Randy Kabrich on PPM


I am not a PPM critic. I am critical of bad research – no matter what form it comes in. In PPM’s defense, it’s not the data collection mechanism that is the problem.

Besides over delivering African American Respondents, Houston, unique in its fielding and placement, has not been subject to the respondent/sample balance problems of all subsequent markets. Thus, except for the constant quality control problems (not PPM’s fault), Houston has not seen anywhere near the amount of issues as the "radio first" markets (all subsequent markets). This, above all else, should speak volumes about the value of MRC Accreditation in Houston versus the lack of it in "radio first" markets.

What I am critical of is all the problems that Philadelphia and all subsequent markets are seeing in the respondent/sample balance, not to mention quality control, especially at the price radio is paying.

Do I think that Arbitron could do a much better job on panel management as PPM will end up costing a radio station roughly 4% of its revenue compared to the current 2% for the diary? That goes without saying. For example, I truly believe there are better ways to nudge panel participants to carry their meters on more than a few days each week.

In today’s economy, what business is willing to give away roughly 2 more points of its total revenue for a problem-laden system?

As Broadcasters struggle in this economy, Arbitron posted very nice revenue increases in Q1 (5.5%) despite paying for PPM panels in New York, Nassau-Suffolk, Middlesex, Los Angeles and Riverside that were supposed to pay Arbitron significantly more than if they were diary markets. They also incurred the added expense of diary placement and collection in these markets, in addition to the PPM panels.

Overall, Arbitron reported Revenues of $94.1M (MILLION) in the Quarter. If they had the received the additional 2% of revenue from Stations in those PPM markets that were slated to go live, but had not, in the Quarter, Arbitron would had seen roughly $17M (yes, MILLION) in ADDITIONAL Q1 Revenues – or AN ADDITIONAL 20% to their Q1 Revenues. That said, Arbitron would have seen a revenue increase of roughly 22% in Q1 instead of 5.5%.

Compare this radio’s decline in Q1.

Considering they lost Revenue of $7M in 2007 Q4 when PPM did not go live in NY and an additional $17M in 2008 Q1, that’s $24 Million lost revenue and counting. This is simply a matter of Arbitron being short sighted and trying to do things cheaply – instead of doing things correctly. They clearly have the money to do it correctly, but as the problems continue, at who’s feet does it land?

Radio is at the crossroads.

If we are willing to give away an additional 2% of our revenue to Arbitron so they can make record profits and revenue, shouldn’t Radio at least expect to have the problems solved before we pay for it? Or should we just continue to roll this out just so Steve Morris and Pierre Bouvard can obtain their bonuses?

Randy Kabrich