What happens when you turn down a $6,000,000,000 offer from Google?
Looking into my crystal ball, there are two potential outcomes:
1. They become your biggest competitor and eat you for breakfast.
2. Your two year old company, which has experienced the fastest growth of any company, EVER, currently valued at around $7.8 billion and still experiencing unprecedented growth rates, prepares for a $15 billion IPO (and thumbs its nose at the internet giant).
How do you see this playing out? Keep this in mind – the week after they turned down Google’s offer, Groupon signed up 4 million new email subscribers.
Let’s say a telemarketer calls from Arbitron and asks for your participation in keeping a diary for a week. Statistics show that whether you agree will depend on your demographics. Then if you agree, will you bother to fill it out and send it back… If so, did you remember to diligently record every time and for how long you heard the radio… How about when you were in the store… Wait, what station was that… Driving in the car and your kids keep changing the station…
This widespread criticism has led to a new system of data collection known as portable people meters (PPM). I know you are hanging on the edge of your seat, but more on this next week. I’ll just leave you with the disclaimer from a radio schedule that was sent to me this week, just bear in mind that the criteria for allocation of money spent was based on the PPM rating points:
“PPM ratings are based on audience estimates and are the opinion of Arbitron and should not be relied on for precise accuracy or precise representativeness of a demographic or radio market.”
Ever wonder why you pay more for certain things than others? Who is to say what makes one commodity more valuable than another and who sets the criteria? And who is to say why someone would shell out $200 or more for UGG boots or a Coach purse when you could pay a fraction of that for something that is just as functional. Any college freshman will tell you the answer is supply and demand, namely if more people put higher value on one thing over another, chances are it will cost more.
What happens then when we try to put value on something intangible like radio advertising time? In general, the same rule applies. The more listeners tuned in to a certain station during different times of the day or week, the more valuable they are deemed and the more advertisers have to shell out for commercials. The concept is parallel to the obscene amounts advertisers pay to air their messages during shows that the most people are watching like the Super Bowl or American Idol. But how do we know how many more thousands of people are listening to one radio station versus another?
Check back next week to find the answer to this question where the god of Arbitron will be revealed in all his glory.