I probably spend too much time reading the radio and television research trade press, and now that I’m part of it, apologies in advance that this column may be adding to someone else’s addiction. The good news is that much of the trade press can be skipped, either because it’s not that important or the item has already been reported in five other emails or websites.
Reading so much trade press can be instructive when you apply “outside” news to the radio/audio business. If you haven’t been keeping up, measurement in the video space is becoming highly competitive and that has a direct impact on radio measurement as well.
The TV/video industry has seen several Nielsen-wannabe competitors enter the fray and the industry has not only taken notice, but it’s also taken action as well. Around 15 years ago, a group called the Coalition for Innovative Media Measurement (CIMM) was formed and is now a part of the Advertising Research Foundation. You should be aware that the word “media” in CIMM’s name applies only to visual electronic media as stated in the “About” section of CIMM’s website. CIMM has released several reports on advanced video measurement that are worth reading.
Next, a number of video industry players started a Joint Industry Committee (JIC) a year ago to steer research providers to provide services that better suit their needs. In other countries, JICs exist to act as a monopsony (when the marketplace has only one buyer, in other words, the opposite of a monopoly) purchaser of audience measurement.
It’s long been considered that JICs would be illegal in the United States based on our antitrust laws, but this JIC is different. It has set up criteria for “certification” of cross-platform data and invites all companies to participate. In September, the JIC announced that it had granted “conditional certification” to comScore, VideoAmp, and iSpot. Other companies did not make the initial cut, but they may make it through the next time. One important sidenote: Nielsen did not apply for certification from the JIC.
While radio and audio are not part of these groups, there is a downstream effect. Former Canadian prime minister Pierre Trudeau once said that the US-Canadian relationship resembled a mouse sleeping with an elephant, “No matter how friendly and even-tempered is the beast, if I can call it that, one is affected by every twitch and grunt.”
Radio/audio is a Canadian mouse and video/TV is the U.S. elephant. When the video industry has measurement competition with a number of companies trying to enter, the incumbent (Nielsen) has to go to battle. And that battle means more investment in the product and typically lower prices for customers.
Nielsen just announced a renewal for their services with FOX Television and Nexstar, the latter owning the largest number of US local television stations. Obviously, financial details were not disclosed, but I’d put a dollar or two on a wager that FOX and Nexstar will be paying less and probably getting more or at a bare minimum, dealing with much lower escalators than in their previous contracts. Nexstar also signed a contract with comScore for cross-platform data.
This leaves radio measurement in a precarious position. Our industry depends on Nielsen as the currency source of audience measurement (yes, I’m aware of Eastlan, but it has survived all these years by not going head-to-head with Nielsen; an astute strategy). Now that private equity interests own Nielsen and is smaller with the breakup from the other part of Nielsen (marketing data), where does that leave us?
Let’s consider the state of the current measurement technology. The diary dates to the mid-1960s. Arbitron began working on PPM in the ‘90s although the system didn’t make it to market until the mid-aughts. Since that time, have we seen any new measurement systems arise? PPM has a new form factor (a watch) rather than the old “pager” configuration. The diary has been updated over the years, but it’s still a seven-day, self-administered instrument. The basics have remained the same for a long time.
As I noted in this column, when Nielsen One, the cross-platform product was announced, the words “radio” and “audio” were nowhere to be found. On the ten-year anniversary of Nielsen’s takeover of Arbitron, I paraphrased the Ronald Reagan question “Are you better off now than you were ten years ago?”. Anyone for a “yes” answer out there? Please raise your hands!
Nielsen recently announced that they will be “offshoring” more of their operations and that likely means more RIFs for the Nielsen Audio staff here in the US based on recommendations from McKinsey. As Captain Renault said in Casablanca, “I’m shocked…shocked.”
Do you think you’ll get better service and a better product when most everything is handled in India, Mexico, and Poland with less oversight here?
What to do? Radio and audio usage is tougher than ever to measure, but there are likely some good ideas for different approaches to the problem. Why can’t our industry get together and search for new entrants?
Some time back, iHeart put out an RFP for a new system which didn’t get anywhere. Many years ago, Cumulus tried to find a competitor and convinced Nielsen to measure some markets with a diary. After a couple of years, Nielsen folded their radio tent and eventually bought Arbitron. Why would one company go it alone? The industry, along with the agencies and major advertisers, needs to get together and encourage competition in the audio measurement space.
The economist Joseph Schumpeter was known for a number of quotes, perhaps the most famous being “At the heart of capitalism is creative destruction”. We’ve seen that in so many industries and growing up in a Kodak family, I know what can happen to a Fortune 500 company that doesn’t change with the times. Perhaps it’s time for some creative destruction in our space.
Let’s meet again next week.
