RAB’s PPM Economic Impact Study Reveals Potential Of $700 Million More In Annual Radio Revenue With PPM vs. Current Ratings Method

One In Four Advertising Decision-Makers Will Change Current Spending Patterns With A Better, More Reliable Ratings System

New York, New York – July 20, 2005 -- The Radio Advertising Bureau (RAB) today released The Economic Impact Study of the Portable People Meter (PPM) on the Radio Industry. 

Presented this morning at a press conference in New York City, the study was commissioned by a special committee of the RAB-PPM Task Force and conducted by Forrester Research.  The project was spearheaded by consultant David Pearlman, President, Pearlman Advisors, and was funded by Arbitron.


The research confirms that employment of the PPM will make a sizeable difference in Radio spending with the potential for substantial revenue growth.  A fully deployed PPM platform could mean annual net Radio revenues that are $696 million higher than with the current diary method.  Conversely, continued use of the existing diary method could mean a decline in Radio dollars. 


“We talked to nearly 500 advertising decision makers who gave us a clear ratings roadmap as we hit a critical currency crossroad in Radio,“ said Pearlman. “One in four indicated that they would change their spending patterns with the implementation of a ratings system that is better and more reliable than the diary.”


The study also demonstrates that if the current PPM test results on daypart consumption continue with a drop in Morning Drive listening, there will be a shift in spending. “Revenues will chase ratings no matter what the time or marketplace,” Pearlman explained.  “According to our sample, there would be a drop in Morning Drive spending, but the dollar difference would be made up proportionately across all of the other dayparts.  There will also be more Radio revenues directed to PPM markets versus those still utilizing a diary measurement methodology.”   


“The results of the study verify that advertisers and agencies are eager to embrace electronic measurement,” observed Gary Fries, President and Chief Executive Officer, RAB.  “Moreover, it is apparent that there is a risk of loss of advertising dollars for media that do not advance to a more reliable - and better - measurement platform.  Our industry needs to review these findings very carefully to determine our future direction with a full understanding of both the perils and opportunities that electronic measurement holds.”


The Executive Summary of the RAB’s PPM Economic Impact Study follows this release.  To view the entire presentation, please click here, or visit the RAB Web site at www.RAB.com.  


The RAB PPM Task Force is committee assembled by the RAB Board of Directors to assist Arbitron and the Radio industry in a review of the business and research components of a PPM-based local market Radio ratings service.  The sub-committee was formed with Task Force members and Arbitron staff.

About Pearlman Advisors

David Pearlman is President of Pearlman Advisors, a Lexington, MA based firm that provides consulting and management services to the broadcasting industry.  He has spent the past 33 years as a highly successful, well-respected interpreneur and entrepreneur in the Radio business.  Pearlman is the former Senior Vice President of Infinity Radio and previously was the Co-Founder and Co-Chief Operating office of American Radio Systems, a publicly traded 96- station group that was sold to CBS for a then record enterprise price in 1998.  He is a past Chairman of the Arbitron Advisory Council and Vice Chairman of the RAB.  Pearlman is a Magna Cum Laude graduate of Boston College with a B.S. in Marketing.  He earned his MBA in Marketing/Finance from Boston University.  He can be reached at 781-674-1434.


About Arbitron
Arbitron Inc. (NYSE: ARB) is an international media and marketing research firm serving Radio broadcasters, cable companies, advertisers, advertising agencies and outdoor advertising companies in the United States, Mexico and Europe. Arbitron’s core businesses are measuring network and local market radio audiences across the United States; surveying the retail, media and product patterns of local market consumers; and providing application software used for analyzing media audience and marketing information data. The Company has developed the Portable People Meter (PPMSM), a new technology for media and marketing research.


Arbitron’s marketing and business units are supported by its research and technology organization located in Columbia, Maryland. Arbitron has approximately 1,700 employees; its executive offices are located in New York City.  Through its Scarborough Research joint venture with VNU, Inc., Arbitron also provides media and marketing research services to the broadcast television, cable, magazine, newspaper and online industries.


PPMSM is a service mark of Arbitron Inc.

About Forrester

Forrester Research (Nasdaq: FORR) is an independent technology and market research company that provides pragmatic and forward-thinking advice about technology's impact on business and consumers. For 22 years, Forrester has been a thought leader and trusted advisor, helping global clients lead in their markets through its research, consulting, events, and peer-to-peer executive programs.


About RAB

The Radio Advertising Bureau (RAB) is the sales and marketing arm of the Radio industry with nearly 7,000 members including close to 6,000 stations in the U.S., and over 1,000 associate members in networks, representative firms, sales, and international organizations.





 Executive Summary

§        The survey reached a diverse group of marketers.

We surveyed 484 advertising decision-makers.  Radio gets 19% to 20% of ad budgets.  This isn’t changing much.


§        Agencies are more familiar with PPM than advertisers.

PPM was familiar to 77% of agency respondents and 34% of advertisers.


§        Spending would increase based on PPM ratings quality.

One in four respondents will change their spending based on ratings methods, with average increases of 9% (agencies) and 12% (advertisers).


§        PPM makes a significant difference in radio spending.

On average, advertisers plan a 2% cut in annual radio spend with diaries, but a 3% increase with PPM.  Agency plans are similar.


§        Revenues will chase ratings by daypart and market.

Based on PPM results, marketers say they would cut drive time spending, spend more in other dayparts, and shift dollars to PPM markets from diary markets.


§        PPM is likely to have a huge positive impact on the radio industry.

We estimate that deploying PPM in the top 50 markets would drive spending increases of $150 million more per year.  Our estimate of the net difference in spending with PPM vs. diaries is $696 million when PPM is fully deployed.


Source:  RAB/Forrester Consulting Phone Survey, April 2005