Voltair vs. Nielsen? It Doesn't Matter. Radio Is Measuring The Wrong Thing
July 28, 2015
The big controversy in the radio industry last week was over Nielsen's webinar on the Voltair system. At stake: Whether Nielsen's portable people meters can accurately measure the number of people listening to any given radio station based on encoding of signals. The industry has relied on Nielsen's (Arbitron's) ratings for decades to generate revenue from advertisers. If those numbers are questioned, it could give advertisers an excuse to move to other advertising platforms. But here's the thing…
The data from digital platforms like Google's Adwords or Facebook ads are already giving advertisers a reason to decrease their radio spend.
And it's not because these platforms can measure the size of their audience with more accuracy (although they can).
It's because the size of the audience isn't the most important number anymore.
It's Not the Size That Matters…
Increasingly, advertisers want to know the ROI on their advertising expenditures. If they spend $X on an advertising channel, how much will they generate in sales?
To figure this out, advertisers need to be able to attribute their sales to specific marketing channels. With tools like Google Analytics and Facebook's tracking pixel, companies can easily see where their sales are coming from.
Unfortunately, radio doesn't offer the ability to track sales back to its advertisements. The main reason for this is that radio advertisements are on a type of hardware — radios — that can't take advantage of digital tracking code.
As an advertiser, which would you prefer?:
- Scenario A: You spend $100,000 on advertising. Your ads reach one million people. Ten thousand of those people purchase your product.
- Scenario B: You spend $100,000 on advertising. Your ads reach 100,000 people. But twenty thousand of those people purchase your product.
Obviously, most advertisers would choose more sales even if they reached fewer people.
How does this happen? Companies like Google and Facebook are increasingly able to use data to target consumers more effectively. They do not need to reach lots of people to drive sales; they only need to reach the right people.
Unfortunately, radio is rather late to the data gathering game. For the most part, we don't know enough about our listeners, and we are not able to target them effectively. We've been too focused on the size of our audience, when we need to start paying attention to other characteristics.
So maybe the important question here is not whether Nielsen can accurately measure the size of the listening audience, but whether the size of the audience is really valuable to advertisers. The problem may not be that Nielsen's measurements are questionable; the problem may be the Nielsen isn't measuring the important thing in the first place.
NEXT STEP: Figure out how to use your website to gather data about your audience.