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Nielsen Challenges Arbitron's Radio Monopoly

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NEW YORK After a year of battling minority groups, clients and federal authorities to get its portable people meter into major radio markets, Arbitron faces a new challenge as Nielsen Media Research sets its sights on ending Arbitron’s decades-old monopoly in the field.

Nielsen intends to initially measure radio audiences in 50 small and medium markets where it has a deal with Cumulus Radio, which issued an RFP for the business last spring. Nielsen also signed Clear Channel Radio in 17 of those markets. (Nielsen Media Research, like AdweekMedia, is part of the Nielsen Co.)

But sources said Nielsen intends to expand to other markets. “Nielsen isn’t getting into this to play around in 50 markets -- they want the entire market,” said a senior exec for one radio group. Nielsen executives would neither confirm nor deny that, only saying that for now the company was focused on setting up a system to measure the 50 Cumulus markets by next spring. “We need to work through this process first,” before considering an expansion, said Lorraine Hadfield, NMR managing director, who is overseeing the effort.

Nielsen’s proposed diary-based survey differs from Arbitron’s diary method in several ways. For one, the Nielsen diary employs stickers with station names, a form of aided recall to help listeners remember which outlets they listened to. For another, Nielsen’s service only measures markets once a year. Hadfield said Nielsen will employ larger sample sizes to reduce the margin of error by 30 percent.

While Hadfield said she has received “multiple calls” about the service, media buyers questioned the need for a second ratings source -- particularly one from Nielsen, which faces numerous challenges in measuring TV and Web ratings. They also wondered about a diary-based system at a time when clients want more granular research via electronic systems.

“Electronic verification is the way to go,” said Dennis McGuire, vp, regional spot director at Carat. Developing a new diary service, he said, “is a step backwards.”

While commending Cumulus for efforts to improve measurement, Maribeth Papuga, senior vp, local broadcast at Mediavest, said, “What we really want is to push forward with what we have and make it better and, perhaps, roll out more electronic measurement. Diaries won’t capture all the audio channels that audiences might listen to online or on satellite.”

Arbitron took its lumps on Wall Street last week, with two investor downgrades and a  plummeting stock price. It said the loss of Cumulus and Clear Channel would cost it $10 million per year. But CEO Steve Morris told analysts Arbitron would “aggressively protect our business” and remain in all markets.