Radio Advertising 101 part III

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.”

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Radio Advertising 101 Part II

Radio ratings are determined through the very inexact science that is ruled by the god of ratings – Arbitron. Arbitron wields immense powers in radio land, can make or break stations, careers and drive up or down spot prices by the power of their ratings. Since 1949, this research company has held a monopoly over the research that stations and advertisers must purchase in order to be rated. Until very recently, the research was conducted using a random sample of the population in each metro area, who after agreeing to participate, were sent a diary, one for each household member older than 12. Information about time spent listening to radio stations are filled out for a week and sent back to Arbitron.

Over the years there has been considerable criticism about the accuracy of data collected by Arbitron, namely stemming from the high percentage of the sample  not sending the diaries back (response rate is 30%) and from information that is provided not accurately representing actual listening.

Next time I’ll explain why.

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Radio Advertising 101 Part I

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.

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