On measurement and monopoly

Michael Hedges August 13, 2007

Across the globe and across all media measurement is the be-all and end-all to commercial success. As media buyers and ad agencies demand changes and enhancements to measurement systems, from cross-media, passive monitoring to ‘granular’ data, broadcasters either acquiesce or endure the financial consequences. Cox Radio CEO Bob Neil took questions from ftm on radio measurement and monopoly.

Robert F. (Bob) Neil is President and CEO of Cox Radio, owner and operator of 80 US radio stations in 18 markets. Cox Radio is publicly traded and effectively a subsidiary of Cox Enterprises, originally a newspaper company, which has, in its 109 years, spread to radio, television, cable TV and new media. Neil joined the company in 1986 and was named to his current position and company director in 1996. Unlike most US broadcasting CEO’s, Bob Neil’s career started in programming, an influence clearly evident today.

Arbitron provides radio audience measurement systems in the United States. It has been virtually the sole supplier for more than 30 years. A decade ago Arbitron began developing a passive, electronic measurement system (PPM – Personal People Meter) to replace diary data collection. Having recently received accreditation from the US Media Research Council, PPM-based audience measurement is being conducted – side-by-side with diary data collection – in two US markets, Philadelphia and Houston.  The PPM system is marketed in Europe by TNS Global.

Cox Radio and four other US broadcasters have agreed to support testing of Ipsos’ smart-phone measurement device in Houston this autumn.

ftm: Cross-media measurement is all-important to media buyers today. Media usage per person has reached levels incomprehensible a decade ago, if all new media (from internet to games) is included. To what extent do you, at Cox Radio, evaluate the strength of the company’s brands? How is that done?

Neil: We do a great deal of perceptual research on our brands.  It is going on year round.  We’ve invested in extending those brands to the internet, and we’ve become agnostic about how we are consumed.  It doesn’t matter to us whether it’s our over the air signal, web pages, or streaming on computers or handheld devices.

ftm: Broadcasters have discussed electronic measurement for radio for a decade or more. It seems closer now to becoming reality, yet I sense a distinct lack of excitement by broadcasters. Would that be a correct assumption?

Neil: That’s probably an understatement.  Two factors combine to generate this:  The high cost broadcasters are paying in an already challenging business environment, and the challenges faced by the declines in AQH (average quarter hour) numbers generated by electronic measurement.  There isn’t anything exciting about it.

ftm: Media buyers clearly favor electronic measurement over diaries. If implemented throughout the United States, what advantages or disadvantages do you see for radio broadcasters in the relationship with the advertising industry and the money they spend?

Neil: Media buyers always want enhancements in measurement, because they largely don’t have to foot the bill for it.  So who wouldn’t want something that was ‘better’ when you don’t have to pay for it?  The main problem I see is that PPM reflects dramatically lower AQH numbers.  Cume numbers go way up suggesting huge reach.  (PPM – Personal People Meter – is Arbitron’s trademarked electronic media measurement device system) 

The problem is Media Buyers don’t buy reach…they buy Radio like they do TV…on an AQH basis.  Arbitron was foolish, and we as broadcasters are foolish, if we think that is going to change.  TV drives the big bus on this issue, and Media Buyers will use any and every lever they have to lower rates they pay, and this gives them a big one.

ftm: Measurement by recall (diary or telephone survey) has created over the past two generations an entire language for radio broadcasters, in programming and sales. How have broadcasters been preparing themselves for measurement of exposure?

Neil: Arbitron has been so secretive about the data, it’s been very hard to get enough information to prepare.  They won’t even describe the process and bit rates they use for getting the data from the respondent to Arbitron.  The terms may change, but it’s still about getting listeners and keeping them as long as possible.

ftm:The US radio broadcasting industry is the largest and richest in the world. European broadcasters have been just as reluctant to adopt electronic measurement. On this side of the Atlantic many broadcasters are waited for the UKs joint industry committee RAJAR to complete its testing, now three years running. German broadcasters have rejected electronic measurement outright as insufficient for their technical needs. Iceland has adopted PPM for radio and television measurement but, in general, only small countries (Iceland, Switzerland, Singapore) with tiny broadcast markets have adopted to change measurement systems. To what extent are American broadcasters aware of these tests, trials and their results?

Neil: As usual, Americans tend to live in a vacuum.  The European tests have largely been out of the trade news here.

ftm: The radio measurement joint industry committees (JIC) – RAJAR being most notable in Europe – have been quite successful at bridging the interests of broadcasters (public and private) and media buyers. Electronic measurement has been adopted as radio advertising currency only where JICs do not exist. Why has a similar joint industry committee structure, responsible for measurement implementation and output, not developed in the United States?

Neil: Clear Channel tried very hard to put together something like this.  In fact, the RFP group was making progress.  American broadcasters, as you know, are so competitive that it’s hard to get us to agree on the weather.  Unfortunately, one individual at CBS Radio signed an Arbitron deal, largely to feed his own ego I was told.  As the second largest group, CBS torpedoed the RFP process by signing.  That individual was fired a few months later, but not in time to save the group process. 

It is possible had that not happened, that we might have decided to form such a group to negotiate on behalf of all of American radio, which would have changed the dynamic.  Arbitron is a monopoly and behaves like one, so we either need to get more competition or broadcasters need to form their own company to do measurement and own it, as is done in several other countries.  We just didn’t get it done in time, and now we are paying for it.

ftm Follow Up & Comments