Imagine paying for 100 feet of rope, and getting only 65 feet, while someone else gets 98 feet based on your age, sex, and where you live.
Confused? Imagine how media buyers feel.
AQH estimates with PPM are lower than diary estimates, about 30% less. Arbitron explains it this way:
Different measurement methodologies can and do produce different results (in other words, different estimates).
Note that Arbitron is not claiming that with PPM there are fewer people listening. Only that PPM finds fewer listeners. So as far as Arbitron is concerned, the lower estimates that PPM produces is just a minor consequence of the switch-over to PPM.
The problem is that media buyers don’t think like Arbitron.
They buy radio using budgets based on AQH points. They will be told to buy (say) 100 points in a market. Their job is to buy it as cheaply as possible.
When AQH ratings drop in a market, a media buyer will pay less. Period.
The reason for the drop is immaterial. Fewer points. Fewer dollars.
If new PPM numbers are 30% lower than the old diary numbers, she will expect a 30% discount from what she paid in the past.
Arbitron came up with a solution that only Arbitron could. They simply decided that media buyers should pay more per point with PPM.
Arbitron created confusing charts for media buyers showing exactly how much more buyers should pay with PPM. (At left, click to enlarge.) The buyer might have to pay 35% more, or maybe 1% more. It depends.
It depends on the market, the daypart, the sex, age, and ethnicity of the target audience.
The guide now runs 65 pages, requiring media buyer to sort through nearly 200 different possibilities in each market--just to find out how much more Arbitron thinks the buyer should be willing to pay.
There is no scientific basis for Arbitron’s buying guide. It is simply an ad hoc attempt to dance around the negative financial implications of PPM’s lower estimates dressed-up with some scientific sounding mumbo-jumbo.
But it gets worse.
The top 50 metro markets will have switched over to PPM by the end of the year. The remaining 241 Arbitron markets are measured with diaries, and will continue to be measured with diaries.
Since PPM and diaries produce different estimates, strictly speaking we cannot combine PPM and diary estimates. They are not comparable.
But Arbitron does. Repeatedly.
National radio estimates like Arbitron’s Radio Today, RADAR, and DMAs are now a hodgepodge of combined numbers, PPM numbers for the largest markets combined with diary numbers from smaller markets.
You’ll find this note in Arbitron’s latest Radio Today (emphasis added):
In this first annual report including PPM-measured data from several major markets as well as Diary methodology, average quarter-hour (AQH) ratings were lower than what would otherwise have been reported using an all-Diary methodology.
These differences should not be regarded as actual declines or losses in listening, but as a shift in measurement methodology. As more markets transfer from Diary-based measurement to PPM, we can expect to see additional and significant adjustments in these figures compared to Diary returns.
Arbitron neglects to mention that all these significant adjustments will be downwards. No market has been adjusted upwards, and none will be.
It’s right there, but will anyone pay attention to this warning? How many writers and new-media pundits will worry that trending PPM numbers with diary numbers is wrong, especially when it portrays radio in decline?
So the stories will just cite the Arbitron trends and declare: Radio Listening Drops Again.
In our next post we’ll try to disentangle this confusing hodgepodge of numbers to assess the real health of radio.