The analysts at Bear Stearns have been crunching the Arbitron numbers from the latest book and noticed a trend: "In an analysis of the Spring ratings book, several operators posted low to mid-single digit declines, including Univision (-6.6%), Clear Channel (-5.3%), Radio One (-4.6%), Cumulus (-3.7%) and CBS (-3.4%). Except for Cumulus, these operators all have something in common: stations in Houston and Philadelphia." Overall ratings gains were posted by Emmis (+2.7%), Entercom (+2.3%), Cox Radio (+1.7%) and SBS (+1.2%). Of those four gainers, only Cox has stations in one of the two markets where Arbitron has fired up its Portable People Meters (PPM). It is in Houston, but not Philadelphia.
For several years now, the Bear Stearns analysts, Chris Ensley, Vic Miller and Tracy Young, have been writing about how radio had become a trifurcated marketplace, with niche formats (Spanish, Urban, Religious) taking share away from general market English stations. "PPM could change that scenario. While Spanish-language operators such as Entravision (+10.3%) and Univision (+24.5%) posted strong results over a 2-year period, Univision’s Spring ratings in Houston decreased by 37%, and Radio One’s Spring ratings were negatively impacted by PPM in Philadelphia (-45%) and Houston (-47%). As PPM rolls out in more markets, it may impede the ability of niche formats to take listening share," the analysts said in their latest report.
What’s the solution? With PPM showing higher cumes and lower TSL, the Bear Stearns analysts think radio may need to change its pitch to advertisers. "Radio may choose to begin selling itself as a reach medium, not just a targeted medium," they wrote.
RBR/TVBR observation: Whether change is good or bad, we can all agree that change is hard. Shifting how radio is marketed will not be easily accomplished. As we’ve noted before, the immediate problem is in how advertisers are pricing ad buys in PPM markets. Arbitron says 70 GRPs under PPM equal 100 GRPs under diary measurement, but the buyers aren’t rushing to embrace the new math.