The PPM Affair.

As many of you know, the US Hispanic Radio and the advertising agency industry are at a crucial standoff together, where they both agree that the incorporation of Arbitron’s Portable People Meter (PPM) technology to measure Hispanic radio listening and ratings generation is very disadvantageous to our Industry and other minority broadcasters.

On Monday August 18th, 2008 the PPM Council of the Association of Hispanic Advertising Agencies (AHAA) meet with the top brass at Arbitron in the hopes that their concerns would be heard and handled to improve the sampling of the minority population in the USA and that the sample proportionality would reflect a balanced of language preferences and country of origin required to properly measure our diverse Hispanic Consumer base.

Both language and country of origin play an extremely important role in determining format preferences and listening patterns of US Hispanics.

Arbitron handled everyone and positioned their interests as expected.

The insights and passion of Gloria Constanza – d exposito & partners and Ceril Shegrin of Univision Communications lead the charge to encourage Arbitron to listen to the concerns of the Industry. There were many more industry people present at the meeting and very few voices represented the interest of our Industry.

The silence was troubling. Deafening.

Thus far, Arbitron continues to present their case that the PPM rollout will happen regardless of the Industry’s concerns about the sample and technology implications of the PPM, irrespective of the downside to the business models of Hispanic Radio stations and ad agencies in our Industry.

That is a FACT.

Many consider Arbitron a monopoly in the radio rating research industry.
According to InvestorWords.com the definition of MONOPLOLY is:

A situation in which a single company owns all or nearly all of the market for a given type of product or service. This would happen in the case that there is a barrier to entry into the industry that allows the single company to operate without competition (for example, vast economies of scale, barriers to entry, or governmental regulation). In such an industry structure, the producer will often produce a volume that is less than the amount which would maximize social welfare.
Now, let us rephrase this.

Arbitron is a MONOPOLY.

Arbitron is a company that needs to incorporate the new PPM technology immediately to offer their company and investors economies of scale and cost reduction in the very expensive game of media usage data collection.

Many of the top executives at Arbitron also enjoy the opportunity to cash in on some very, very, very large bonus if Arbitron commercializes the PPM.

So as we see it ….

1- A MONOPOLY potentially sampling minority audience incorrectly and then using a technology that is extremely more accurate at recording actual radio listening patterns, that in turn delivers exponentially incorrect results from the jump due to sample disproportionality with the reality of the Hispanic listener universe and/or sample.

2- A MONOPOLY that is going to execute their rollout of the PPM regardless of the dramatic revenues losses that Hispanic Radio stations will encounter and Industry concerns.

3- A MONOPOLY that does not have a transition program in place from the old methodology to the new, which would allow the testing and refining of minority samples that in turn could balance the disproportionate losses of audience and ratings of Hispanic Radio station when compare to mainstream radio station in the same transition. On average a mainstream radio station negative audience compression is less than 30% with the PPM technology, on Hispanic Radio stations it is 55 % to 70% depending on the market and station.

Arbitron has stated that they will not offer both the Diary and the PPM data in key Hispanic markets in the full roll-out to ease the transition, since they feel that this is inappropriate and does not help the PPM roll-out.

4- A MONOPLOY that enjoys an approval of the PPM by the mainstream broadcasters.

Their bread and butter client, since the audience data shows that mainstream radio is back on top of the ratings game. A position held by many minority broadcasters over the last 10 years and created dramatic revenue gains for minority broadcasters, at the expense of mainstream radio broadcasters.

5- A MONOPOLY that currently is hell-bent on commercializing the PPM without resolving the unique challenges of minority broadcasters.

6- When Arbitron tries to compare the differences in ratings results when the US Hispanic Market when through a similar ratings transition in Hispanic Television from Strategy Research to Nielsen NHSI and then to NHI, that was done over 15 year period. Arbitron expected the Hispanic Radio Industry to accomplish the transition and acceptance over the last 12 months.

7- The MONOPOLY has yet to understand the social, political and marketing implications of negatively impacting one of the sources of news and entertainment key to US Hispanics. Along, with the sample collection and PPM model potentially discriminating against minority broadcasters.

AHAA yesterday released a statement after the Monday August 18th, 2008 meeting with Arbitron stating their continued position that the sample used by Arbitron in either the Diary or the PPM is not an accurate representation of the diverse linguistic, cultural and country of origin composition of our Hispanic markets that once again demonstrates the complexity of our Hispanic Consumer base. As well as, their insistence that the rollout should not occur and that Arbitron needs to earn Media Research Council (MRC) accreditation prior to rollout.

As we have stated before, over $250 million in local, regional and national dollars will be contested once the PPM roll-our occurs. These are the bounties of hard labor of Hispanic and minority owned Radio stations earned using the ratings delivered by the diary method, which are completely destroyed due to the 55% – 70% negative audience compression demonstrated by the PPM due to poor sampling of Hispanic and other minority audiences.

Mainstream radio broadcasters are salivating.

Mainstream agencies now have a reason not to buy a Hispanic Radio station for their clients with the current PPM model.

We spoke on Thursday August 21, 2008 with Thom Mocarsky and Rich Tunkel representatives from Arbitron and we asked them about the issues.

Their responses are:

• The sample used in the PPM is the same as the diary and they expect to test country of origin difference in the sample in the fall
• They are interested in working with Hispanic Radio stations and agencies, since they have success stories that exemplify the transition and success with PPM.
• They will continue the commercialization of the PPM from their point of view.
• Yes, there are executive bonuses tied into the commercialization of the PPM.
• They also stated they are not in the position to speculate if the PPM roll-out will impact the Hispanic Radio stations and the Industry in a negative way.

Did they offer any olive branches and hopes for a better sample?

No.

Arbitron also released on Thursday after our conversation with them a statement that reiterated the perceived validity of the sample base and the PPM technology, along with questioning AHAA’s and the Spanish language Radio broadcasters ability and potentially qualifications to reach conclusions of data supplied by Arbitron to the association and the Industry regarding the results of the PPM.

Que feo.

Well, we are at the Mexican Standoff as an Industry with Arbitron.

What to do?

A couple of thoughts.

1- Do not accept Arbitron’s response to the issues at hand, our Industry is at another crossroad to extinction (not sound as an alarmist, but we have endured over the last couple of years major hits we could have fought as an Industry preemptively)

2- Support the Hispanic Radio broadcasters, it is part of your bread and butter.

3- We encourage the Hispanic and mainstream ad agencies to better understand the implications of a proper sample that will allow for a better gauge on how Hispanic Radio deliver key demos. Not just accept the losses and sell them as one agency executive conceded to in the Arbitron meeting at last Monday’s meeting. We understand that AHAA has voiced their separation from the points presented by this executive directly to Arbitron, stating that his request and views do not represent the association, its members and/or the Industry.

3- There probably will be a couple of Hispanic broadcasters that will take Arbitron head on and chose not to encode their signal. The PPM technology will not be able to decode the listening patterns for these radio stations, thus making the Arbitron PPM results in several key market completely useless without the top Spanish-language radio stations in the survey.

4- There will be a major court battle in the near future and the political and marketing implications of the issues will come to the forefront.

5- This issue will test the cohesiveness of our Industry from an agency, media, association and personal standpoint.

6- The worst is yet to come for Hispanic Radio broadcasters and the Hispanic agencies.

7- We are going to have to escalate our knowledge of how the sample does not represent US Hispanic and that the ratings and results are flawed. Our advertisers and agencies are going to need a 101 course on why not to use the PPM data.

Immediately.

8- A MONOPOLY in America cannot afford a synchronized political and marketing presentation of the cause and effects of PPM on the health of the Hispanic Radio Industry and it being a focal point for the national press and Wall Street, since the inability to deliver major radio markets due to the exclusion of top rated Hispanic Radio will be a concerns to investors of Arbitron and affect the commercialize the PPM.

9- ¡Estamos al pie del cañon!

Many consider that we at HispanicAd.com are too passionate about the issue of PPM and the impact on our Industry. Your real question should not be about our passion, but the lack of passion of other Hispanic and mainstream trade journals of exposing the injustice and highlighting the dangers for all of us in OUR INDUSTRY.

Your comments are welcome. This is not a time for the voices not to be heard.

To voice your opinons send us an e-mail at in**@********ad.com

We at HispanicAd.com will not sit silently on the sidelines and not be involved as other trade journals that cover our Industry hide behind their editorial policies.

At some point you got chose a side. It is the right thing to do.

We chose to serve the Industry.

Gene Bryan
CEO
HispanicAd.om