In an industry where audience measurements effectively are surrogates for market currency, changes in research methods can have a profound impact on the way people plan and allocate their budgets.
This has always been clear to media planners and buyers, who rely on research estimates from companies such as Nielsen, Arbitron, Mediamark Research, Scarborough, NetRatings and comScore to make decisions about the print and electronic media they select for advertisers. Any changes normally are slow, well thought out and heavily tested before they are implemented. But even then, as has been evident with Nielsen’s rollout of People Meters in the local markets, chaos can reign.
But while lawmakers and the media seem transfixed by the implications of Local People Meters, Madison Avenue has moved past that methodological change and is wrestling with the impact two other-arguably more fundamental-shifts are likely to have on the way they plan and buy media.
The first of those developments, Nielsen’s decision to begin measuring and reporting ratings for digital video recorder households next year, will change virtually overnight the way the ad industry thinks of television viewing, commercial exposure and the value of time-shifted TV audiences. The second, Canada’s decision to begin using Arbitron’s Portable People Meter technology, will change the way the ad industry thinks about simultaneous reach across two electronic media markets, and potentially across a wide array of others.
As if that weren’t change enough, some major cable operators, including Comcast and Cox, have begun feeling out Madison Avenue on the notion of a new audience measurement service that would be derived directly from digital set-top subscriber boxes.
That immediately raises questions about issues such as consumer privacy. The question of how the data would be collected, aggregated, reported and used also remains a significant hurdle. However, the fact that two big MSOs are at least thinking this way is a major milestone for the ad industry, which has long coveted access to the so-called “clickstream” data generated by digital set-tops.
“These are all very important developments,” said the research chief of a top media shop. He framed the evolution this way: “The diary was 19th century technology. The people meter was 20th century technology. The Portable People Meter is 21st century technology. Is it perfect? In audience measurement, there is no such thing as perfection. We just keep trying to make it better.” The ad executive stopped short of chronicling the role of DVRs and digital set-tops in the media ratings timeline, but they clearly fall more into the 21st century category than older eras.
Most agencies had signed off on the LPM long ago, and have quietly sat on the sidelines as the rollout flamed into a racial and political debate. Curiously, PPMs have been brought into that debate, as two U.S. senators, California’s Barbara Boxer and New York’s Charles Schumer, have begun questioning why Nielsen isn’t leap-frogging the “push-button” People Meter in favor of the PPMs, which some see as a more passive and potentially more accurate way of measuring media exposure. During the recent congressional hearings on Nielsen’s Local People Meter plans, Nielsen CEO Susan Whiting sidestepped that issue when queried by Sen. Boxer, stating that Nielsen continues to invest in the research and development of the PPM with its potential partner Arbitron.
The question took on new impetus for Sen. Schumer when it was disclosed that Nielsen was merging its Canadian operations with BBM Canada, an industry-owned TV and radio ratings cooperative that has extensively tested and has now decided to roll out the PPM as its official ratings currency in Quebec and Montreal this fall. How and when Canada’s move might impact deployment of the PPM in the United States is anyone’s guess, but at least one insider believes it is a key endorsement of the technology.
“The barriers to change are very, very high, so when a major economy and a major country like Canada takes this kind of a step … that, in our mind at least, counts as a pretty significant statement of confidence by a very sophisticated media industry that does very detailed analysis before they make a decision to move,” said Stephen Morris, president and CEO of Arbitron, during a recent briefing with Wall Street analysts.
Nielsen’s Canada move coincided with an announcement by Nielsen and Arbitron that they had made a breakthrough in the response rates of panelists using PPMs in test markets, and that the PPM is now achieving response rates akin to those of Nielsen’s People Meters. Arbitron owns the PPM technology and has an agreement to develop it in the U.S. with Nielsen, which would control any TV ratings data generated by the system. The PPM will begin a test later this year in Houston.
This next phase is important for two reasons. First, it could test the radio industry’s support of the new meters, Madison Avenue, Arbitron and the Radio Advertising Bureau believe that ultimately the PPM technology is a good thing, because radio currently is measured by the most antiquated of ratings methods-paper diaries-and the move to electronic measurement would put radio on an even playing field with the state of TV ratings art.
It would also level radio’s playing field with TV in another important facet, said Arbitron’s Mr. Morris: how agencies plan the two media. Specifically, Mr. Morris was referring to the findings of a study conducted jointly by Arbitron, media agency OMD and media planning systems provider Stonehouse Systems, which for the first time showed the impact PPMs can have on identifying and planning the unique audience reach of the two media side by side.
“When radio is added to TV in a media plan, it brings in a significant number of unique consumers not reached by television alone,” Mr. Morris said. “These findings make a strong case for giving radio a more significant piece of a media plan.”
Reluctant to Change
Despite this, and the fact that radio reaps only about 7 percent of U.S. ad budgets-about a third of TV’s ad market share-some key radio players, including Infinity Radio, Cox Radio and Radio One, have been loath to change and have said they will boycott Arbitron’s and Nielsen’s PPM test in Houston. That could be a genuine setback for the PPM, because the Houston test is being designed in part to vet the findings of OMD’s study, which indicates that radio delivers a significant unique reach, especially among key demographics such as teens and young adults.
“It just boggles my mind that they don’t want to participate,” said Beth Uyenco, director of communication insights at OMD and author of the TV/radio reach study. “It seems rather dumb to me that they would give up the potential to get a bigger piece of the ad pie, because they have all these established ways of doing business.”