by Dave Zornow
CSP Magazine, September 2000

In June Arbitron and Nielsen committed to a history-making deal, agreeing to cooperate on the testing of a new electronic technology which may someday replace the diaries now used to measure TV viewing and radio listening in local markets. The former TV ratings rivals agreed to work together to field test the Arbitron Portable People Meter (PPM), a pager-sized device that is worn by consumers to automatically detect inaudible identification codes transmitted by broadcasters. The deal is a high-stakes gamble for radio and TV programmers, agencies and advertisers and at least one of the ratings' companies.

Arbitron has been working on its PPM technology for almost nine years, perfecting and miniaturizing the passive measurement device that uses hidden audio codes to identify the program sources. Each respondent in a family carries the device with them throughout the day, and then plugs their PPM into a base station that recharges the people meter and transmits the day's signals to Arbitron. The technology was successfully tested in Manchester, England over the past two years. The joint Arbitron/Nielsen test will take place in the Wilmington Radio Metro, part of the Philadelphia DMA. Arbitron is now deploying an initial sample of 300 portable, passive pocket meters during the 3rd and 4th quarters of 2000, with initial analysis and reporting schedule for the first six months of 2001.

Local cable stands to benefit if the PPM can do a better job of tracking viewing than the diary, an inaccurate paper booklet where respondents need to write down what they watched, when they saw it and which family members viewed it. Broadcasters may also see a lift because the PPM promises to capture out-of-home viewing, including -- for the first time -- TV usage in bars, restaurants and other public venues. Radio broadcasters think the portable meter can level the playing field by documenting currently unreported viewing and increasing radio's representation in agency budgets. And media planners may finally get the opportunity to analyze multi-media usage from a single electronic source that passively monitors all TV viewing and radio listening.

Unlikely Bed Fellows, Mutual Beneficiaries?
Nielsen forced Arbitron out of the TV ratings business in 1993 after a bruising battle where deep pockets won out over big ambition. In the late 1980s, Arbitron developed and implemented a national people meter panel to take on NTI (Nielsen Television Index). Nielsen aggressively counterattacked by expanding their spot TV ratings service (NSI), relying on a surplus of household meters and the deep pockets provided by the network TV business. Arbitron attracted endorsements, but only one major network supporter and eventually pulled the plug on its national ambitions and its local service too.

Why are these two rivals now teaming up? For Nielsen, Arbitron represents an inexpensive "look-see" at this new technology. Teaming up with Arbitron lets Nielsen evaluate potentially state-of-the-art technology without a budget-busting investment. It also shows Nielsen's spot TV clients that they are doing something about a seemingly intractable problem.

For Arbitron, the stakes are higher. A lot has change since Arbitron first started developing the PPM in 1991. The radio business has undergone a massive consolidation where now only a handful of station groups own the largest stations in the biggest markets. Cable has matured to where it is now in seven out of ten homes. DBS is no longer a concept for a viable competitor. And there's the Internet. Arbitron has also changed, too, no longer a major player in the TV measurement business.

The Nielsen partnership might bring Arbitron the incremental revenue needed to help this new measurement service succeed. Without this boost it is unlikely the radio industry would support this expensive initiative themselves. All of this It all comes at a good time, as Arbitron's parent company Ceridian announced in July its intention to spin off it's radio ratings subsidiary as a separate publicly traded company. This follows Nielsen's spin off two years ago, which closely followed all of its stock being repurchased by by the Dutch publishing and media conglomerate, VNU.

How Do We Know This Will Be Better?
Both companies are being tight lipped about the criteria for success - either because of the high stakes, or simply because they don't want to speculate on the outcome until they see the data. But deciding whether or not the PPM is better than the diary will surely depend on how each party analyzes the results.

A comparison to current diary based TV demographics isn't practical because all players - even Nielsen - admit diary measurement in a digital world is fundamentally flawed. Nielsen's TV household ratings panel can't be compared because the PPM includes out of home viewing, but can't distinguish where the viewing is taking place at home or somewhere else. And there aren't enough people meters in Philadelphia/ Wilmington to use as a comparison, either, because there aren't enough deployed in the area of the Philadelphia DMA to be comparable or reliable.

The success of the personal portable meter will affect the future of TV ratings, the fortunes of at least one company, several media and one not-yet-common stock. Who will be the media winners and who will lose ground? Will we get better media measurement, or a new set of research compromises? Will Arbitron follow Nielsen's footsteps with a successful IPO? It all sounds like the plot line for a good TV movie. Stay tuned. ##

Dave Zornow is President/TNG Research, a media research consultancy and applications development company that works with media sellers and research providers.

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