All Access Exclusive: Cumulus COO John Dickey Separates RFP Fact From Fiction
April 21, 2008 at 3:50 AM (PT)
A week ago today, (NET NEWS 4/14) CUMULUS COO JOHN DICKEY announced an RFP (Request For Proposals), and invited qualified vendors to submit proposals to CUMULUS for a new service designed to measure both quantitative and qualitative audience characteristics for its stations in markets 100+.
With that announcement, strategically timed at the start of the NAB in LAS VEGAS, DICKEY announced that as of JANUARY 1st, 2009, CUMULUS would no longer subscribe to the ARBITRON RADIO MARKET REPORTS currently published in 50 of their markets.
There will be no ridiculous weighting techniques, no 'behind the curtain algorithms'. This new ratings product will be very straightforward.
ARBITRON Pres./Sales and Marketing PIERRE BOUVARD responded pointing to ARBITRON's past and present efforts in this area. And, EASTLAN RATINGS Pres./CEO MIKE GOULD went on record to embrace the RFP and offer its help as their ratings provider or consulting a new company they may decide to create internally. "We're committed to help them in this process in any way we can."
Now in an exclusive interview with ALL ACCESS, JOHN DICKEY seeks complete transparency for the RFP and wants to separate fact from fiction.
FICTION: CUMULUS will control, through ownership, this new ratings service.
FACT: We don't own the data. CUMULUS is simply underwriting this ratings service. We will retain control over methodology. This new ratings service will be licensed and those users and their representatives will have use of the data and may sell with it -- but they can't tell the winning vendor to change the sampling methodology. As this new ratings service takes on more legs, we will form an oversight committee of subscribers to make their opinions known. At the end of the day, CUMULUS will be the ombudsman. Unlike ARBITRON, subscribers will always be able to sell and use the data they have on hand through the time they have paid for it. ARBITRON limits the use of any data once you stop subscribing, which encourages continued subscription to ARBITRON.
The winning vendor will retain ownership of the data, which makes the integrity of the data un-impeachable. CUMULUS is just the underwriting the service. The roll-out of this service is NOT dependent on anyone else subscribing. Once the product is rolled out, CUMULUS does believe that other broadcasters will immediately appreciate the accuracy of the data and will be interested in the new service.
To this end, it’s important to point out that CUMULUS is not seeking to profit from this new ratings service -- all licensed users will share in the cost of the product. Cost will be allocated based on a pro rata basis according to revenue each company takes out of a subscribing market. The cost of the new ratings service will be predetermined by the vendor and published for all to see.
FICTION: We are using this RFP process as a ruse to renegotiate our ARBITRON contract.
FACT: We are doing this because the diary methodology is broken. ARBITRON has acknowledged this due to its push for PPM (electronic) measurement. The diary methodology and the resulting product ARBITRON is selling us is producing an audience estimate with irresponsible margins of error.
ARBITRON's product is also encouraging users (buyers and broadcasters) to use the data in an irresponsible way by virtue of the software tools ARBITRON sells us to sort/rank/analyze the respondent level data. Again, no disclosure of margin of error, thus all users are drawing conclusions that should not be drawn in most cases.
The new ratings product that CUMULUS is underwriting will hold the winning vendor to deliver a product with a specified margin of error of +/- 3% on the largest demo, Persons 18-54. We have attached to the RFP the estimated in-tab sample sizes for the markets we will be surveying initially with this new ratings product. In-tab sample sizes will more than quadruple what's presently supplied to us by ARBITRON.
FICTION: The RFP that CUMULUS has laid out is so restrictive, that it will not be economical for broadcasters to afford this product.
FACT: We have just begun the RFP process, so commenting on pricing is premature and speculative at best by those that do. Secondly, in the RFP it's noted that this product will be delivered one time a year in a market, not two or four times; thus, reducing the cost to customers. Thirdly, CUMULUS is already, as are many media companies, in the research business by way of all of the audience and sales research we design and produce in-house. So we have a specific understanding of what it costs to procure accurate research.
Therefore, we feel comfortable saying that this new ratings product will provide economic relief to broadcasters as it provides a far more reliable and accurate product.
FICTION: Any broadcaster subscribing will be writing checks to CUMULUS.
FACT: If they write a check to CUMULUS, we will return it and give them the proper vendor/payee information ... the winner of the RFP process.
FICTION: This process will not get off the ground by JANUARY 2009 due to its complex size and execution list.
FACT: CUMULUS has already undertaken major initiatives in our company in short time frames. We R&D'd our own web-based music scheduling program and successfully rolled this out to our entire company within six months of initial design. CUMULUS has designed and written its own CRM (Customer Relations Management) software and successfully deployed this web-based product to all markets/stations in less than 12 months. We are also in the process of rolling out our own traffic/billing system to be in place by end of year. These are mountains that vendors to broadcasters felt were impassable, and we have climbed them successfully. Market research is in our wheel-house of expertise and we feel confident in climbing this hill as well.
FICTION: CUMULUS has no real clue about research.
FACT: Remember (CUMULUS Pres./CEO) LEW DICKEY began STRATFORD RESEACH. LEW wrote the definitive book on branding called "THE FRANCHISE" and it's still the sole strategic driver in programming and marketing strategy used by radio broadcasters today. We didn't invent branding, but brought the concept to radio. We wrote the book. Samari swords have been taken off the walls in GM offices thanks to LEW's book.
Telephone-Based Methodology Emphasizing Reach
DICKEY went on to address the process and thinking behind this new ratings service, saying, "The hypothetical methodology laid out in the RFP is telephone-based, and will include households that are cell phone-only. There will be no ridiculous weighting techniques, no 'behind the curtain algorithms'. This new ratings product will be very straightforward. This RFP process will create a basis of understanding the methodology and cost drivers in this new ratings product without hocus pocus ... full transparency. Sampling into not only the county level, but the zip code level will occur. This will provide a more statistically accurate sample frame and reduce the bounce we have all complained about.
"ARBITRON tries to quantify the smallest unit of performance -- quarter-hour ratings/persons. That creates a very small window to look at what radio can bring to advertisers. We want an estimate service that gives radio the same ruler to measure itself by that TV, cable, direct mail, Yellow Pages, newspaper and outdoor all use -- REACH. We need a product that will accurately quantify and qualify what each of our brands bring to the table ... the size and quality of our community of users.
"When the subject of CUME first became the new push/advantage of PPM, I was the one who suggested it three or four years ago. Agencies and buyers of our medium will have access for free -- no restriction of access to anyone.
Subscribers and users of the data will be trained on how to responsibly use the data. ARBITRON has completely failed broadcasters in this critical area."
One Yearly Survey, Cell Phone-Only Households Included
DICKEY goes on to say, ARBITRON is a player in the process: "Despite ARBITRON's track record of not responding quickly and cost-effectively to the needs of its customers, we have invited ARBITRON to respond to the RFP -- we want to get the best methodology and best provider possible for this new ratings service. We told ARBITRON five years ago when we signed our current contract that is expiring at year’s end that we had problems with methodology and sampling. Arbitron promised five years ago to address these issues that they acknowledged were hurting the accuracy and reliability of their ratings service. We put penalties in the contract if they didn't achieve certain research and methodology improvements. Suffice it to say, they didn't make the promised improvements that were promised five years ago.
So we have no confidence in their promises and we fundamentally disagree with their band-aid solutions to accuracy and reliability issues, not to mention our desire for more extensive qualitative information. However, if ARBITRON can meet the needs of the new ratings service we have laid out in great detail in our RFP and they do so in the most cost-competitive manner, we'll buy from them -- but if not ARBITRON, then someone else.
"While we have planned only one ratings survey a year, we have thought about how to capture the changes that happen in a market when a station or stations flip formats or a significant programming change takes place. Consequently, there will be a predetermined policy and detailed triggers for that policy that will prompt the winning Vendor to go back and market’s audience estimates due to these changes. This update will be a distributed as a sidecar product and not folded into the main body of research that is published annually.
"We plan our first survey in mid-late AUGUST, with the initial survey presentation on OCTOBER 15th (see RFP for complete timeline)."
Winning Vendor Likely To Be National Research Brand
"We have had hugely positive reaction from other broadcasters over this RFP," added DICKEY. "Reaction has been very encouraging from research vendors as well, including EASTLAN's MIKE GOULD. We respect the work MIKE has done, but frankly his company is far too small to take this initiative on as is. If he can present a viable plan to ramp up his company's ability to take this on, we will look at it. That being said, the winning vendor will likely be a national research company. There are several who have stepped up that have significant resources beyond ARBITRON.
"We are not obstructionists -- we are a large broadcaster that is concerned about the quality, accuracy and cost of the audience estimates it is currently buying. We don’t believe that ARBITRON’s existing product offers the best long-term value for our stations. This is not about forming a coalition against ARBITRON. We are supportive of ARBITRON’s efforts in establishing a new electronic measurement service. This is about our mid-market and small-market product from ARBITRON not being satisfactory. We think this RFP will produce a much better product."