Houston First up, Followed by Top 10 U.S. Markets in 2008

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NEW YORK ( -- Even while radio giant Clear Channel mulls three finalists in its search for an electronics ratings service, Arbitron is forging ahead with its portable people meter in Houston in July and plans to roll it out to the top 10 U.S. markets by 2008.
Arbitron’s portable people meter.
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Since 1965 Arbitron has measured radio listening by asking its sample panel to fill out a paper-and-pencil diary, noting which stations they listened to and at what times. The method has fallen out of favor with advertisers, who suggest asking listeners to write down every time they switch stations is ineffective and doesn’t offer an accurate listening picture.

Encoded signals
In addition to radio, the PPM -- a small pager-like device that picks up audible codes embedded in an audio signal -- is able to measure other media as long as it’s embedded at the source. In a recent Houston trial, TV networks encoded the signal, allowing the PPM to measure out-of-home viewing. And several retailers chose to encode their in-store radio feeds to try to form a link between a sample member and an ad he or she may have heard on the radio hours before entering a store.

In a statement, Arbitron CEO Steve Morris said Nielsen’s decision earlier this month to forego a potential joint venture on the PPM in which Nielsen would use it to measure TV listening paved the way for Arbitron to proceed with the service for radio. He also noted that Arbitron “will continue to work with those of our customers who are in the process of examining options for the ‘next generation’ of electronic measurement” -- namely Clear Channel.

So far 48 advertising agencies, two broadcasters and an advertiser, Wendy’s, have signed on to use the service.

Since it commenced its PPM trial in Houston last July, Arbitron has been using the PPM and diary measurement systems simultaneously. Diary and PPM measurement will overlap by about a quarter in the next four markets scheduled for PPM rollout-Philadelphia in January 2007, New York in October 2007, Los Angeles and Chicago in January 2008-in order to allow planners, buyers and sellers to recalibrate the cost per points.

The results of two PPM trials indicated fewer total radio ratings points but that radio had a far greater reach than expected. Local media buyers, who have been some of the strongest advocates of a more efficient radio ratings system, had gone through just such a transition in local TV when Nielsen replaced diaries in several of its local markets with local people meters.

Radio groups feared the PPM results would mean reduced ad dollars for them and Arbitron commissioned a study on the subject to try to assuage that fear with promises that a better measurement system would likely mean more money for radio, not less. Arbitron has committed to hosting roundtable discussions between radio sellers and buyers in each market that moves from diaries to PPMs.

"This is kind of like when France converted from the Franc to the Euro," said Pierre Bouvard, president of Arbitron's PPM division. "The actual cost didn't change but everything in the store had to be re-priced."

Mr. Bouvard said Arbitron has a continuous dialogue with the TV industry on how PPM can serve as a supplement to Nielsen, whether it be to measure out of home viewing in bars or at work or as a tool to index TV watching and radio listening.

"Local TV stations spend a lot of money on radio promoting their newscasts so knowing precisely the right places in radio to promote a newscast is valuable," he said. He also noted the PPM can measure podcasts with commercial content, streaming radio and the emerging HD radio stations.

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