Two Iconic Business Models That Failed — 2
How Arbitron royally roiled the world of radio
January 2008 By Denny Hatch
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In the News
Radio’s Challenge: Counting the YoungAs radio moves away from an outdated system of audience measurement, it is facing the same problem that confronts other media: figuring out how many young people are listening or watching is maddeningly difficult. A long-awaited electronic measurement tool, the “portable people meter,” has produced sudden swings in ratings in tests, raising red flags for radio executives. After a test in October in New York, the radio measurement company Arbitron delayed the broader introduction of people meters by nine months.
—Brian Stelter, The New York Times, December 31, 2007
What is not hazy is that several months after we parted company, I received a call from Arbitron asking if I would agree to accept one of the diaries, keep track of what I listened to on the radio for a week, and then return the diary.
I said yes.
I received the little pocket-sized diary and some $1 bills—Arbitron’s way of saying thank-you for participating.
It was a nightmare week. I had real problems, and I realized Arbitron had real problems.
Recently the egg has hit the fan for Arbitron—and radio stations nationwide.
Background
You could call me a child of radio. I was born in 1935 and grew up during WWII. During the War, the family would gather in the den to hear the latest war news from Edward R. Murrow, H.V. Kaltenborn and Gabriel Heatter. My grandmother’s favorite newscaster was Lowell Thomas.
As a kid, after school I would listen to the afternoon adventure serials that ran 15 minutes each—“Hop Harrigan,” “Captain Midnight,” “Terry and the Pirates,” “Jack Armstrong” and “Superman.” Other programs: “The Lone Ranger,” “Fibber McGee & Molly,” “It Pays to Be Ignorant,” “Your Hit Parade,” “The Shadow,” “Can You Top This?” and “Truth or Consequences.”
As I recall, we got our first television set for Christmas in 1947 and listening gradually changed to viewing habits.
Arbitron’s Pivotal Year: 1949
In 1949, all radio was AM (Amplitude Modulation). FM did not show up until 1960. At that time, the New York area had four network-affiliated stations in operation: WCBS (CBS), WOR (Mutual), WJZ (ABC) and WNBC (NBC). In addition, I found another 12 independent AM stations, for a total of 16. There may have been more.
The big question after the War: How was an advertiser to know where to spend money in radio?
In 1949, the American Ratings Bureau was launched to track what radio programs consumers were listening to. It morphed into Arbitron in the 1960s.
Takeaway Points to Consider:
* Sometimes a business model outlives its usefulness and must be changed.* In Arbitron’s case, the Portable People Meter concept makes absolute sense. It replaces subjective, inexact reporting with automatic data collection that insures accuracy.
* The new results were extraordinarily exciting—a real boon to the science of audience measurement and a huge benefit to the radio industry.
* What should have been perceived as a magnificent achievement instead garnered incendiary reactions from the industry and a barrage of negative press.
* When Arbitron saw the dramatically changed results, my best advice would have been not to go public right away. Instead, it should have sent an SOS to a consummate PR organization—Edelman, Ruder Finn or Bob Dillenschneider—and mounted a campaign that talked benefits, benefits, benefits to radio stations, advertisers and stockholders.
* “The secret of good public relations is letting people in on what you are doing.”
—Evelyn Lawson
* In my opinion, Arbitron’s stock should have gone up with the success of Portable People Meters—not down.
* “Always convert a disadvantage to an advantage.”
—Elsworth Howell, founder of Grolier Enterprises
* “Always turn a marketing disaster into a marketing opportunity.”
—Lester Wunderman
Web Sites Related to Today's Edition:
Arbitronwww.arbitron.com
Arbitron Data Collection Difficult, Forbes, 03/11/03
http://www.forbes.com/2003/03/11/cz_sl_0311arbitron.html
Early Press Coverage of Arbitron’s Portable People Meter
http://tinyurl.com/2ws7yn
Arbitron Shakes up Radio, The Wall Street Journal, 09/06/07
http://tinyurl.com/35uqsy
Arbitron Stock Plunges 26%, Media Week, 11-27-07
http://tinyurl.com/ys8f36
Arbitron’s Difficulty Counting Young, The New York Times, 12/31/07
http://tinyurl.com/2ul8s4
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