Summary of Arbitron's Total Audience Measurement

Jan 23, 2012

As NPR and Public Radio content becomes increasingly accessible on more platforms, each release of Arbitron’s broadcast ratings is met with more skepticism.  Any ratings decline or lack of growth is often attributed to people shifting their listening from broadcast to digital.

While a shift to digital listening cannot explain away all erosion when there is a decline in the ratings, all indicators point to digital listening reaching critical mass sometime soon.  For many years, the audio industry has yearned for a measurement service that captures audio listening across all platforms.  Last month, Arbitron unveiled details for its own forthcoming Internet radio ratings service – the Total Audience Measurement service.

In doing so, Arbitron is treading a fine line between trying to please both its current customer base – radio broadcasters who are paying a high price for PPM ratings – and potential new customers – such as web pureplays.  By announcing the new service, Arbitron has invigorated an ongoing debate: "what is radio"? The summary below lays out what details have been shared so far, and the implications for NPR and member stations.

What’s driving this new Total Audience Measurement service from Arbitron?

There is no one-size-fits-all approach for measuring and selling audio. Each of the many ways to listen to audio has its own measurement system andeach has tools which are evolving to meet marketplace demand.  This causes confusion on how best to evaluate performance and how to make transactions for advertisements.  As consumers change how they listen, arguably so should how the industry buys and sells audio.  And as online audio continues to grow, then the need to sell air-time beyond the local market will also grow – both locally and across different markets.

What ratings do NPR and member stations currently have access to?

NPR releases broadcast ratings twice a year for its national shows, the basis of which NPR uses to generate revenue for corporate underwriting and to charge member stations to carry the newsmagazines.  These ratings are now a mix of two very different methodologies: the Arbitron’s Portable People Meter (PPM) which is used in the top 50 markets and collects listening data based on exposure to encoded audio signals, and Arbitron’s 7-day paper diary, which is used in the remaining markets and collects data based on listener recall.  In addition, NPR member stations also have access to local market PPM ratings every four weeks in PPM markets, and quarterly ratings in diary-measured markets.

Later this year, NPR will provide webcast metrics for member stations through a new partnership with AndoMedia. This will enable greater insights into the amount of digital listening to station streams, but will be a separate service from Arbitron.

Do Arbitron’s national ratings include any digital listening?

Technically yes, but the impact is minimal.  Arbitron has only just started to include HD and Streaming listening (from PPM-measured markets) into its national broadcast ratings.  In the next national survey – Fall 2011 which will be released in March – the ratings will include listening to HD & Streaming, not that anyone will notice (for example, Morning Editionmight get a boost of around 50,000 weekly listeners on top of its existing 13 million).

Why will we not see a significant boost from digital listening?

Measuring exposure is one thing (and the PPM does that quite well), but including that listening into the ratings (which are based on broadcast listening behavior) is another matter.  The PPM can collect listening data from new forms of radio (HD, Internet streaming), but it struggles to capture audio from devices that requires a headset such as a smartphone or a mp3 player.  The PPM also has complicated rules for crediting time-delayed or partial-show listening (podcasts/downloads) and cannot collect any data for services that are not encoded (XM/Sirius), nor any programs that do not exist as a broadcast (i.e. NPR’s Planet Money).

The other part of the story here is that listening to audio via radio is still the most dominant platform.  While NPR and Public Radio content can be accessed in many different ways, NPR raises its revenue (almost exclusively) through underwriting and programming fees based on Arbitron broadcast ratings.  The digital forms have yet to reach a critical mass, though every indicator suggests this will happen soon.

What is Arbitron’s Total Measurement Service?

Behind the scenes, Arbitron has been putting together the details on this new service for many months.  Basically, this service will measure audio as a single medium, regardless of whether it’s distributed over the air or via digital streaming. Arbitron will use a common set of metrics with only a basic level of details – most likely Persons 12+, total week ratings.  More discrete demos (Persons 25-54) and unduplicated cume may come later.  This will be done somehow by combining ratings from the PPM markets with server-side log file data provided by webcasters and de-duplicating listening to create local reports.  Diary data will also be added to national reports too. This service will go through lots of testing before any national, and then local, market reports are released.

What will be the biggest challenges with this new service?

There are at least two huge challenges– balancing the needs of its long-held and current customer base (i.e., radio broadcasters who currently pay a lot of money PPM Broadcast-based ratings) and the much-feared internet webcasters.  The second challenge will be getting everyone to agree to share their webcast server log files.  If some networks or webcasters choose not to share their data,then this inherently devalues the service.

Why are broadcasters unhappy with aservice that would measure all audio?

In a nutshell, if Arbitron measures radio alongside pureplay webcasters, then the latter become legitimate contenders for all the potential revenue from ad buyers.  The quotes below (from Inside Radio, December 19th) were taken just two weeks after Arbitron first shared plans behind its new total audience measurement service.  Arguably, these remarks are telling in that they view the pureplay webcasters through the lens of how the audio industry is aligned and how the audio is delivered, but with little regard to how the listener perceives them – which generally, is that they are all radio.

“You hear a lot about Pandora, Spotify — that’s not radio, that’s a music collection…and the way they’re measured has to be different as well — and unfortunately you see them trying to compare themselves to radio, which makes absolutely no sense at all”

--Bob Pittman, CEO, Clear Channel

"Arbitron’s plans would make Pandora “look, feel and smell even more like radio. All they’re going to do is provide Pandora their good housekeeping stamp of approval and true them up with our methodology”

--John Dickey, COO, Cumulus Media

"Taking a totally different business model and saying it’s the same as our model would be a very frightening approach”

--Drew Horrowitz, EVP, Hubbard Radio

Why are the web pureplays unhappy?

…because Arbitron has positioned this new service as ‘separate but equal’; webcasters would be much happier just being ‘equal’.  To be fair, this positioning is Arbitron’s valiant attempt to keep everyone happy, but instead, it might have already pulled the two parties irretrievably apart. 

Basically, the service would consist of two separate reports – one being “one-to-many” services such as broadcast radio, satellite radio and non-customizable online radio streams and the second report being “one-to-one” destination audio sites like Pandora, CBSRadio’s, Clear Channel’s iHeartRadio and on-demand music providers such as Spotify.  Web pureplays would prefer a true apples-to-apples comparison, not ‘separate but equal’.  Broadcasters don’t like the positioning either because they say there is nothing to stop someone lifting from one and comparing to the other.  And they’re right – that’s exactly what will happen, even if Arbitron doesn’t like it.  Pandora is already doing this, which is upsetting a lot of people in broadcast radio.

How has Arbitron responded to the backlash?

In an effort to differentiate broadcast metrics and streaming metrics, Arbitron recently released a short letter to its clients, clarifying the difference between the two, in Thoughts on Comparing Audience Estimates.  It’s a short piece and wasdriven in part because of the backlash expressed about Pandora’s aggressive use of audience metrics.  The letter contains many valid points, but overall, it’s likely to do little to stop anyone doing exactly what they are telling people not to do.

Can’t we all agree on what is‘radio’?

In the past, technology has been the big barrier to accurately measure the media people consume.  Much of the radio industry has been screaming for years for an end to the diary service, but now that the PPM is up and running – although how well it’s running is a separate but vital question for all to consider - but in this case, it might come down to how best to resolve and get all parties to agree on the big philosophical question here – which is simply ‘what is radio’?

Can radio span from signals from tall towers in big fields to a one-to-one streaming service like Pandora which consists of hundreds of thousands of consumer-created stations?  And if not, then the radio (or audio) industry needs to quickly find a consensus and then it can move closer to a common measurement.  Regardless of what the answer actually might be, advertisers want to measure all the sources that the consumer can choose from and they want a more holistic view of the entire audio marketplace that would allow them to follow the listeners throughout the day from platform to platform.  As Inside Radio noted, both buyers and sellers say universal audio measurement is needed to drive more dollars into the streaming audio marketplace. “It would be a game-changer in how media buyers and planners look at streaming,” says former TargetSpot chief revenue officer Andy Lipset, who co-founded one of the first companies to market in-stream audio commercials to advertisers and agencies. “It’s a necessity to move the advertising needle in the streaming audio space,” Lipset says. “Buyers are looking to see where music consumers are, not just radio consumers, and find the best ways to market to them.”

Will Arbitron’s Total Measurement Service ever be launched?

Here, I would echo Mark Ramsey’s point of view - it's not looking promising right now.  It’s hard to imagine how a combination of Arbitron’s biggest paying clients would come to an agreement with the new pure-plays and it’s hard to believe that all sides will willingly provide their server log files to Arbitron to present separate-but-equal ratings for a finite revenue pool that might continue to shrink should the audio industry remain unable to tell a complete story of how people consume all audio.

Instead, the current confusion of multiple systems measuring audio in multiple ways will likely continue.  Independent players such as Triton could make the most of the opportunity, particularly if the marketplace cannot wait for Arbitron to move forward.  Following ESPN, Katz Marketing has recently signed with the Media Behavior Institute for a service to better understand how radio fits into the day in the life of media consumers.  This service consists of panelists being given a smartphone with an app which they use to fill out an eDiary in 30-minute increments over a 10-day period.  In the past, Arbitron has been using PPM’s to measure media use on both radio and television.

Recent investments by NPR member stations in webcast metrics are timely as more listening shifts from broadcast to digital.  Having webcast metrics will enable member stations to sell digital underwriting spots separate from radio and potentially open the door for advertisers with digital budgets who otherwise might not have considered radio.  Currently, NPR and NPR Digital Services are establishing a pilot with a dozen member stations to test technology from Triton Media that allows them to ‘cover’ their underwriting credits with separately sold digital credits on their station streams.  This service could be a critical one as digital streaming becomes more important. A report and webinar for member stations highlighting Streaming Media Sponsorships will be announced in February.