Currently, the radio industry is predominantly measured by Arbitron, a measurement company whose portable people meter was designed to make radio advertising more accountable. First deployed in Houston in 2006, the PPM is a pager-like device designed to track radio listeners' habits on a granular basis so advertisers have a detailed sense of how consumers interact with radio through their daily lifestyle habits.
The Nielsen announcement comes at a pivotal time for the radio industry, which is facing declining ad revenues due to measurement discrepancies from Arbitron that have caused an uproar and even lawsuits in New York and New Jersey.
Arbitron has had some very public delays in deploying the PPM in major markets such as Los Angeles, Chicago and New York, amid concerns from urban and Spanish-language station owners that the new electronic measurement under-reports their ratings and listener engagement.
In an effort to get beyond the difficulties, Lew Dickey, CEO of Cumulus Radio, issued a request for proposal for Nielsen to measure Cumulus stations in 50 small to midsized markets, starting summer. In an interview, Mr. Dickey said the RFP was "the result of our feeling that the existing product we had was deficient in consistency, accuracy and reliability. ... We're very pleased to be able to get together with Nielsen on this and award them the contract. It's a ringing endorsement for our industry that the gold standard for audience measurement has chosen to get into the business of measuring radio."
Following Cumulus' efforts, Clear Channel will also subscribe to the syndicated service in 17 of Cumulus' 50 Nielsen-measured markets. John Hogan, president-CEO of Clear Channel Radio, said he hopes the participating Clear Channel stations will gain more "stability" as a result of the new measurement. "There's been a wide disparity in our results due to methodology that looks suspect," he said.
"What's exciting for us is the opportunity to work with a service provider to craft an audience measurement tool that will be much more reliable and has been done in partnership."
Paper diaries simplified
Nielsen's radio measurement system will not rely on a portable electronic device but rather an enhancement of Arbitron's former currency standard, paper listener diaries. Lorraine Hadfield, who heads up Nielsen's global radio business, said participating households will be provided with stickers for every station in their local market to place on their paper diary, which will give each station an equal chance to be selected.
"It's much easier to complete the diary, and eliminates any kind of inaccuracies that people in an open-diary scenario might have created," Ms. Hadfield said. An electronic diary will be made available to participants in 2010 as an alternative to listeners who prefer to log their results online.
Nielsen will also present stations with a single-source questionnaire from their household sample so they can track their listeners' lifestyle habits and media usage in one document rather than combining PPM data with diary results. The full results will be presented once a year, a marked difference from Arbitron's six-month reports.
Mr. Dickey said Arbitron's six-month data sweeps were often dramatically different from each other. "It was nearly impossible to attribute those changes to consumer behavior in those markets. It made it cumbersome and strategically dangerous to make programming decisions," he said.
But Arbitron is already speaking out against Nielsen's methodology. "Once-a-year measurement is a step backward," Steve Morris, president, chairman-CEO of Arbitron, said in a statement. "Advertisers have told us that radio markets need more than a once-a-year survey in order for stations to maintain accountability and recapture revenue from out-of-home, Internet and online media."
The company also restated its planned enhancements and expansions to its diary service in 2009, including the addition of cellphone-only households to its survey sample in 50 diary markets in spring 2009, expanding to 125 markets in fall 2009. The company is hosting an investor conference call at 5 p.m. today to further discuss the concerns presented by Nielsen's new measurement deals.