PPM Could Trigger Boost In Radio Ad Spending, Study Claims

While some radio broadcasters have been wary about the potential impact of portable people meters (PPM), Arbitron's new means of monitoring radio listenership, could lift radio revenue far beyond its current level and provide the industry with more reliable data than is now available, a study presented by the Radio Advertising Bureau concluded.

Presented at a press conference in New York City, the RAB's "Economic Impact Study of the Portable People Meter" concluded adoption of the PPM could make a sizable difference in radio spending and open a window for far greater potential revenue growth. The PPM, fully deployed, would potentially lift radio ad revenues $696 million over what they are with Arbitron's current diary method. Continued use of the diary method, meanwhile, could spell a fall in radio revenues, the study warned.

Coming on the heels of an analysis by the RAB-PPM Task Force released last week, which found that corruption of PPM data is "virtually impossible," the new study--which was funded by Arbitron itself and conducted by Forrester Research--appears to indicate that support for a new method of listener tabulation is growing greater still.

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"The confidence in the current diary system has eroded tremendously, and the radio industry is at potential revenue risk if it continues to be a diary-only industry," said David Pearlman, President of Pearlman Advisors, which spearheaded the project for the RAB. "The advertising community is clamoring for a better measurement system."

Forrester arrived at the $696 million figure via an economic modeling system, taking into consideration additional revenue projected by adoption of the PPM system and the loss of dollars that would potentially take place if the industry stayed with the diary system.

Some industry observers, however, expressed caution, saying that although the advertising community was by and large behind the adoption of the PPM, some of the study's monetary projections--based on highly changeable future predictions--were premature.

"It's very preliminary, as nobody knows what the marketplace conditions will be if and when the PPM is up and running," said Brad Adgate, senior vice president for research at Horizon Media, a private media services company based in New York. "It's also somewhat looking at radio as an isolated situation [but] clearly, there's increasingly more choice as to where advertisers place their dollars."

In tests, the PMP was able to identify 59 percent of total radio sessions in environments of varying levels of noise, falling within a goal of being able to identify between 50 percent and 70 percent.

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