If it lives up to the hype, the Portable People Meter could revolutionize radio advertising by providing a more accurate
look at who's listening to what.
The pager-size device tracks radio-listening habits in real time, rather than relying on ratings survey participants to remember what stations they tuned in during the course of a day. Industry experts say the PPM's accuracy even could win back skeptics such as Cincinnati-based Procter & Gamble and others that had all but given up on radio.
And finding a better way to track radio ratings--and price advertising--could have a huge impact on industry players like Indianapolis-based Emmis Communications Corp.
"Over the last five years, a lot of young media buyers have been looking at radio [and its rating system] with raised eyebrows," said Rick Cummings, president of Emmis' radio division. "We're increasingly up against a credibility issue."
Still, radio-station operators have mixed feelings about the gadget, tested by New York-based radio ratings firm Arbitron Co. this year in Houston and Philadelphia. Numbers in those markets were lower using the new technology, but Arbitron says the ratings are more reliable. Such details matter because stations set advertising prices based on the listener tallies.
For all its promise--and potential pitfalls--little has been written about the new system, which now is rolling out in Chicago, New York and Los Angeles. It will be the radio measurement tool in Indianapolis in just more than two years. Still, the PPM is relatively unknown to many media buyers and advertisers.
"We haven't had much communication from Arbitron," said Bill Perkins, a longtime media buyer who operates Indianapolis-based Perkins Nichols Media. "The only thing we really know is that something new is coming. It's supposed to be more accurate, but who knows?"
The PPM seems like something pulled out of the futuristic world of Max Headroom. It's designed to be a radio listener's third ear, and Arbitron officials want to make sure it goes where the ratings survey participant's other two ears go. The device has a super-sensitive motion detector, and if it remains stationary for even a short time, its data will be discounted.
"If you're breathing, we'll know it," Arbitron Senior Vice President Thom Mocarsky said of those carrying or wearing the PPM. The more survey participants carry the device, the more they get paid by Arbitron.
Radio stations subscribing to Arbitron's ratings service will have a transmitter installed to send an inaudible signal through radios identifying it to the PPM. The device picks up signals wherever the listener goes--from home to work and everywhere in between. There is no off switch.
When survey participants sleep, the PPM is placed on a mechanism that recharges the battery and downloads information to Arbitron's headquarters.
Experts say the PPM is a quantum leap from the pen-and-paper diary system now used. Current Arbitron survey participants are paid a small sum to participate, and Perkins said most wait until the end of the day to fill out their diary, instead of more accurately filling it out hour by hour.
"The diary system has some shortfalls," concurred Jay Schemanske, associate director of strategic communications in the local office of media buyer Optimedia, a division of ad agency Publicis. "But for 40 years, it's been the standard. It's how radio advertising was priced and purchased."
Arbitron started developing an electronic ratings system in 1992, but the influx of new advertising outlets and the ability to accurately track Internet traffic along with television's jump to high-tech viewer measurement gave the project some urgency.
The PPM already is registering some important nuances in radio listening habits the diary system did not. For example, radio stations using the service can get complete weekly ratings instead of the quarterly figures compiled with the diary system.
Even so, station operators have mixed feelings about the technology, perhaps because of the mixed ratings message the devices have delivered.
PPM usage in Houston and Philadelphia showed there are just as many people listening to radio as was reported through handwritten diaries, and listeners are tuning in just as long as before. But the audience is more fragmented, since the device picks up listeners' dial-surfing habits more accurately.
"Instead of listeners tuning in to two or three stations as reported with the diary, we've found it's actually four or five stations," Mocarsky said.
Industry experts said, in many cases, that has eroded the largest stations' cumulative audience.
"What people have to realize is that this is a different measuring system," Emmis' Cummings said. "It's like going from miles per hour to kilometers per hour."
Results in the test markets show that 70 rating points using the PPM are equivalent to what used to be 100 rating points in the diary system. But radio stations contend since the audience is essentially the same, ad prices should not be slashed.
A better mousetrap?
Buyers aren't necessarily convinced.
"From a media-buying standpoint, this may change radio's role in a holistic strategy," Schemanske said. "A recalibration of pricing will likely be needed long term."
It's no wonder, then, that the technology was a dominant subject during a recent Emmis conference call with analysts. Although Emmis doesn't have stations in the two test markets, it does have operations in L.A., New York and Chicago, so should feel the impact of the PPM soon.
"The Portable People Meter ... addresses the single most important need that our industry has faced with our advertisers, which is accountability," Emmis Chairman Jeff Smulyan told analysts.
Given the importance of the PPM, Smulyan and his Emmis lieutenants last year pulled together an industry coalition that included officials from Radio One, Clear Channel, CBS Radio and two of the nation's largest ad sales firms in an attempt to reach an industry consensus on the issue.
Emmis and CBS were the first major radio operators to sign with Arbitron to use the PPM in mid-2006. Most of the other major radio groups have since followed suit, and Arbitron says 75 percent of radio stations in the nation's top 50 markets are now signed on despite the lingering uncertainty.
"No one is against having a better mousetrap for measuring the audience," said Chuck Williams, local market manager for Radio One, which operates WHHH-FM 96.3, WTLC-FM 106.7, WNOU-FM 100.9 and WTLC-AM 1310. "There may be disagreements about what that mousetrap looks like."
Disagreements aside, the industry is bracing for the change.
"It's not a matter of if we like it," Williams said. "It's coming."
The good and bad
To cover increased costs of the high-tech system, Arbitron will charge radio stations about 65 percent more for PPM-generated ratings than for the diary survey, Mocarsky said. That will amount to a six-figure annual cost increase for many large radio operators, including Emmis, industry experts said.
There are other concerns, as well.
Some critics say the PPM will not accurately measure the number of black and Hispanic listeners--a common complaint about the current system, too. Stations targeting minority audiences say their listeners may be even less likely to use the new technology. But Mocarsky said the tests in Philadelphia and Houston have indicated few problems measuring ethnic audiences.
Media buyers have complained the portable devices record "hearing," and not true "listening." Diary entries, on the other hand, reflect the stations the listener still remembers at the end of the day.
"There's certainly a difference between engaged and captured listeners," Optimedia's Schemanske said.
Others are concerned that young listeners won't carry another gadget along with their cell phone, iPod and whatever else they jam in their pockets.
Mocarsky admits that gauging younger audiences is an issue, but no more so than with the diary system. And because the PPM is so much easier to use than diaries, Arbitron is adding listeners ages 6 to 11 to its surveys, which had included only those 12 and older.
Operators such as Radio Disney have clamored for ways to track younger children, who are thought to influence parental purchasing choices. But the most highly sought demographic is still 35- to 54-year-olds, since baby boomers outnumber every other age segment.
Ultimately, some PPM revelations should help radio stations sell ads. The ratings tests showed that stations have only 8 percent fewer people listening coming out of a commercial break than they did heading in.
"That means a lot of people are listening to radio commercials," Emmis' Cummings said.
Commercials also can be encoded with their own signal, meaning PPMs could detect which and how many listeners are hearing specific commercials.
As the rollout continues, Arbitron officials are promising to compile more valuable data for all interested parties.
"There's a never-ending quest from advertisers for more granular data," Schemanske said. "If this helps us better connect with the [radio] audience, that's a good thing."