February 4, 2014
When it comes to audience measurement, Nielsen has become the ultimate "Power Player." After acquiring Arbitron, Nielsen now reigns supreme as the top monitoring resource in both audio and visual media. How will they evolve in the future? How will Nielsen impact radio, the PPM and the diary? SVP/Local Media Product Leadership Farshad Family offers some insight
Once the Arbitron acquisition was finalized, how did you view it in terms of its strengths, potential and challenges to overcome?
The way we looked at it was as follows: At its core, radio measurement is the business and platform we acquired ... and a capability we wanted to have. We're strong believers in radio -- and more broadly, audio -- as a media platform that we want to measure. Radio listening takes up about two hours of a consumer's day; TV captures about four to four-and-a-half hours, with online getting roughly another hour or so. We're getting better and better about putting together a comprehensive picture of what consumers are consuming, and what media they're exposed to and are interacting with. For us, getting Arbitron was a big selling point.
Of course, we're very excited to have PPM technology under our roof. We think it's a tremendous tool, not only to measure radio, but we're already starting to think about how we would deploy it for TV audience measurement in areas out of the home. That creates an interesting, intriguing synergy. The other thing is we also look at it from a perspective of integration ... what we can provide the legacy company. Up to now, the main thing we focused on was the video side and TV side. Nielsen has done a lot of work connecting what people watch with what people buy. That's an elusive link advertisers and marketers are learning from our data, which provides lessons on how to do that effectively. We want bring the same capabilities to the audio side. We're keen on bringing our capabilities to the legacy business and providing radio clients a strong case for linkage between what people listen to and what they buy.
What are the differences, if any, between audio monitoring and TV monitoring, in terms of sample size and demographical makeup?
The two businesses are quite similar. The radio platform, by its nature, is a local medium, and the TV platform, by its nature, is a local medium, too. The difference is how large businesses measure local TV. Nielsen has carved up the U.S. into 210 DMAs for TV purposes. For its legacy business, Arbitron carved up the country into more than 250 markets. But the local nature of the platforms make the measurement challenges and opportunities very similar -- to be able to accurately capture a representative sample of media consumption, be it in a local market the size of Los Angeles or one the size of Sioux Falls.
In both cases, we need a large enough sample. To achieve that, interestingly enough, both platforms are quickly going to digital sampling. It's becoming more and more important in the audio business and it's becoming more important in the TV business. For both platforms, the big priority in 2014 is how to measure digital consumption on both platforms. The phrase we use here is "We live the same house." Video and audio have a lot of the same challenges and growth opportunities when it comes to servicing local markets.
Have you considered using the same number of local markets for both TV and radio?
Some clients have asked us that question; it's something our measurement scientists are looking at, but in terms of all the things we need to do, we first want to tackle things that need improvement. I'm not sure that harmonizing the number of markets is at top of the list. Obviously, there are good reasons why legacy Arbitron didn't necessarily line up radio markets with TV markets. Even though both are broadcast mediums, it's all about how far the signal will travel, so there are good reasons they're not perfectly lined up. But in a digital age with new technology, we'll look at that closely at some point.
Nielsen made waves right off the bat by announcing a concerted effort to build its audio sample size for PPM. How has your progress been in that regard?
The good news is the PPM sample increases that we announced in November have begun. Just to quickly recap, we're making investments in the audio business by increasing the total aggregate PPM panel size by about 6% across all markets. However most of those increases will be concentrated in markets 31-48, where the need for a larger sample size is the greatest. In a lot of these markets, that's an average increase closer to 20%, which is fairly meaningful. We expect the total increase to be wrapped up in the middle of 2014, so that initiative is well under way.
Can you already discern an impact in the data?
The main reason we're doing this is for stability. The larger the sample size, the more stable the ratings we produce. You will be seeing less bounce in the numbers because a bigger sample size stabilizes the reading on audience behavior. Since the initiative has just started, it's too early to have any data numbers to share.
What other goals have you set for improving the audio monitoring division?
We've made a couple of other announcements regarding increasing sample size in certain demo segments, so we can offer a better analysis for clients. A larger pool of Hispanics and African-Americans will enable us to get a better granular sample. Both of those segments are over-indexed on radio consumption compared to the general population, so it's very important to provide clients of those custom segments with oversampling.
Capturing a representative sample of cellphone-only households used to be a problem for Arbitron. Is that an issue for Nielsen, too?
On that, I don't have much news to share. I know it's something we're looking at, but I don't know if we fully fleshed out any plans on what we should do. In general, for both Diary and PPM markets, about 30% of all of our current respondents are cell-phone only. Of course this varies slightly by individual market, but 30% is a good ballpark figure on a national basis.
Do you see Nielsen expanding PPM to more markets and if so, how many and when will you start in that regard?
In terms of the immediate future, we're making a couple significant investments in improving the measurements that exist today in the form of the sample increase and the over-sampling initiative. We're also engaged in another initiative to provide better coding and monitoring technology for clients in PPM markets. We're focused on improving our core measurement, which should be our first priority based on client feedback.
The second priority is digital. All of our broadcast clients are putting more content up on digital platforms, and we know consumers are moving that way, so they want us to be able to measure it as quickly as possible.
The third priority is the area to link what people are listening to and what they're buying. We have access to third parties for categories such as retail or quick-service restaurants, movie theaters and wherever you use your credit card. We want to help make the link between a radio's audience and local business purchases; doing so would provide a stronger case on why audio is a strong platform. Our radio clients have told us pretty consistently in meetings that we should really improve in that area, focus on it and help make their case why advertising on radio and their digital platforms make sense.
In terms of expanding PPM into other markets, that's something we're looking at, but we have no set plans. Economics obviously plays a major role here. It's big financial investment to go into any market and roll out PPM technology. It is possible that as the costs of the technology goes down over time, it would be more feasible. Our R&D labs are looking into making that more cost-effective.
How much effort do you put into the diarykeeping arm of the company?
That's yet another focus area in 2014. We are continuing our effort to develop an electronic diary -- a web-based diary -- to keep up with the migration from a paper to a digital world. Previous tests on an electronic diary have gone fairly well; we're scaling up with a bigger test this spring and assuming that goes well, you could see electronic diaries play a much bigger role over time in markets where PPM measurements are not economically viable. I don't think the change will happen overnight, but we think it's important for us to embrace the digital platform and figure out how to do audience measurement via digital so we don't have to rely as much on paper.
There have been suggestions that audio monitoring could be done with a chip or app installed into a smartphone, or even in Google glasses. Are those feasible or even being considered?
I don't know if I can comment on what's being developed in our labs or what I think is feasible or not. I can say we are focused on coming up with the next generation of measurement tools so our monitoring continues to be relevant and continues to provide an accurate read of consumer behavior. That's a very broad stroke as it's our guiding principle.
What are Nielsen's goals in online measurement?
Our mission statement, our mandate, is to measure audio consumption in a comprehensive manner. We know there will be many different types or flavors of audio consumers, as they're both broadcasting to large numbers of consumers via radio and one-to-one via podcasts and the like. And within these two types of broadcasting, some are ad-supported and some are subscription. There are a lot of different audio platforms being used right now, and we're figuring these things out. If we want to be relevant, we need to follow the consumer ... and as the consumer embraces and uses new platforms, we need to be there. That's how we stay relevant - by measuring audio wherever it travels and in various forms. That's a broad statement we communicated to all of our clients right after the Arbitron acquisition closed. We want to go into the digital space used by the traditional broadcast clients as well as the space used by the new entries.
Is it difficult to establish a strong digital foothold when there are many other entities monitoring Internet activity?
We're still working through our plans of how we would do digital audio measurement. We have a strong hypothesis that the OCR/DPR (Online Campaign Ratings / Digital Program Ratings) technology we developed to measure video digital platforms can be highly relevant in measuring audio on digital platforms. We believe it's important to measure consumption and listenership at the point at which it happens. We want our technology to be embedded in various apps and browsers, so our clients can measure their audience at the point of consumption, as opposed to being on the server side and relying on server logs.
Finally, there seems to be so much going on, what with the new technology and digital platforms. Where do you see all this going in the future?
Certainly it's unreasonable to forecast out too far, but what we do know is that without question for both video and audio, digital platforms will become much more important simply because consumers are embracing them much more than they used to for seeking out content. We want to be with our clients every step of way as they figure out their strategy on platforms; we'll be there with measurement tools that are relevant.
There's a lot of debate right now about what metrics are appropriate, what kind of unit of measure should be used. There are questions on how to make things additive - combining over-the-air numbers with digital numbers. I'm confident that Nielsen will answer all these questions and do it in conjunction with the industry - the media companies, advertising agencies and advertisers. Everyone has an important voice in determining the future.