From the Corner Office – October 2013

October 7, 2013

Peter Smyth
Beginning a New Era of Audio

The last several days have marked the end of the Arbitron era and the launch of Nielsen Audio as the primary provider of metrics for the broadcast industry.  A longtime fixture of the television industry, Nielsen spent over a billion dollars to purchase Arbitron and promptly renamed the service.

Notice anything different about the name?

Yes.  Radio is becoming part of a larger universe:  audio.

Advertisers, especially big national brands, have long wanted, and recently demanded, a more integrated holistic picture of their customers’ behavior across media of all types.  It’s a huge step to break down the budgeting silos that have kept both media buyers and sellers captive.  Nielsen has been working hard in the television, cable and video world to solve this problem, and with the acquisition of Arbitron, they will now be able to integrate the average two hours each day that listeners spend with radio into their overall picture of media consumption.

Today, we know little of the specific integration plan, but you can be assured that some day in the not too distant future, ratings will contain online radio stations such as Pandora, Spotify and iTunes Radio as well as podcasts like Adam Carolla, Ricky Gervais and “Wait, Wait Don’t Tell Me” from NPR.   We can no longer come to work believing that our rivals are the stations down the street; now we will see the true scale of competitors for our audiences’ attention.  That may scare some radio people, but it does not scare me; the truth is that we have been competing with internet audio for some time now, regardless of what Arbitron rules have said about the listening universe.

On the positive side, I do believe that advertisers will see much, much more data that will convince them of what we have been saying for years – that the local radio station is not only an excellent feature of their community but is also a great, affordable and effective advertising medium.  I believe that more aggregate dollars will flow to audio than have historically been budgeted for radio, and we will compete effectively for them.

For the past five or six years, our industry has been programming “to the meters”, meaning that we have focused on tactics and execution rather than on the strategies of our brands.  No measurement method or device is foolproof.  At times, the PPM has been painful as Arbitron tweaked the incentives and the panel size and makeup. I hope those deficiencies will be remedied by a larger and unified sample base.   While the people meter will continue to be the measurement instrument for the foreseeable future, that larger measured and integrated universe will allow us to see a more realistic picture of our listeners’ behavior.  I hope that the Nielsen staff will make it a high priority to provide advertisers and broadcasters with studies of comparative media effectiveness as quickly as possible.  When we are all measured by the same impartial umpire, we have a level playing field.

Any transition this large and far-reaching will be challenging and will force all of us to reexamine long-held truths.  But I believe that we are standing on the threshold of a new and vibrant audio marketplace.

PS:  I will be participating in the DASH conference in Detroit on October 23 and 24 and I hope to share some insight with you next month on the topic of the digital dashboard.  It’s another significant change that is coming toward us and we need to help automakers find a great, user-friendly way to incorporate all of this technology into the car in a manner that’s a positive experience for our listeners.