Technology application to upend radio advert market

To think that radio station advertising rates are still charged based upon the antiquated theory of “diaries”, where a swat team of North American radio listeners make weekly notes about what they listened to.

All that is about to change, as the radio industry has finally agreed to allow technology-assisted monitoring, and all of the precision that comes with it. Here is a summary from the research analysts at Genuity Capital Markets:

“Background

BBM is on schedule to introduce electronic measurement to radio markets using PPM technology (Personal People Meter), starting with Montreal in December 2008 and expanding to Vancouver, Calgary, Edmonton and Toronto in September 2009. PPM has been used in Montreal to track TV ratings since 2004.

Montreal will become Canada’s first radio market to move away from the antiquated diary method of compiling ratings to the far more representative and reliable electronic measurement.
The PPM is worn like a pager, and detects hidden audio tones within a station’s audio stream, logging each time it finds such a signal. For TV, it has proved to be much more accurate than the old handwritten diaries’ forgetful test subjects, as the PPM captures signals no matter whether the panellist is at home, in the car, or listening through a mobile device.

With PPM, panellists do not need to remember what they were listening to throughout the week. Panelists simply need to take the PPM with them and the passive technology records the inputs.

What to expect from the shift to PPM

For over 60 years, radio ratings have been measured according to a deeply flawed method in which survey participants filled out weekly diaries. The problem is that people who fill out diaries tend to report their habitual behaviour, rather than their actual behaviour.

Survey participants’ recall of which stations they listened to over the course of a week is often tenuous at best, which tends to favour long-established radio stations over upstarts.

Based on the experience in U.S. markets which have already shifted to PPM and trials here in Canada, a few trends emerge:

1) Reach sees a lift

Reach is defined as the total number of unique listeners having been exposed to a radio station for at least one minute during the week.

In Philadelphia, the #1 station’s reach under the diary method was 1.09 million, while using PPM, its reach was almost double at 2.02 million. Part of this increase is attributable to incidental listening, i.e., while in a doctor’s waiting room or in a retail environment, where the listener does not control the dial.

2) The average number of stations listened to increases

Using Philadelphia data collected by Arbitron, the average number of stations listened to under the diary method was 2.6, compared with 4.5 stations once PPM was introduced.

3) Average Quarter Hour decreases

AQH averages all dayparts to determine the number of persons listening to a particular radio station for at least five minutes during a 15-minute period. Just as PPM is a more faithful representation of listening patterns, as evidenced by the fact the average number of stations listened to increases, it also stands to reason this reflects the fact that listeners frequently switch between stations.

Using that same Philadelphia data reveals that AQH declines 23% using PPM relative to the diary method. So, radio stations appear to pull in a bigger audience than originally thought, but that audience spends less time listening.

4) Radio is not just about morning and drive

The morning and afternoon drive times have traditionally been thought to be the be-all and end-all of radio, but PPM data indicates that evening and weekend listening are of far greater importance than originally thought.

Both systems show less listening on weekends, although the drop-off is less pronounced with PPM, relative to under the diary method.

A BBM study in Montreal also found that under PPM, weekend listenership saw a material lift, bringing it up to par with weekdays. We posit that this should give the value of ad inventory a lift across the board.

5) Tuning patterns by demo differ

In Philadelphia, PPM data consistently shows larger male audiences – 2.9 hours per day versus 2.7 for diaries. Conversely, diaries show larger female audiences – 2.8 hours for the diary compared to 2.4 for PPMs.

Diaries also skew towards larger older audiences, while the PPM reports younger. Teen listening is 50% higher with PPM measurement than with diaries. Conversely, the size of 65+ audiences is 20% higher with diaries than with the PPM.

This also makes sense in light of the fact that for years, men and younger listeners were consistently among the least reliable sample constituents to fill out a diary properly.

6) Ad avoidance is limited

Houston PPM data reveals that, on average, 92% of listeners stay tuned during commercial pods. With the exception of the first commercial in a spot break, which boasts 99.6% retention, the audience for all commercials is pretty similar. This finding suggests that advertisers need not worry about falling audience levels as a commercial break progresses.

Conclusion

Relative to diary data, PPM is more reliable, more credible and more frequent. On that last point, there will be four major releases of summary data per year, each covering 13 weeks of data, while monthly data will be released as well, allowing for quick feedback on programming and listening patterns.

The ability to offer advertisers ratings info within days of a show airing, instead of the months that diaries can sometimes take, holds the promise of expanding the radio advertising pie. However, as President of Canadian Broadcast Sales Pat Grierson mentioned at the CAB conference earlier this month, it will be important to make sure that ad agencies and their clients do not think the PPMs are just a money grab.

As radio in Canada shifts to PPM measurement, it is important to remember that it is the same listening audience; only the measurement has changed. However, it will be important for broadcasters to stress this point upon ad agencies who will note that Average Quarter Hour (AQH) metrics decline when using PPM data.

PPM has revealed that people tune in to more radio stations than diaries let on. However, the duration of each listening occasion is shorter, therefore impacting the AQH ratings. So media buying decisions may be briefly in turmoil during the transition period from diaries to PPM. It will be essential for broadcasters to educate advertisers about the measurement changes brought about by the new technology.

We expect radio stations with a lower profile than market leaders will benefit most from the shift to PPM. Whereas in the past, people who filled out diaries would naturally gravitate towards long-time market leaders when attempting to recall their weekly listening patterns, the PPM allows for a far more representative selection of stations tuned, irrespective of their profile within a market.”

The move makes sense, and it’s remarkable that the big stations were able to block it for so long. For me, the real question is what local radio station to listen to, not how to monitor the choice. CFNY has gone off the juvenile deep end in the morning. Q107’s classic rock pulls your mind back to highschool, whether you like it or not; Trooper, Kim Mitchell, Phil Collins, Queen, Zeppelin, etc. Classical 96.3 can be hit or miss if you are an opera fan, which is fine, but then there’s the insufficiently cheery “Good Day GTA” tagline. The CBC is a non-starter unless you aren’t already getting enough KO over the airwaves….

MRM