Please Stand By: Arbitron’s Radio PPM May Be Stalled

Fearing higher research costs, lower ratings or both, radio stations have once again managed to construct a roadblock to the rollout of Arbitron’s Portable People Meter ratings service. At the urging of its Radio Advisory Council last week, Arbitron agreed it would not make the PPM ratings the currency in Houston without Media Rating Council accreditation. Both parties are still debating whether MRC accreditation would be a prerequisite for rolling out the PPM in Philadelphia and other markets.

“The council was of the opinion that this product was so important that it really needed to first get the ‘Good Housekeeping seal of approval,'” said Bill Kelly, RAC chairman and market manager for WKBN-AM, Clear Channel’s news station in Youngstown, Ohio. The Council is a New York-based organization that assesses audience measurement systems, like Nielsen’s TV ratings services and Aribitron’s radio ratings system, to make sure they comply with accepted industry standards for accuracy.

The decision could derail the timing of the PPM’s rollout. For Arbitron to meet its July 1 launch date in Houston, the MRC would need to complete its review of Arbitron’s audit and accredit the service by June 15. While the MRC could conceivably accredit the PPM by then, agencies—most of whom have signed on for the PPM—are worried that the review process could drag on, pushing the rollout off at least another year.

Last week, however, the MRC was not providing any assurance that the PPM would be accredited by July. An audit of the new service has been ongoing for two years. Currently, the two sides are going back and forth on a number of questions the MRC has posed about the Houston PPM system. Anthony Torrieri, svp, associate director of the MRC, said the council is now awaiting response from Arbitron on several questions. But the answers that Arbitron responds with could pose more questions. “It’s a fluid situation,” said Torrieri, who declined to speculate on when the process would be complete.

Further complicating the industry’s transition away from diary measurement, radio giant Clear Channel’s electronic measurement evaluation committee opened the door to two potential competitors to Arbitron. Although Media Audit/Ipsos’ smart cell-phone-based technology and MRI/Eurisko’s “Media Monitor” (a portable meter that uses a matching technology) have yet to conduct a single U.S. test, Arbitron’s decision gives both research firms more time to get up to speed.

“The critical thing for us is to make sure that once we decide on something, it’s the right choice for us. And if that takes two or three years, so be it,” Randall Mays, president and CFO of Clear Channel, told analysts at last week’s Bank of America media conference.

Agencies, which attended Arbitron’s Advertiser/Agency Advisory Council meeting last week, are getting quite frustrated with the industry. Waiting two to three years—as the industry undergoes even more fractionalization—would be too late, said agency execs. “It’s just another sign how reticent this business is to change,” said Kathy Crawford, president of local broadcast for MindShare. “If the rollout doesn’t move within the next two months, it will hurt radio. Ultimately, advertisers will take their money and move it to a more accountable medium.”

All along, stations have balked at the cost, despite studies and assurances from agencies that have gone through a similar transition in TV. “The PPM costs 65 percent more in an industry whose revenue has shrunk and is beholden to Wall Street. It may be hard for radio to find the money [to pay for PPM]. But if they don’t, it’ll pull the plug on the industry,” warned Jean Pool, evp and COO at Universal McCann.

By giving stations the “off-switch” to PPM service (stations must encode signals for the PPM to track listening), Arbitron finds itself in a hard spot. In the end, though, the entire industry may lose. Said Crawford: “Radio is not a must-buy now—all these things are causing it to be even less of a must-buy.”