How Google Analytics Will Rob Radio Of Its Ad Revenue
February 24, 2015
When advertisers buy radio time, they usually base their decisions on Nielsen ratings. When they decide where to spend their online budget, they often base their decision on Google Analytics data. While there is a difference in the purpose of each of these measurement systems -- Nielsen is designed to measure audio listening; Google Analytics is designed to measure online behavior -- the two offer very different experiences for the advertiser. And Google Analytics has a lot of advantages over Nielsen.
As advertisers become more and more comfortable using tools like Google Analytics, I believe that they will increasingly find the shortcomings in Nielsen's methodology unacceptable. This is bad for radio, which relies on Nielsen ratings to generate revenue.
Here are some of the advantages that Google Analytics has over Nielsen ratings:
1. Google Analytics can connect marketing to revenue.
With Google Analytics, advertisers can directly measure the amount of sales generated by their marketing efforts. They can easily see which channels -- Facebook, Twitter, Google Adwords, Yelp!, etc. -- are bringing in the most business. By contrast, even with Nielsen ratings, the evidence of radio's impact on sales is largely anecdotal. As advertising decisions become more and more data-driven, advertisers will increasingly prefer Google Analytics for its ability to accurately measure the consumer's entire buying cycle.
2. Google Analytics is more accurate.
Forget the fact that Nielsen had to revise tainted numbers in the nation's largest radio market. Even without these unforced errors, Nielsen's methodology offers nothing more than an estimate. Nielsen doesn't measure actual radio listening; it takes samples of listeners and extrapolates based on those. Google Analytics, on the other hand, measures every single website action by online visitors. There's no extrapolation, no guesswork, no margin of error.
3. Google Analytics allows you to dive deep.
Because Google Analytics measures every single visitor, advertisers can zoom in on granular bits of data to see what's going on. Want to focus on just the people who came to a particular blogpost by way of Facebook? No problem. On the other hand, because Nielsen is extrapolating its data from small samples, zooming in in this manner magnifies errors and inconsistencies. The more you zero in on a particular subset of listeners, the less accurate the data is.
4. Google Analytics offers real time data.
Want to know what's happening right now? Google Analytics allows users to see data in real time. While PPM has sped up the delivery of ratings data, it's still not delivered as fast.
5. Google Analytics is free.
Anybody can add the Google Analytics tracking code to their website for free. Want to see the Nielsen ratings? It's going to cost you. A lot.
For years, the broadcasting industry and advertisers have accepted the limitations of Nielsen (and Arbitron) ratings because that's all there was. This isn't the case anymore. Of course, Google Analytics can't be used to measure radio listening. I am not suggesting that stations try to use it as a replacement for Nielsen ratings. But I am pointing out that advertisers have more than one measurement tool to help them decide where to spend their marketing dollars. As they come to realize that Google Analytics offers them insight that can improve their sales in a way that radio's ratings system cannot, they will move towards the mediums with the more trusted measurement systems.
This is a problem for broadcasters.
As an industry, radio needs to break its dependence on the Nielsen ratings in favor of a superior measurement system. If it doesn't, its advertisers will.