Mike Gould

With all the hue and cry surrounding the efficacy of Arbitron's PPM, it's somewhat to overlook the ratings methodologies currently being used in the medium and smaller markets. While Arbitron and Nielsen use variations of the diary, Eastlan Ratings exclusively uses the phone survey, where the data collection is taken from respondents in one phone call. Launching in 1999, serving the unranked markets that weren't served by Arbitron, Eastlan has slowly but surely grown. Now it's being used by upwards of 90 stations. President/CEO Mike Gould tells All Access how Eastlan established itself in the competitive ratings service arena.

What were you doing before you started Eastlan ... and why did you get into the ratings service business?

I've spent 29 years in the radio business. In the '70s, I worked as a DJ in a small market. I would eventually move up the corporate ladder to being the Manager of Washington State for Pioneer Broadcasting, which has since sold out to Morris Communications. I was a GM and Market Manager for the preceding 10 years before starting Eastlan in 1999.

My real motivation for starting the company was twofold: As a small-market broadcaster, I had no alternative to the expensive Arbitron diary, which really didn't make sense for smaller markets. On a personal level, I wanted to be able to live wherever I wanted to live, instead of having to go where the job was. One of the great things about Eastlan is that I can do my job anywhere in the country.

Was your initial plan to be an alternative to Arbitron?

Actually, our initial plan was to not compete against Arbitron. For several years, we provided service primarily in places they weren't in - namely, unranked markets. That's what we thought we'd be as we grew as well. As it turned out, things changed. We found ourselves able to compete with Arbitron in pretty much any market outside of the top 50. We're never going to be in any markets that are measured by a meter, but in diary markets, we feel we can offer a worthy alternative.

Alternative in what way?

There's no fundamental difference in how we monitor listeners. It's really the same telephone recall that has been in use since the 1940s. The difference is that we don't cost nearly as much as Arbitron does. Other than that, probably the biggest difference in the past 11 years has been the advent of cell phones; we do needed to include those in our sample, but again it's not that much different than reaching someone on a landline.

How have cell phone-only households impacted your ratings?

It varies from market to market, but we don't look at CPOs like others do. We found a tremendous confusion with the term; it means something in the radio business that doesn't necessarily apply to the real world. A perfect example is our household; we have two lines that are landlines, but my son - who has lived here all of his life - never uses our landlines. When a motion picture company called him to do a survey, he said he was his own CPO household.

Another example: I just had lunch with a senior citizen who asked if I would consider her to be a CPO household. Her cell phone is the only phone she uses. But that really doesn't matter to us; our job is to reach the widest variety of people, the widest cross-section, regardless of being a CPO or landline household. What about those who forward their cell phone calls to their landline phones, or vice versa? That's why we treat cell phone and landline phones the same; we just want to get a representative sample from active local prefixes and CPO prefixes.

Why did you decide to compete with Arbitron in the ranked markets?

It actually came the opposite way; interested broadcasters came and contacted us. It happened very quickly, as early as 2001-2002, it was something we became very successful doing. But I wouldn't characterize our success being due to these stations not being able to afford Arbitron; I do think they were looking at the cost as a decision based on ROI. Why pay for two to three times more for the same basic product? Even though I can afford a Porsche, I don't buy one because I feel I can do just as well driving a Ford.

What could Eastlan offer radio stations that would make them choose you over Arbitron?

There's only one reason someone buys Eastlan over Arbitron ... and that's because we're less expensive, but it's important to differentiate why we're less expensive. What we do is representative, professional and widely accepted, but the primary reason our clients do business with us is because we deliver more value and better ROI. People don't do business with us because our fantastic methodology; people use us in the same way people shop at Costco - they get the same basic products for less.

Why are we less expensive? Two reasons. Our methodology is structured differently. Arbitron calls a potential respondent and asks if they want to take part in the survey. Next, they send them a diary with a dollar or more, depending on the incentive. The diaries are then mailed back and tabulated. That's a more expensive process than what we do, which is get permission and conduct the survey during the same phone call. We have no mail or incentive costs.

There's certainly a huge difference in overhead. Our offices are here in Washington and Oregon - and our sales reps work from home. Their corporate offices are in the Beltway and only recently have some of their sales staff started working out of their homes. We also don't have to worry about shareholders, either. We're not a publicly traded company that has to show maximum profit or else to please Wall Street. It's kind of like why All Access is still around and R&R isn't.

How has Nielsen's sticker book fit into the competitive mix?

We are in only two markets where Arbitron and Nielsen are also in - Green Bay and Appleton/Oshkosh. We each serve a major group cluster in each market. We've seen some of the results from the other services in those markets, compared to us, but they're all 12+ numbers ... and everyone knows how dangerous drawing conclusions from 12+ can be. I wouldn't think our methodologies are so disparate that a station gets a 10 share in one ratings service while it gets a 1 share in another; I'd bet that we're all in the same basic ballpark.

I do question why any radio station would pay 50% more for the same basic information. Granted, Nielsen has a larger sample size, but they only report ratings once a year, so there's a trade-off there -- and even so, I doubt if their numbers are terribly dissimilar from everyone else's.

Would you describe what's going on in Green Bay as a cutthroat competition between the ratings services to get their rivals' stations?

No, it goes the other way. The broadcasters make the choice. I don't think we can steal someone else's business if the stations are satisfied with what they have. In the end, the broadcasters will have to choose what's best for their business, so we'll never consciously steal business from Arbitron or Nielsen.

So you don't contact a station that uses a rival ratings service and say, "We can give you the same basic service at half the price"?

We say that every day, but again, I don't think stations would subscribe to another service if they were already satisfied with what they have. It comes down to a value judgment; decisions aren't solely based on having the lowest price. If that were the case, the Yugo would be the best-selling car in America.

Although we offer the same basic things the others - AQH shares, full demo breakouts and such - what does come into play are intangibles. Arbitron's longevity, sheer size and near-monopoly in the bigger markets are intangibles, both pro and con. Nielsen is a large company that has long since ruled TV.

Do you actively market Eastlan to attract new station clients?

We certainly market our company; we have very active salespeople who are good at what they do. But more often than not, we gets referrals where stations come in our direction, and from that we build new relationships.

I'm proud to look back to 11 years ago, when we had next to nothing and were competing against a gigantic company in Arbitron. Well, we're still here and many people didn't expect us to survive, let alone get into 80-90 markets.

Are your ratings primarily a tool for local advertisers, or can your data also bring significant national advertising to your radio clients?

We used for both, but there's a fundamental difference between large and small markets. Where it might be common that 80-90% of ad revenue in a larger market comes from an agency, it's the absolute inverse in smaller markets like Sheridan, WY, Yuma, AZ or Burlington, VT. So while Eastlan can and is used to attract national advertisers, by and large, our small-market clients use it to transact business through relationships, personalities and results. Far fewer of the buys are based solely on ratings numbers.

How has the monster recession impacted Eastlan?

We sort of reflect what has happened to broadcasters -- and they reflect what has happened in the retail world. Obviously, it was a struggle for all of us. When retailers can't afford as much advertising, if any at all, that impacts radio, which in turns impacts us. We're all intertwined. Suffice it to say, 2009 was not a great year for us; it was the only year where our year-to-year numbers went down, but it was a small decline compared to others ... in the mid-single digits. We're already on our way to having a record year in 2010, as we rebuild whatever momentum we lost in 2009.

So what are your future goals? Do you see Eastlan ever entering the major-market territory?

I have no interest and see no scenario in which we enter the top-50 markets to compete with Arbitron, which covers that well. Frankly, I think we're not too far away from seeing single-provider service that will provide info on radio and TV in one device, which will be provided by one company.

We don't see our future in that world; we are very happy to serve small and medium markets. That's where we absolutely want to grow. We're grateful for the position we're in; we do believe we earned our success so far, but at the same time we're not anywhere near where we will be someday. I don't expect there to be some cataclysmic event that will suddenly make us eight times larger. For the last 11 years, we've been growing at four or eight new stations at a time ... and I see no reason for that to change