Broadcasters cool to PPM price hike
Most don't want to be quoted by name, but radio broadcasters that RBR is hearing from are not lining up to write the checks for the 40-65% price increase that Arbitron says will be needed to move from diaries to Portable People Meters (PPM). Not only is the price hike hard to swallow, but the broadcasters are also questioning Arbitron's assertion that one PPM carrier is equivalent to three diarykeepers. "Here's the math: 65% more and we're going to use 65% less sample. I can tell you, that's going to go over like a lead balloon," said one of the broadcasters who insisted on remaining nameless. As we calculated previously, about 1.5% of total radio revenues go to Arbitron for ratings services - - and both giant groups, Clear Channel and Infinity, are right in line with that mark. But for many smaller groups, the percentage is already 2% or more, so they'll feel a rate hike even more than the largest groups.
Arbitron has confirmed RBR's reports that it is telling groups to expect ratings costs to go up 40% for PPM if Nielsen agrees to a joint venture (spreading the infrastructure costs across TV and cable as well as radio) and 65% if Arbitron has to go it alone - - but the company also insists that PPM won't be implemented unless its clients, the radio industry, agree to it. What we're hearing from broadcast executives is that the biggest players will probably go along with the price hike to get PPM, which big advertisers and time buyers are pushing for, but that it will be a harder sell outside of the top 20 markets.
One group owner who didn't hesitate to speak on the record was David Benjamin, CEO of Triad Broadcasting. With Biloxi-Gulfport (#138) as his largest market, Benjamin isn't likely to see PPM in Triad's markets anytime soon, but he questions whether the ad buyers are playing it straight with their push for PPM. "The assumption is that if we provide better research, that the major buyers will embrace it and that this will enhance the growth of the business... I think Arbitron already is better researched than a lot of competitive media that are showing more growth than radio is. As an example, local cable - - local cable has no effective measurement at all, and yet it is showing far more growth than radio is at this point," Benjamin said. "My concern is that more perfect research is only going to be another weapon for the buying services to beat down rates," he added.
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