Wednesday, October 17, 2012

Is Radio 48 or 294+ Markets?

Hopefully the old 'Diary Market Owner/Operator Caucus' is on the phone with Arbitron today.

Hopefully, "Radio's Roi in Marketing Mix Models" (click for the pdf) white paper sponsors Dial Global and Premiere, whose business model involves near total coverage of radio in all markets to hit their growing Radar® cume numbers, know what the research they have been a part of for the last two years is going to do to network and national business in all but the 48 PPM measurement DMA's.

It's clear to me why CBS, Clear Channel and Cumulus - which though they do tout their total national cume audiences on their websites but also dominate the PPM markets - are probably going to love this report.

If all you do is pitch to buyers using CPP and present using software - possibly even eventually completely eliminating the need for personal relationships with media buyers - radio is going to get a much larger piece of the media pie in markets where PPM data is available and maybe ultimately get it with a lower cost of sales.

Top 40 and AC stations - those with high cume - are going to reap the rewards, just as they have done at the expense of lower cume/higher loyalty formats.

PPM's "larger sample" (as cited in the white paper) is actually a lot more granular data from a much smaller group of individuals who remain in the sample for as long as several years.  If you want long term data on how those small groups of carefully-selected people use radio, PPM indeed does a better job than diaries which measure far less granular usage by a much larger group of different people over the course of a year or two.

Thankfully, local radio in markets under market #50 is still an excellent business for local owners.  And, equally luckily, ratings and shares have less to do in those places with who gets the buy.

Local advertisers know local radio works.  They place their budgets on stations which get results for them and they don't require computer models to do so or to know what the results they see coming in their front door are worth to them in cash register rings.

That's a good thing, because Arbitron and Sequent Partners as I read it, have just provided the metrics that will move more and more of national ad dollars to the top 48 and away from diary-rated and phone-measured markets.

The big publicly-traded companies are going to want to own larger shares in the PPM-size cities, but will your network or national rep even be interested in you if you happen to have a large audience share in a small or medium market?

Maybe the silver lining behind that cloud is that local owners will stop cutting their rates to meet CPM demands from national buyers and will realize that their real value is on Main Street, not on Madison Avenue or Wall Street.


Jerry Del Colliano said...

PPM does not accurately reflect talk radio listening which means that if they chose an AMP hit radio format instead, they’d get bigger ratings with fewer expenses.

Radio Ink said...

We should get an update on the Arbitron sample size today. The Arbitron Advisory Council has been meeting this week and we'll get a condensed report on what took place during an 8:30 conference call.