• by Joe Mandese  @mp_joemandese, July 20, 2004

Radio audience researcher Arbitron and the Radio Advertising Bureau Monday issued a request for proposal for a study to assess the economic impact Arbitron's new portable people meter (PPM) measurement system would have on the radio industry. The effort would be the second economic assessment conducted by Arbitron, which has been trying to convince radio broadcasters - its core base of customers - that the new ratings system would not create a competitive disadvantage for the radio industry.

The concerns emanate from a series of studies conducted by Arbitron and Nielsen, its erstwhile partner in the development of the new media measurement system, which have shown that TV audience estimates - especially for cable TV - rise significantly, while radio's overall audience delivery essentially remains the same via the new system. The main reason for that phenomenon is that while radio's current ratings method - the diary - accounts for out-of-home usage of the transitory medium of radio, Nielsen's TV meters and diary systems were designed to capture in-home usage of television. But extending the measurement of TV outside the home, the PPM captures TV viewing that was essentially unaccounted for.

Not surprisingly, some major radio broadcasting groups fear the shift in measured audience estimates could contribute to a share of advertising budgets from radio to TV at a time when the radio industry has ambitious plans to grow its market share. In fact, radio currently enjoys the lowest share of advertising budgets relative to its delivery of audience impressions of any of the major consumer media.

In their RFP -- a copy of which can be found at http://www.rab.com/PPM_Economic_Impact_RFP.pdf -- Arbitron and the RAB said the study would be designed to explore how the PPM system might affect radio's share of ad revenue, how radio sells itself to advertisers and agencies, and how it programs and promotes the medium. David Pearlman, president, Pearlman Advisors and former senior vice president, Infinity Broadcasting, has been retained by the RAB PPM Task Force and Arbitron as the initial point of contact for consultants and companies who wish to submit a proposal.

The radio industry's concern is one of two major factors that have slowed the development of the PPM system. The other has been Nielsen's reluctance to deploy the method until it could be proven to meet Nielsen's research and sample cooperation standards. Nielsen negotiated an early right to own any TV related ratings data generated by a PPM system in the U.S., which is deemed to be an integral component for the success of the system, which would be the first to measure two - and possibly more - media side-by-side utilizing the same methodology and the sample audience samples.

While Nielsen has contributed significant sums toward the testing of the system, some believe it has been dragging its feet and is loath to help develop a system that would be owned by one-time competitor Arbitron.

The system is being deployed this fall by the Canada's industry-owned BBM ratings service, which also recently announced plans to merge with Nielsen's Canadian ratings operations, though the two companies would operate and maintain separate ratings systems in various markets, at least for the foreseeable future.