much would our currency change from what it is now with the current ratings?
PB: Well I think history shows, Janice, that we could add five points of SPI and add thirty points of DDI and the ratings would not change.
KC: Yeah, but Pierre you said the same thing about the last time that we stopped the rollout and you said the ratings wouldn’t change, but you still stopped the rollout because of the confidence level and I think there are issues with the confidence level. It would be really nice if everybody had confidence in Arbitron’s ratings. I’m just staying with what Janice is asking and I understand the answer. I’m just saying that there are issues with confidence that are out there.
PB: They fall into four quantifiable categories. Sample size, panel representation, compliance and SPI initiatives. And coming last November the messages that we heard from folks like Bob and all the other major group heads were, hey, hit those sample targets. We had slipped in Houston and Philly over this last summer. The other major message from the group heads was 18-34. We want Arbitron to increase sample sizes, not only among 18-34 but also among black and Hispanic. The third area was compliance, the percentage of folks that are in-tab in a typical day. Those were the hardnosed, fix these things, mandate that we got from abroad swath of our customers, not restricted to any one broadcaster. I can tell you in the six months since then we have met or exceeded our total sample targets.
BN: Yeah but Pierre those sample targets were set by you. The 70% level that you often trumpet on your calls were set by Arbitron not by broadcasters. I don’t think there is a single broadcaster that thinks a 70% number against a sample target is acceptable. This is the same argument that goes with the diary where you say you’re meeting your 12+ sample target, but the only way you’re meeting them is because 55+ is growing and growing and growing and growing as a percentage of those samples in the diary markets. You have to take a more global look then just at your 6+ target, you have to look at the individual cells.
PB: Absolutely and that’s why we have basically done two major initiatives. The big issue which you identified Bob, in the letter along with your other group heads, was 18-34. It wasn’t 35+ or, it was 18-34, and not just 18-34 but the young end and the older end. Let’s take a look at Philadelphia, which is the market that’s been up the longest I think under Radio First. Six months ago we were in the 60s you know we’re now in the 80s. We’re blowing past the 70s, we’re blowing past the 80s, 18-24 is in the 90s. We did not set the benchmarks as kind of easy lay-ups. We set them as kind of minimums with the full intention to keep working at it.
BN: Do you expect that those numbers will begin to decrease over the summer as you set that expectation in Houston and Philadelphia in the past? We’re going to get into the summer, compliance is going to go down. I think what broadcasters are saying here is, I don’t think anybody would deny that we’re moving in the right direction, but I don’t think anybody has seen this improvement long enough to feel confident with it and, once again, I just come back to this, the MRC accreditation point of this gives everybody some confidence that the science on the sampling regime is right. Again I don’t know from a science standpoint I couldn’t tell you exactly what you guys are doing with regard to the 18 to 34 sample and scientifically how you’re approaching it, and what have you. It looks like it’s moving in the right direction, but wouldn’t you feel, and you know Kathy, Janice, wouldn’t you feel better knowing that the science of the sampling regime had been signed off on? That the sample targets had, the indexing in those targets had gotten up into the mid 80s or so and were staying there over the summer doldrums when historically we’ve seen compliance go down?
JG: Can we just take a more pragmatic approach here? Could PPM be better? I think everybody thinks it could be better. Will the MRC make it better? Absolutely. But we’re not talking about a choice between PPM and a much better PPM. We’re talking about using diaries in place of PPM when we could be using better ratings. We’re talking about not delivering our clients the best ratings information out there when we can.
BN: Well Janice, let me ask you a question. In Long Island right now, for 18 to 24 women on CHR our station we cannot run you a report as a client. So we’re a Top 40 station we can’t even run that demo for you to show you how our Top 40 station does with 18 to 24 year-old women. That’s not a service to our clients, that’s a disservice to our client.
JG: Is that a PPM issue?
BN: Yes it’s a PPM issue.
JG: In what way?
BN: There’s not enough sample to run the report.
JG: But that’s an Arbitron issue, that’s not a question about the methodology itself. You’re right, but Pierre you can comment on this, but we’re talking about a sample size not the actual PPM methodology, is that right?
BN: That’s correct. All I’m saying to you is that if you have confidence in the currency you need to know the science is right and you need to see that these sample sizes are really going to be acceptable as we go forward.
JG: But I have no confidence in the diaries. How can I possibly go forward after I’ve seen what the PPM is yielding and not use it in some way? It seems irresponsible to me to turn my back on what I think are more accurate ratings that are probably not going to change substantially.
BN: But Janice, the diary is going to be around in a lot of markets for a long, long time. We’re going to be using it whether we like it or not in a lot of markets for a long, long time.
JG: But why not use it [PPM] where we have it and work to make it better at the same time? Why does it have to be such a radical choice, black and white?
PB: That’s interesting, because the radio industry I think over the last couple of years has adopted a very kind of courageous outlook on new initiatives, which is roll it out and fix it as you go. Whether it’s streaming or HD Radio, none of these things were perfect, but they are getting better every day. There are a lot of great things going on in the industry. Recently the industry made a very courageous commitment to posting and guaranteed audience delivery. Now are those initiatives perfect?
KC: That’s a major stretch to be saying that. We should have done that 50 years ago.
PB: Okay but.
KC: Let’s not lump that into this.
PB: Give the industry credit for stepping up and saying that we’re going to stand behind…we’ll run what you ordered. I think the point is that all of these things are not perfect but the industry has the courage to say we’re going to roll it out and fix it as we go.
PB: I think that’s the approach that the industry is clearing saying on PPM. Pursue accreditation but don’t wait.
BN: I’m not sure that the industry is saying that as I talk to a lot of group headss. I know CBS has been pretty loud and clear about how they feel, we’ve been pretty loud and clear about how we feel and talking to Clear Channel and Cumulus and other companies, I think they have yet to kind of come on record for it. One quick question, Pierre, because this one is one I’ve always wanted to ask you.
PB: I’m all ears.
BN: What would it take for Arbitron to roll the Houston methodology out in the other markets? We know it’s accredited. We know that we’d feel better about that. What would it take for you guys to agree to do that?
PB: Well it’s really a small sample methodology. I mean it is.
BN: But it’s not a small sample.
PB: Yeah let’s take New York. Nielsen does the door-to-door thing in New York with a sample size that’s about a third of the size of what we’re doing. It’s a trade-off; you’re getting door-to-door in return for a dramatic cut in sample.
BN: Well again let me try the question one more time. What would it take for you guys to roll out the Houston methodology in all of the other markets?
PB: It’s something that the industry, the radio what the industry said to us, our marching orders were, give us the biggest possible sample for the least possible cost. The best way to do that is with the phone frame methodology and that’s how we get a panel that’s two to three times bigger than Nielsen in New York.
BN: One more time. I’m not trying to be confrontational here, but you’re still not answering the question. What would it take for you guys to agree to use the accredited methodology in Houston in the other markets? What would the industry have to do?
PB: I think what’s important is that the accredited methodology is not just how you knock on the door or pickup the phone – don’t quite get so hung up on how we make the first contact.
BN: I’m not.
PB: Accreditation covers the technology. The accreditation covers the sampling system, the interviewing process and the software that creates the estimates. Accreditation covers a whole swath of how the methodology gets implemented. The only difference that we’re referring to when we say “Houston” is that two-thirds of that panel is recruited over the phone and one-third is in person.
BN: There’s no other difference in Philadelphia besides that?
PB: That and I think some minor differences in premiums.
BN: Okay so.
PB: But just like you know you could say well, gee, C-3 is so similar from what Nielsen used to do a couple of years ago.
BN: But we’re not talking about television here we’re talking about radio and again you’re doing a great job in dodging the question. What would the industry have to do? If there is not that many differences between Houston and Philadelphia, Houston is accredited – everybody could roll with Houston’s methodology – what would we have to do to get you guys to use that methodology?
PB: I think what the industry has said is pursue accreditation, but don’t wait. Don’t get hung up on waiting for accreditation, pursue it vigorously and that’s exactly what we’re doing.
BN: Well you never answered the question, but that’s okay.
CM: It could be that it may cost the radio industry more money.
PB: Let’s go back to what the panel in Houston was created for. It was created for a joint Arbitron Nielsen demonstration where TV would be picking up a pretty big chunk of the methodology, because the door-to-door is extremely expensive. That’s why Nielsen runs sample sizes that are much smaller than Arbitron.
BN: Well I thought you said there wasn’t that much of a change? So if it’s not that much of a change, how could it be that much more expensive?
PB: Door-to-door is good for small samples.
BN: But Houston isn’t a small sample.
PB: Phone methodology is good for big samples and radio broadcasters want big samples.
JG: But even if there were a change, that wouldn’t guarantee accreditation. That’s hardly the way the MRC works.
PB: Oh sure it would. If Arbitron said we’ll take the Houston accredited methodology and that will be the system that we will use going forward that would be it, it’s accredited.
JG: Absolutely not. That’s not how it works. We’d still have to look at all of the data. We’d have to look at all of the metrics. Each market has to stand on its own, that’s how it works.
PB: Oh, I’m sorry Janice I understand what you’re saying, but it’s because each market does get a review.
JG: Yeah they’d have to go back, they could resubmit, but we would re-start, that would put us even further back than we are now.
BN: I understand, but they would be using a system that is already scientifically, that has been proven…
JG: Well I wished it worked that way. It’s just not that easy. I’ve seen it happen in local television where markets using the same LPM methodology — one was accredited, the other one failed.
CM: Does a lot of it have to do with demo?
JG: Each metric, each piece of the puzzle has to sit well. It’s a grueling process and I think it’s great, but just switching methodologies wouldn’t put us that much further out than we are now.
PB: That would give us an accredited scientifically proven system.
JG: No, it would give us a chance to resubmit a methodology that has been accredited in a different market.
PB: Boy I wish I had somebody from the MRC here, but I don’t.
JC: Is there a positive to that, you know, once you’ve got a benchmark established where you’re not reinventing the wheel over and over again?
JG: Well some pieces of it, but each and every metric is reviewed separately. The SPI is reviewed separately. Each one has to stand and then it’s compared and I know from looking at this data, that it isn’t as automatic as people think. Things change and sometimes they’re random and sometimes there is a reason and some markets sustain lower metrics in some areas, higher fault rates, lower SPIs than in others, and that becomes accepted over time, but these things take years to sort out. What’s random what could be helped by an increased sample. What’s the function of the market or the people who live in it? The methodology itself is only the framework for the submission.
BN: Well, I think I’d rather build my house on a framework that I knew has been approved by the building code than one that hadn’t been.
PB: Well remember that the fastest growing media – outdoor, Internet – have no accreditation and they are solid, strong advertising mediums that a lot of money is pouring into, but despite that, we are absolutely committed to the process.
BN: But, Pierre when? You know what I mean? I know you can’t answer that but I know…
PB: Bob, what we focus on is the stuff we can control which is how do we make this thing better every single day? How do we make Long Island better from where it was last month? That’s the stuff that we can focus on and we can control. I think if you take a step back, look at what’s happening. You have the RAB coming out very strongly with guaranteed audience delivery in the same year where PPM is going to hit the beach in a lot of markets. You go back to a study the RAB did a couple of years ago. They looked at what’s accountability mean, like what does it really mean? When you talk to advertisers its schedule integrity and running spots as ordered and improved credibility of the audience measurement. You put those things together and that’s the magic accountability.
BN: Well why hasn’t that worked in Philadelphia or Houston where revenues are down, Pierre? That same RAB study or one similar to it said revenues were going to go up if we only adopted PPM and Philadelphia and Houston are down.
PB: Well, the other message of that study was if radio doesn’t do anything it’s going to erode and some have suggested that a lot of the delays in getting PPM going could be partially responsible.
BN: That’s absurd.
PB: All around us there are other media that are making very bold steps on accountability. The advertisers insist on it.
BN: Posting, though, as Kathy said earlier, doesn’t relate back to this issue. Again it’s a nice diversion, you’re good at this, but we still have to come down to those same two issues again, the science…
PB: If posting is good for radio, PPM will help radio post. That’s really the spirit of how these two initiatives are coming so close together in time and how they are so tightly interwoven.
BN: Well how is Kathy or Janice going to be able to post when they have these low sample sizes? Are they going to believe what ten people on Long Island say with women 18 to 24? Is that a service to their client?
JG: The issue on posting isn’t so much…there will be issues on posting no matter what methodology is supporting it, no matter what the sample size because people will mistake a sample, in a sense it’s in our business, and it’s never been clearly explained. I would actually hold Arbitron and Nielsen as accountable as any other body in that but we don’t really explain that these are all statistics and they are subject to the same physical limitations as anything else that’s estimated. What we would have to do in that case is be way clear about our ability to speak with confidence that with the delivery in Long Island versus Houston – but it doesn’t mean you can’t do it. It means that you have to be smarter about how you read the results.
PB: And I agree with you, that’s why I think it’s a little ludicrous to say that somehow PPM and posting, oh these are wonderful things because they’re tied together.
JG: The data for instance, in a smaller sense, not that I’m the biggest fan going of posting until we iron those rules out either, but when the data is more readily available as it is with PPM it does give buyers and planners a chance to make appropriate adjustments, rather than just sitting there for months on end with their fingers crossed.
CM: I know that Kathy had made a point and it may help, it could help the process in some respects if she had, if PPM developed in some markets alongside the older diary methodology to sort of compare and contrast and have it as a fall back. It could be a factor in there that it just costs too much money to run both methodologies even for a small period of time. Could you make that point Kathy about having a dual methodology in some markets as the PPM rolls out?
KC: Well, we have the period, I believe it’s a month isn’t it Pierre?
PB: It’s two.
KC: For two months where we have side-by-side comparisons. On the other hand the diary of course is what it is and it doesn’t go out on a daily basis but the PPM goes out on a daily basis. It’s nice having the comparison, but once it goes into currency the diary is no longer in effect and as a result you don’t have anything like the C-3 issue where you do have live ratings given the same methodology to deal with. We won’t have that and that really was the only point that I was making in that piece. There is no question in my mind that the PPM is an unbelievably far superior methodology. I just get concerned when we had fits and starts before and we don’t have the faith so to speak that this is going to roll out in the timeframe that it’s supposed to roll out without everybody digging their heels in. I think that the broadcasters, who pay the bulk of this thing, have their issues. On the other hand, I also think the broadcasters would be happy to stall it as long as they could.
BN: I wouldn’t be happy to stall it. I’m the guy saying wait for the accreditation.
KC: I understand that. I truly do. I just think that the accreditation is very important given what has happened in the past. If all this hadn’t happened in the past and we didn’t have this change in methodology, as small as Pierre thinks it is, and believe me Pierre when you make certain statements you open mouth insert foot in an odd sort of a way, because the idea that it isn’t going to cost more if you did the same thing as Houston, that’s really the crux of the matter. It would cost more and the broadcasters would have to come up with it. In the scheme of things, if Bob were given a price and said, okay this is what it would cost if we did that, and oh by the way would Long Island be a part of that? And if he wants Long Island to be a part of it, then maybe he pays for what could be added to Long Island. That’s a whole conversation between the two of you. My real issue is that we need to stick with the thing, get the hell into accreditation and move along. If we don’t get into accreditation I can just see the handwriting on the wall from – the stations, not from our side of the fence.
PB: What we have said to the industry is we’re going to make a decision about restarting the rollout later this month. We’ve been doing these calls with clients every month showing the work that we’ve done on improving the metrics. The metrics are in a lot better shape, but we’re never satisfied I don’t think anybody should be. We think we’re on track for a restart. Haven’t made a decision yet, but the metrics and the encouragement that we’re getting from the Advisory Council today…
BN: Pierre, I suggest you talk to the group heads not the Advisory Council. I’m not sure that, based on what I know of the Advisory Council, it’s pretty much split right down the middle at this point. So you might want to pick up the phone can call John Hogan and Lou Dickey and you know everybody else before you make a decision based on what you think the Advisory Council is telling you.
PB: Well you know the four issues that the industry identified – panel representation, compliance, sample size – we have made significant progress.
BN: The question is whether it’s good enough and all I’m suggesting is you talk to your customers.
PB: And we’re not declaring mission accomplished. We’ve made a significant steps and our mantra is continuous improvement.
BN: You never did answer the question earlier about what you think will happen to those indexes as we move into the summer. What if they go down?
PB: There’s two parts, there’s two aspects to that. One is the compliance rate and then there’s the actual in tab sample. We fully expect to see…
BN: Is that ambulance for you coming in the background?
PB: Ah that’s for Kathy, Janice and I in midtown Manhattan.
PB: And it’s coming at me. That’s the typical soundtrack of New York City. Compliance rate will go down in the summer that’s the percentage folks installed that participate and it’s simply due to vacations. People take vacations so the compliance rates will go down. However, knowing that there are vacations, etc., we install more panelists, so that in terms of the actual sample sizes themselves in the various demos you won’t see as much of a drop-off. The same thing happens in diary every summer we get a lower response rate, so we have to make more calls, place more sample to hit the sample targets and summer has always been our lowest response rate period in diary.
BN: Okay so the question again, just trying to clarify this in my own head. We had a big drop-off last summer in Houston and Philadelphia, are you saying that this year you’re putting more sample in so that won’t happen?
PB: So you’ll have lower compliance rates, i.e. response rates, more panelists installed, so that your sample sizes moving forward should be pretty consistent.
BN: So that will be different from last summer?
JC: I heard the word forward or we’re moving forward, but we’re really stuck and radio is going to suffer. I’d just like to ask a general question: how much is radio losing in advertising dollars right now and moving forward by not utilizing PPM as we toss all these numbers around? If a broadcaster knows he’s going to have an expense that’s going to rise with PPM, nobody has ever given me a realistic figure. How much is radio really losing to the Internet, to cable, to other media? We could talk about it, but how much are we losing Kathy?
KC: I can’t answer that question because I’m not a planner. I can tell you this, I think that this is a dangerous road to go down by suggesting that the PPM is going to be the solution to the money leaving radio.
JG: Really is there any correlation out there between dollars and audience methodology that anybody has seen for any medium anywhere?
JC: I’d just like, I mean that’s why I’m asking the question.
KC: I have never seen one.
PB: Television has had electronic measurement for a long time and if you took out political their revenues are going down.
KC: That’s right. And if you keep political in there, in a lot of cases, their revenue is going down.
CM: You’re dealing with a tough economy that affects a lot of media and obviously a lot of people, a lot of agencies are moving their dollars into Internet, new media, mobile advertising and that. So, traditional media is suffering a little bit in this transition to everything digital. Those two factors, the economy and moving to digital, are huge in this game.
KC: Be very careful Carl, because it’s not… You can’t make as much of a sweeping statement, because this is far more about the younger spectrum than it is about the older one. I think that for anybody in the world of radio to think that life is going to get better in about 20 minutes, they are wrong. I think that people ought to recognize that what is happening in the newspaper world is essentially happening in other media, not just radio, but radio seems to be glaring. To be perfectly honest with you, how many of you who are in New York City, I can only speak for New York, I can’t speak for other markets, but how many people watch the young people walking up and down the street with ear buds in their ears? They’ve made their own radio stations. I’ve said this for 100 years – they’ve made their own radio stations. They’ve got MP3 players and a little screen TVs and all kinds of other things. And radio, you know tuning in to a dial, is not…and who does the planning? The planning is done by young people, so the story really does not have anything to do with the PPM. Now is it the right thing to do because that’s where technology is taking us? That’s a whole different story. If I had it my way, there wouldn’t be diaries anywhere, even in TV.
BN: And I think the reality Kathy, you zeroed in on it, it doesn’t matter what media you’re in. I happen to work with a very large media company and I don’t care what advertising-supported business you’re talking about, whether it’s television, radio, newspapers even cable ad sales are not growing or growing very, very slowly and the same is starting to happen with a lot of the Internet businesses when you see Yahoo and Google report that they are neutral on click-throughs. What I said a lot of times is, in the world we live in today there are a lot of choices and there are a lot more ad units available for sale out there than there ever has been in history. So if you’re a client or an advertiser it’s hard to know exactly how to spend your dollars against a very broad trough of possibilities that are out there for you to put your dollars into. I don’t think you can make, as I said before, I don’t think you can make a judgment on any particular form of measurement improving your odds at getting revenue Use television as an example, we know they’ve been electronic for a while and aren’t really seeing increases in revenue. I agree with you, electronic measurement is the right thing to do. I think that’s about unanimous among the broadcasters and we just want to get this right. We’ve had so many problems with this thing coming up to this point that the old line is you never get a chance to make it right out of the gate and I think there’s just a lot of us that really sincerely want to do that. It’s not a fuss at Pierre, it’s not a fuss at Arbitron per se, it’s just, boy we know that this is a big change and we need to make sure that it’s right especially when we start moving into markets the size of New York, LA and Chicago and the dollars that are involved there – we just can’t afford to not get this right.
PB: Amen, no, we absolutely agree. That’s why we are every month we are reporting improvements and new initiatives. It’s a never-ending focus, which is continuous improvement.
JC: I have a concern, we keep talking New York, Chicago and LA but I also hear from broadcasters that are in Wichita, that are in Boulder, Colorado and they just throw up their hands when they hear the word electronic measurement. They say well it’s never going to get here and we hear the saying, it is what it is.
KC: Yeah maybe it won’t.
JC: I don’t know what to tell these people.
KC: The question is, where will the growth come from?
JC: I don’t know, I’m asking. That’s a great question because I get asked that every day.
JG: The way the industry is going you can separate the local advertisers from the big agencies and the way they’re looking at media. As far as media planning goes, it’s not so much done by a planner sitting alone with a spreadsheet as these very complex optimization models where a lot more data goes in than simple audience levels across media. All kinds of other sources are integrated into it. That’s a lot different than people sitting in a local market who feel confident to select from a relatively small selection of options and say they want to put some money into TV and some money into radio. Without the electronic measurement certainly you can do what people have always done and buy what your brother-in-law listens to or what the diaries show or you can buy the station that hires the salesman who buys you the best lunch. There’s a lot of ways to go about that, but the more sophisticated, the richer and more intricate process requires electronic data for processing. I think radio will just get left out of that mix entirely.
BN: Isn’t it interesting though, Jim, you and I have talked about this, that a lot of those smaller markets have fared better from a revenue standpoint because they just go out and sell the time.
JC: That is true they just say we’re going you know it is what it is and we believe in our local marketplace and they are doing their jobs to compete in an environment which is regulated by the federal government, same as television against the competitors that are non-regulated. I listen to concerns on a consistent basis every day from a man, woman, young people, I mean radio has a very difficult time holding on to quality people in the sales area or in the management area, just because the corporate headquarters focus on a methodology that may never reach their marketplace and there are no answers given to those particular individual people.
JG: Well the methodology can’t create the demand, real demand especially on the local level. It’s a questions of where it fits into the future and even looking at online products for buying, if that happens a lot of the businesses in the smaller markets may be relegated to online buying on the national buying level, with the most efforts being put into the large markets where people have the most resources and have the most money and probably most products at stake. It’s not to say that there’s no demand, it’s to say that there’s no reason to think that demand in the smaller markets will be handled the same way that it is across the country, multi-media plans with products and allocation models that go beyond local needs.
JC: I tell broadcasters that if you’re looking for the Holy Grail, just go buy one of the DVDs of Indiana Jones, he’s still looking for it. He had it once, but he lost it.
PB: Well don’t you think though, that having worked in smaller markets with broadcasters is that the Holy Grail of ROI to that local furniture store owner who spends the money on radio and then she sees the results – literally product moving out the door – that the loop of expenditure and sales you know local market is tight and people see what gets results.
JC: Exactly because it’s at a simple, basic level that can be measured. If you’re talking about one medium and one product you can be fairly sure that radio is the reason. If you’ve got a national campaign on the air and local television and local radio and maybe some interactive going on and who knows what kind of other, maybe some mobile advertising mixed in, it’s pretty hard to say precisely what’s driving it. The econometric modeling is complex and costly and also comes several months after the buys run. You can’t make the same kinds of statements and be as sure.
JC: Well at the same time you know in Wichita or any smaller market, you talk about New York and I love New York to watch you know the people with the white wires hanging out of their ears or watching their mobile devices, well they do the same thing in Wichita and they do have the mobile devices, the MP3 players, so the life is fairly identical with the technology all across the country.
JG: I don’t even think that radio works better in Wichita than it does in New York, I just think it’s infinitely harder to measure when you’ve got more complex media rich buys on the air concurrently for accounts that can actually afford to put them on like that, rather than the local advertisers who are limited.
PB: Jim, to the point of Wichita I was recently with the folks at the BIA Conference, which is predominately medium and small market owner/operators, and our focus of our discussion was not so much on ratings, but on information about what local consumers buy and where they shop. That was kind of their focus, which is saying that the medium in the smaller markets are looking for more information about qualitative, you know shopping habits and where people are going for cars. So that’s, I think if there is an information direction that we need to be taking our cues from in those size markets, I think it’s more give us the kind of Scarborough local retail shopping data that some of the bigger markets have and bring that into my medium and smaller market.
CM: We also should maybe as we wind this down to a close, we should bring up the topic of PPM and posting. We know that RAB wants posting and they want everyone on board with it that can be on board, but posting has a couple factors. You know, in smaller markets not everybody has subscriptions to rating diaries or PPM down the road and apparently from what all we heard posting isn’t very applicable with diary it really needs to be done with PPM. How does that posting edict from RAB and the industry? How does that affect the PPM rollout process?
PB: I think the people will post off the diary because that’s going to be the only methodology that is available to use in a lot of markets for a long time. I know that part of the deliberation at the RAB Board level had to do with whether the posting should only apply to PPM and it was generally decided that if it only applied to PPM that would only be a handful of markets.
JG: It wouldn’t matter. People have been posting radio for years – this is not new.
KC: Yeah that’s really true.
PB: Absolutely, and guys you took the words right out of my mouth. Certain customers have posted for 40 years, okay, and so at the end of the day here is what this is really about. Kathy or Janice buy radio stations in a market they expect those stations to deliver on their promises whether it’s running their spots, whether it’s point delivery or whatever, and I would think, you know I’m not one to speak for everybody else, but I think you would ignore a huge underperformance at your own peril because Kathy and Janice will come back and buy the market again at some point. So, if you don’t take care of these problems when you have them, then you’re just kind of inviting something bad to happen to you down the road. At the end of the day I think what the RAB is trying to do – difficult process – what I think they are really trying to do is to verify and restate a desire to make sure that buyers understand that radio will stand behind the delivery of audience. I think that’s really what it’s about and it’s less about the specifics, because of the way the guidelines are set right now, I suspect each group will have some different standards that they use with buyers. There won’t be one clear standard – they are not written that way.
JG: I absolutely agree and I think that the standards themselves will change from market to market and from, absolutely, buyer-to-buyer even though we may not like it that way.
KC: Client to client.
JG: Perception – people who think the latest book represents the most accurate information possible and people who think that several books that add greater stability to the ratings represent the most accurate ratings possible. Neither one is good or bad by itself, in that it needs to be adequately explained and, like everything else we’ve spoken about, there’s no perfect answer.
CM: Any closing comments?
BN: It’s been a great discussion.
JC: I’d like to thank everybody for their time hopefully we can do this again very soon. RBR doors are always open we’re here to find solutions to move our radio medium forward. So please contact Jack, Carl, myself any particular time — our doors are always opened to you because broadcasters, believe it or not, they like to hear what you have to say and not just what we print here and what we tell them to read. They like that input and it gives them an opportunity to have a dialogue with people that they never had a chance to have a dialogue with before. If you would, keep us in mind if you’ve got thoughts contact us, drop us an email and we can keep things running and trying to move them forward for everybody.