• by Joe Mandese , December 21, 2004

Nielsen Media Research Monday said it has until the end of the second quarter of 2005 to decide whether to form a joint venture with Arbitron to roll out a TV and radio audience measurement service based on Arbitron's portable people meter system. The disclosure, announced by Nielsen President-CEO Susan Whiting in a letter to Nielsen clients, sets a definitive timetable for the development of a PPM venture, which has been belabored by a series of ongoing tests by both companies, and a significant amount of due diligence by Nielsen.

"We have until the end of second quarter 2005 to conclude the due diligence for deciding whether to be part of the demonstration market," said Whiting, referring to Arbitron's rollout of a new market trial in Houston early next year. Arbitron has indicated plans to keep the system running and launch Houston as the first official PPM market if the tests prove successful.

During the due diligence period, Nielsen has been loath to lend any public support to Arbitron, including any support in recruiting sample households, or utilizing the Nielsen name in that process. However, Nielsen General Manager of Local Business Jack Oken said Nielsen is continuing to support Arbitron's tests financially and is consulting with Arbitron as part of its due diligence process.

He denied that Nielsen has been reluctant to go public in Houston because it has plans to introduce its own local people meters in the market. Nielsen has introduced LPMs in Boston, New York, Los Angeles and Chicago, and has plans to add them in San Francisco, Philadelphia, Washington, Detroit, Dallas, and Atlanta.

Earlier this year, Nielsen executives revealed a scenario to clients for introducing PPMs in markets 11 through 60, but have continued to maintain that it has not made a decision on the validity of the PPMs technology or methodology for measuring TV audiences as part of its commercial syndicated research services.

In her letter, Whiting alluded to the need to conduct additional research to validate the PPM, and said it would also "draw upon other PPM data from Canada and the United Kingdom," but that "the most important source of data will be from our clients."

To date, both Nielsen's and Arbitron's clients have shown mixed support for the PPM. A number of top advertisers and agencies, and some top network research executives have been very enthusiastic about the potential for PPMs to improve audience measurement, especially outside the home, but concerns remain over the PPM's ability to accurately detect audio codes for TV and radio. The radio industry has also been conducting a comprehensive economic impact study on the implications the PPM would have for the radio advertising marketplace.

Nielsen's Oken declined to specify what additional testing would have to take place for Nielsen to make up its mind, but he said some of that research would take place in Houston, while Arbitron is conducting its market trial, and some would take place in other markets.

Recently, VNU executives disclosed they had invested $20 million to date on research and development related to the PPM.