Well, now we know why Arbitron's Project Leapfrog hasn't hopped out of the development stage in 2012 in spite of lots of hype about it in 2011.
With this morning's news that Nielsen is buying Arbitron the phrase "this changes everything" leaps to mind.
I've blogged in the past about the precarious position of being a ratings company with revenues and EBITDA increasing faster than the underlying business which supports it.
The stronger projected growth of television and multi-new-media put the TV ratings giant in a better deal-making position and certainly provides Arbitron stockholders with a very convenient, timely, profitable exit strategy.
It has seemed to me for some time that Nielsen had to do something to recapture market share and move away from expensive surveys toward more automated ways of collecting usage data because of Rentrak.
FYI: Rentrak CEO is Bill Livek, former head of Birch and his compatriot, Bill Engel, is on the board of the emerging company which takes set top box data from AT&T U-Verse cable and at least one other multichannel provider, also known as return path data, and mix that with other information to create ratings.
Large samples in some DMAs, next to nothing in others, but estimates everywhere.
An Arbitron insider recently confided in me: "It's an interesting approach and due to the much lower cost, it's finding favor with a number of TV stations that are tired of paying for Nielsen."
If I am right about this, perhaps they're planning to do as BBM has been able to do in Canada and utilize PPM to measure all media.
If so, it could bring down rates for all current subscribers and greatly increase sample sizes by being able to pick up new media clients by showing actual usage data across all media platforms with an apples-to-apples panel sample based on real usage.
PPM could be used in place of the antiquated diary methodology with its seemingly intractable cooperation and response rate difficulties (which appears to get worse survey after survey) in every size market where Nielsen now measures TV.
Radio does not have a comparable system to Rentrak (unless you want to count those strange systems like Mobiltrak from a few years ago that pick up the IF from the radios).
We will continue to rely on surveys for some time, so the optimist in me hopes that our new ratings supplier will always continue to work as Arbitron generally has - to improve the system - while once the deal is done making it more cost-effective for clients, not further increasing rates in the ways Arbitron has done.
There are some wonderful researchers toiling at Arbitron who have been comparatively transparent, open about their problems delivering reliable estimates amidst a swift-changing media and population landscape.
Nielsen's huge international size makes the company more bureaucratic and "corporate" in their messaging to their clients.
As noted above, TV owners seem to dislike giving their money to Nielsen even more than radio companies do with ARB.
They engage in "big business doubletalk."
Nielsen announced a "doubling" of their sample last summer. They actually announced an effective doubling of the sample (their italics from the client notice) which can be done statistically.
Nearly everyone in the trade media picked up on the doubling without using or in other cases questioning the word effective.
Now that they are our new dancing partner, we'd be wise to look more closely into this.
Nielsen changed the way they estimate language dominance in highly-ethnic markets and the English-dominant went up quite a bit versus Spanish dominant. A one-time change but one that may have a bigger than expected effect on the estimates if they extend this policy to radio samples in the future too.
Arbitron's profitability and growing revenues, while vexing to an old medium whose revenues have been flat has meant that our longtime "frienenemy" has had the financial strength to invest in research innovations and new products like PPM and Project Leapfrog.
Nielsen is a company with much greater pressures on their bottom line.
Are they buying ARB for $1.26 billion to improve the media rating business?
Or, to simply push their debt farther into the future?
We're all about to find out.
THIS BLOG HAS MOVED TO ... - ...the A&O&B website. Link to all our blogs and articles - new and old - here Link to the A&O&B homepage here Thanks!
3 years ago