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Conducting Market Research to Determine Station Ratings

portable people meter (PPM) Auditron’s electronic device for tracking radio listening, both at home and on the street

rating poiat one rating point equals 1 percent of the population in a market

The largest firm that conducts radio audience measurement is Arbitron. The area in which Arbitron surveys people about a station is called the station's market. Des Moines, Iowa; Los Angeles, California; and Madison, Wisconsin, are radio markets of different sizes. On a regular basis, Arbitron selects a sample of listeners in each radio market to participate in its survey. Arbitron then repeatedly tries to contact its selected sample. For example, say Arbitron reaches you at your home and asks you to participate. Given your interest in the mass media, you agree. The Arbitron representative asks you to fill out a diary listing all your radio listening for a week and then to return the diary electronically, via the internet. The company pays you a token fee—usually a dollar or two—for your cooperation.

The diary contains space for a week's worth of responses. You fill it out every time you listen to the radio. You promptly submit it through the company's website at the end of the week. The firm now has an accurate survey, right? Not so fast. This technique of audience measurement has some drawbacks. First, the research firm may have had difficulty getting a random sample of everyone in the area to participate. For example, people such as college students or seasonal workers move frequently or are hard to find, so they are often underrepresented in the survey sample. In addition, evidence suggests that people with busy lifestyles are less likely to participate than those who have more time on their hands. Therefore, the assumption that the sample is representative of the community is often invalid.

In addition, many of the people who do make it into the survey drop out or fail to fill out the diary completely. Though Arbitron designs the diary to be taken along throughout the day, many participants do not do so and then, at the end of a day or week, have to try to remember their station choices and to recreate their listening activity before they write it down in the diary. Even listeners who try to participate conscientiously may accidentally record incorrect information. If you are like many people, you sometimes jump between stations while you are in your car. Would you be able to record which ones you heard?

Recognizing these problems, Arbitron has rolled out a device called a portable people meter (PPM) for tracking radio listening, both at home and on the street. At this point, the company is using it in only a few markets—for example, New York, Philadelphia, and Houston—though it expects it to eventually replace the diary in all U.S. markets. The PPM is a mobile phone-sized device that consumers wear throughout the day. It works by detecting identification codes that can be embedded in the audio portion of any transmission. The PPM can determine what consumers listen to on the radio; what they watch on broadcast, cable, and satellite TV; what media they stream on the internet; and what they hear in stores and entertainment venues.

You've probably already noticed a flaw in this system: just because a person passes by a radio station's sound doesn't mean that he or she is really listening. It's certainly a problem, but executives believe the PPM is still superior to the diary method. Another controversy arose during the early use of the PPM. Executives at stations targeting African-American and Latino audiences complained that Arbitron did not include enough people with those characteristics in its PPM samples. The result, say the executives, is that ratings for their radio stations dropped drastically. In the face of angry protests, Arbitron executives agreed to make their panels more representative.

Although no one believes Arbitron data come close to being flawless, most local stations and advertisers use the diary-based Arbitron rating results because they are the best data available. When ratings are reported to subscribing stations, employees await the news with trepidation. Ratings are to station employees what report cards are to students: rows of raw numbers that summarize many months of effort. One rating point equals 1 percent of the population in a market. Because typically there are dozens of stations broadcasting in major markets, the ratings for individual sta­tions are often quite small. Stations are considered successful if they manage to garner only four or five rating points. Yet the raw number is often not the only thing of interest to a radio advertiser. The extent to which the advertiser's target audience—in demographic and lifestyle terms—is being reached with an efficient cost per thou­sand listeners is often more important. For example, a concert promoter may want to know which station in town attracts the greatest share of the young adult audience so that she can effectively buy advertising to attract a rock band's core audience.

Arbitron results give radio executives and advertisers information on such basic categories as listener gender, race, and age. These characteristics form the basis for discussions between a radio station's sales force and potential advertisers about the appropriateness of the station's target audience compared with those of other stations. To gather evidence about other audience characteristics that might also attract advertisers, many radio stations subscribe to Scarborough Research surveys. Scarborough conducts telephone surveys of a market's population and asks people questions about various aspects of their lives—from purchasing habits to hobbies to radio listening preferences. Radio stations' sales forces often link these data with Arbitron data. They then use the findings to try to convince certain local advertisers that their station can deliver the most appropriate audience.

This doesn't always work, however, because Scarborough studies and others like them have their own drawbacks. Sometimes advertisers purchase time on a radio sta­tion primarily because they believe that the format is suitable for their product or message and because the sales staff has arranged to tie them to a promotion (a contest or event in which prizes are given out) that will both highlight the advertiser and result in concrete responses from listeners toward the advertiser. Almost every­one knows of a radio station that has given away cash prizes, trips, or concert tickets. The prizes are geared to the demographic and lifestyle categories of the listening population that the station's management wants to attract.

A station whose ratings are up will often try to raise its advertising rates to reflect its increased popularity. Some station employees may directly benefit from the rat­ings report because their salaries are tied to ratings. But the celebration cannot last too long because a new ratings report card is always being prepared. Most large radio markets, such as Chicago, are surveyed year-round by Arbitron.