Here's the short-hand summary of the Portable People Meter economic impact study by Forrester Research that was made public yesterday by the RAB-PPM Task Force: If radio adopts PPM, ad revenues will go up, but if it sticks with diaries, ad revenues will go down. Not all of the 189 advertisers surveyed said they would increase radio ad spending with PPM, but 23% - - about one in four - - said they would. Among the 295 ad agency folks surveyed, 17% said they would increase radio spending with PPM. But if radio sticks with Arbitron's current diary methodology, 8% of both groups said they would reduce radio ad spending in coming years. Thus, 22% of agencies and 24% of advertisers said their radio budgets would be higher with PPM than with diaries - - an average difference of 9% for the agencies and 12% for the advertisers. "We believe that what we've essentially done is now gone and talked to our customers and, in effect, they've given us a ratings roadmap as we enter what we think is a very critical currency crossroad in radio," said David Pearlman of Pearlman Advisors, who has been consulting the RAB-PPM Task Force as he presented the Forrester findings. Based on economic modeling, for which Forrester is a respected authority, the radio industry can expect annual ad revenues to rise 414 million per year if PPM is deployed in all Arbitron markets, vs. a drop of 282 million if diaries continue to be used - - a 696 million swing in revenues. The report also broke out the potential change if only larger markets switch to PPM.

Radio revenue impact of PPM deployment

Degree of deployment	Rev. increase	Rev. swing*
PPM fully deployed	$414M	$696M
Top 50 markets deployed	$150M	$433M
Top 25 markets deployed	$114M	$396M
Top 10 markets deployed	$79M	$362M
*from projected $282M decrease if no PPM deployment
Source: RAB, Forrester Research

RBR observation: One thing Forrester didn't analyze is whether PPM deployment would justify the 40-65% increase in ratings costs that Arbitron has told radio broadcasters to expect from transitioning from diaries to PPM. 700 million bucks is about 35% of radio current revenues, so if Forrester's projections are accurate, paying Arbitron an additional 110-180 million a year would be a good deal for broadcasters. But while that may be true industry-wide, it's a different calculation in the real world, where stations in smaller markets where ratings are less important than face-to-face selling are less likely to see a cost benefit from PPM. That's also likely to be the case for many niche players in larger markets. If radio embraces PPM, it will be because the big guys - - Clear Channel and Infinity in particular - - see a cost benefit in it.