Two Iconic Business Models That Failed — 2
Refinement? For some stations it represents a windfall. For others it is a catastrophe. For example, as a result of Portable People Meters in Philadelphia, WDAS-FM (adult urban contemporary) nosedived from being ranked #2 in Fall 2006 to #7 in March 2007. WMMR-FM (rock) rose from #6 to #3 and WMGK-FM (Classic Rock) went from #8 to #5.
At stake is how advertisers will divvy up the $290 million spent annually in Philadelphia—and $20 billion spent nationally—for radio advertising. For example, in the September 6, 2007, edition of The Wall Street Journal, Sarah McBride wrote:
Lower radio ratings are already hitting stations in their pocketbooks. Mary Meder, president of advertising buyer Harmelin Media Inc. in Bala Cynwyd, Pa., says some stations have already been forced to cut rates because of their decline in the rankings. Some radio advertisers are holding back from buying more ads in Philadelphia until they see what happens with rates in the New York market when the People Meter rolls out there.
The Problem With Youth
Arbitron has found that members of a key market segment are notoriously unreliable. Brian Stetler of The New York Times summed up the problem:
Ceril Shagrin, an executive vice president for corporate research at Univision Communications, a major Spanish-language broadcaster, found that the ratings for Radio La Kalle 105.9 FM in New York fell sharply when the people meters were tested in October. She expressed concerns about the reliability of the Arbitron sample. . . Researchers often try to persuade hard-to-reach age groups to participate by paying them more. While Arbitron does not release specific information on incentives, it said it offers 18- to 24-year-olds two to three times as much as the average respondent. The company will increase the age for incentives to 34 in 2008. Even once recruited, the younger people pose challenges for sampling studies. “On an average day, half of 18- to 34-year-olds don’t provide usable data,” Ms. Shagrin said. Young people may leave the people meter, which is roughly the size of a cellphone, at home because carrying it is inconvenient in certain situations, as when on a date or while playing sports.