RADIO EXECS START TO ACCEPT PPM, BUT SOME NOT READY TO PAY Katy Bachman – Mediaweek It's hard to imagine that radio broadcasters would be willing to embrace a 20 percent decline in their average quarter-hour ratings, the audience measure the industry uses to set rates for their commercials. But the response from many radio broadcasters to the reality of diminished ratings from Arbitron’s portable people meter trial in Houston, released last week, indicates they are ready to take their medicine if it means things will get better down the road.
“We have to be responsive to our advertisers and we have to adapt,” said Jeff Smulyan, chairman and CEO of Emmis Communications.
“Average quarter-hour is a nonissue,” added Jerry Lee, owner of WBEB-FM in Philadelphia, where the first PPM test took place in 2002. “All of a sudden, radio has a tremendous story to tell about reach.” Lee is referring to the PPM’s finding that most radio stations in Houston have twice as many weekly listeners compared to diary measurement.
Emboldened by the industry’s acceptance so far, Arbitron is floating a proposal to follow up the commercialization of Houston in April 2006 with Philadelphia in January 2007, plus three other markets in that year. By 2011, all top 50 markets could be PPM markets.
But it’s not all smooth sailing. While broadcasters admit PPM is a more accurate alternative to the antiquated diary, how they get there is a topic of pointed discussion. “Our opportunities are great, but we need to understand how the business will be changed. We can’t be afraid to have a dialogue on the weaknesses,” said Peter Smyth, CEO of Greater Media.
Arbitron may have trouble convincing Urban broadcasters, who feel they will be hurt most by lower AQH ratings and time spent listening. “That’s a big issue for Urban radio,” said Charles Warfield, president and COO of Inner City Broadcasting. (Radio One, also an Urban specialist, refused to participate in the Houston trial.) “They want us to pay 65 percent more for something that isn’t proven.”
Clear Channel and Infinity Broadcasting, the two largest radio groups, are balking at Arbitron’s 65 percent rate increase. “It’s costing us a lot to go digital, a lot to compete. I know [the PPM] won’t be perfect and we’ll have to dive in sometime, but it’s not ready yet,” said Joel Hollander, Infinity chairman and CEO.
Offering a glimpse of how radio might change under the PPM, agencies are rethinking how they might buy radio. “There’s no question there are some big differences and that it will change how we look at radio. We’ll have to recalibrate reach and frequency,” said Larry Kelley, executive vp of Houston-based Fogarty Klein Monroe.
As a reach medium, radio will be able to compete on a more equal footing with TV, advertisers’ favorite medium. “With less time spent listening, but higher cumes, you may have to buy radio across more dayparts and stations, rather than just a.m. drive,” said Brad Adgate, senior vp and director of corporate research for Horizon Media. |