#%&*, We Have Better Radio Measurement!

by , Aug 20, 2010, 5:00 AM
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Remember the old saying, "Be careful what you wish for. It could come true?" For years, we have complained about the inaccuracy of radio ratings data, knowing that we are relying on the memory and accuracy of the listeners filling out the diaries. Wouldn't it be great, we thought, if there was a different way to measure radio listening?

Well, it's here and I find it funny that planners and buyers around the country are complaining about the new Portable People Meters. We can debate the issue of PPM's versus diaries forever, but it's really a moot point. PPM's are here to stay. We now have to educate ourselves on how to best leverage this new methodology for our clients' benefit.

Just like the transition to LPM's, nothing has really changed except the way that the data are being measured. However, the new method creates some growing pains for all involved.

First, more stations are being captured with PPM's, which creates a compression of ratings in a market. Buyers have to look deeper into station composition to find the right station for their target, because there may now be 10 stations within 0.1 of each other. For sellers, this compression dulls their ability to sell their station based on their rank within a market. They may have been the No. 2 station in the market, but now they are No. 2 along with four other stations much closer to them.

Second, PPM data show that more people are listening on evenings, overnights and weekends, proving that buyers may not need to buy the higher-priced drive time dayparts to reach their target. For planners and buyers, this opens up the option for entirely new daypart mixes. For sellers, this creates an opportunity to gain incremental dollars from dayparts that historically were not as lucrative.

Third, this new data let us know that people are tuning in more often, by different means. Since Internet listening is now measured, we will see some stations gaining significantly increased ratings, giving them another revenue opportunity for their stations that previously might have been only an added value portion of a schedule.

And, finally, the painful part of this shift is that our clients will pay more for lower ratings. The new data show us that time spent per listening occasion is much shorter than previously reported. With diaries, people tended not to include switching stations at the top of the hour for news, weather or traffic, even though they did.

The net effect of the new measures is that Average Quarter Hour ratings are lower, making it necessary for planners and buyers to develop new metrics for creating and then analyzing their radio buys. With the new measurement system, the reported ratings are lower, but stations are still charging the same prices for its dayparts, creating higher cost per points. For example, where you used to buy 100 rating points, you might now receive only 75 or 80 points.

While many buyers and clients think that it's unfair to have to pay more for lower ratings, we have to remember that inventory is sold on a demand basis, which is really what sets the pricing. Planners and buyers will have to decide whether to buy to determined point goal -- or to a budget -- keeping in mind that the former 100 point rating buy using the diary method was likely only delivering 75 - 80 points.

Successful radio planning and buying in the new PPM world will require a deeper understanding of a station's listening audience, who those loyal listeners are, and which stations will help you reach and engage them. Now we get to do all of this with the data accuracy we all wished for.

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