A TALE OF TWO SYSTEMS

Chris Byrnes – ByrnesMedia

The level of chatter about a Canadian roll out of an electronic measurement system for radio, better known as PPM, is increasing. Letters of intent have been sent to all broadcasters in the major markets, and if all goes according to plan, Montreal will be the first market officially measured electronically for radio in January, 2008. This will be followed by Toronto and Vancouver in September, 2008 with Calgary and Edmonton in early 2009.

This is both good and bad news for radio.  First let’s touch on some of the good news.

1. PPM is a more accurate way to measure listening, which means better and more reliable data for both media buyers and radio programmers. It’s hard to believe that an industry that prides itself on being hip and technology-savvy is still asking listeners to record their tuning via paper diaries.

2. With weekly delivery of data you will know sooner if a feature or show is working or costing you listeners. PPM may also result in more innovative programming to better serve the listener. Programmers who can show the numbers spike for a speciality show such as baseball will give their sales department the data needed to generate additional revenue.

3. Radio should see a larger slice of the advertising pie in those markets where PPM is deployed. Major advertisers and ad agencies agree that PPM is a more accurate way to measure radio. They are already familiar with it because television has been electronically measured for many years. This should give radio a clear advantage over newspaper and magazines and level the playing field with television. It may also help stem the flow of advertising dollars to new media such as the internet, which has been luring away money perhaps better deserved by radio.

Now, here’s the not-so-good news.  Radio operators outside the top five Canadian markets will suffer because the two-tiered measurement system will make it much easier for agency buyers to justify placing most of the radio budget in the top five markets while using television to cover the rest.  I can hear it now, “We prefer to use the average minute audience (AMA) numbers for both television and radio and the AMA data is only available in the top five Canadian markets.”

The recent study by The Forrester Group in the US indicates advertisers intend to reduce their spending by 2% in those markets that will not be electronically measured. Conversely in PPM measured markets, spending will increase by 3%. The estimated net difference in spending with PPM vs. diaries is almost $700 million. Will the same happen in Canada?

As an industry, we must find a way to make this a viable option for more than just the top five markets. Yes, the costs will be higher but providing there is a greater return on investment via increased national and local advertising, why not look for creative ways to make this happen? Consider the extra money you could be shifting away from newspaper and other media.

For those markets that will be forced to live with the current "total recall" rating system, I have some concerns. Arbitron conducted a series of focus groups recently and found that most respondents could not fill out a diary with any modicum of accuracy.  Everyone is so busy – with media, with families, with work – that even obtaining consent to fill out a diary has become a next-to-impossible mission.

While there are still some unknowns, one major concern for BBM must be the number of smaller stations that may resign and become unrated markets because of this new system. One industry insider suggested to me recently that all the small market operators should band together and once again resign en masse as they did in the late 70’s because of huge fee increases.

It has always bothered me that radio careers are often determined by this flimsy measurement system. We have all lived with the paper diary for so long that it has become an accepted dysfunctional part of our professional lives. I, for one, see PPM as a way for a much brighter future for radio, providing it can be viable for most markets.

Radio needs to continue to look for ways to make it easier for media buyers to choose radio.  Electronic measurement is likely the best tool to come along in years because the data is more stable and granular in support of those buys.

One possible outcome of PPM is that the increased reach may allow buyers to get the gross rating points they need by lowering the frequency in the top five markets. This would free up more expenditure for the secondary markets.

I welcome your feedback and comments on electronic measurement and your thoughts on how we all might adapt once this becomes a reality.

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