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What Enhanced CBET Means to Broadcasters

October 21, 2015

Beginning in 2007, Arbitron (now Nielsen), rolled out PPM in nearly fifty major radio markets. Early on, we at Research Director, Inc. chronicled the impact on reported listening and were among the first to help our clients navigate these uncharted waters.

Arbitron actually conducted simultaneous Diary and PPM surveys in New York from September 20, 2007 through December 12, 2007. The published results showed that the average station had 27.6% lower P12+ AQH Persons reported by PPM than by Diary.

Everyone in the industry wondered why the reported audience was lower with PPM. There were a lot of theories thrown around, but ultimately it was just accepted that the audience reported in the diary was inflated.

On the revenue side, our hope was that, with the proper education, cost per points would rise to offset the decline in reported listening. We all know real listening didn’t change from the final Wednesday of Diary measurement to the first Thursday of PPM measurement. Since advertisers were getting the same audience with PPM on Thursday that they got with Diary on Wednesday, we expected them to pay the same dollar amount for the same actual audience. Unfortunately this adjustment did not occur. To be fair, part of the reason for this was also the timing of the Great Recession.

While no survey technique is perfect, the radio industry believed that PPM was properly capturing all exposure to every radio station. At the time PPM was introduced, nobody had the tools they needed to prove if PPM was undercounting the audience. Now we are being told that it was.

At the same time, broadcasters used PPM data to make programming decisions to maximize their ratings. There are theories that spoken word and some other formats don’t encode as well as other formats. The thinking goes that it is more difficult to find a place to insert and hide the watermark codes in certain content.

True or not, some formats disappeared, and other formats altered their on-air sound or amount of talk to work best with the new measurement tool.

Think about the unintended consequences of these programming changes. We saw the Media Monitors data that showed when personalities talk, people tune out. So we told the jocks to keep the talk to a minimum. But what if listeners weren’t tuning out? What if the meter just wasn’t picking up that listening and giving it proper credit?

Perceptual research shows that the connection with the personalities is one of radio’s true advantages over music jukeboxes and other audio content. It’s something that people say they enjoy about their favorite station. It’s part of what makes a station their favorite. So how much did the industry hurt itself by believing the PPM data and minimizing the personalities? More importantly, is it fixable and can we get the audiences back that were driven away when we literally removed the personality of the medium?

In Diary markets, morning drive has the largest reported audience. PPM shows the largest audiences in afternoon drive. Could it be that this difference in reported listening is due to the higher prevalence of talk (which might be harder to encode) during the mornings? So now we have told one of the more valuable parts of the radio industry’s Unique Selling Propositions to be quiet. Or in the worst cases, the personalities were let go because we thought people didn’t like them based on a methodology that might not have been as good at measuring that content as it was at measuring certain types of music.

Fast forward to 2015. Nielsen is in the process of rolling out a new encoding algorithm called Enhanced CBET (Critical Band Encoding Technology). Limited tests have shown that Enhanced CBET improved the detectability of the PPM codes that might have been missed with the original CBET algorithm. At the NAB/RAB Radio Show, Nielsen outlined how Enhanced CBET would impact reported listening. The test showed an average AQH Persons increase of about 15%. No data was released showing any AQH Persons that decreased. Approximately 40% of the AQH Rating estimates (station/demo/daypart in the test) increased by at least 0.1. A couple estimates even grew by 0.2 rating points.

If everybody’s AQH Persons went up, why did only 40% of the station/demo/daypart AQH ratings go up at least 0.1? One word – rounding. You need to get enough additional AQH Persons to tip the scale to the next tenth of a rating point. So if you start with a 0.325 Ratings and Enhanced CBET gets you enough additional quarter-hours to push you to a .351, your rounded rating moved from a 0.3 to a 0.4. But if you started at a 0.275 and got the same amount of additional quarter-hours, your new rating would be a .301 and would still round to a 0.3.

So this rollout is a great opportunity. First, this higher reported listening should have an immediate positive impact on revenue. Stations should realize higher AUR and it will take fewer spots to meet an advertiser’s GRP level. Advertisers’ cost per points should not change. Therefore going from a 0.3 to a 0.4 would allow a station’s AUR to increase 33% without a change in cost per point. Again, a 33% increase in AUR.

So what do broadcasters do?

First, keep a close eye on how Enhanced CBET impacts your ratings. While it will be nearly impossible to attribute your ratings gains to Enhanced CBET, expect higher AQH persons and therefore higher ratings in many dayparts and demos. An extra keen eye on your pricing strategy and inventory control will allow you to maximize your new ratings.

Second, be prepared to answer advertisers’ questions. Some fear that advertisers will attempt to reduce cost per points. Remember, advertisers did not adjust cost per points when Arbitron rolled out PPM. Some advertisers might see the addition of Enhanced CBET as reporting listening that did not occur. Just the opposite has happened. Enhanced CBET is capturing listening that the original CBET was missing. Therefore the advertiser was getting impressions without paying for them. We as broadcasters just want to get paid for what we are delivering.

Finally, broadcasters need to examine their on-air content. We now know that some content encodes better than other content. Are there changes you need to make that will help you get credit for your entire audience? Understanding this and also having more knowledge about how the panel is using your station is crucial.

Need help maximizing your inventory revenue potential? Looking for in-depth analysis on how PPM is reporting your audience? The Ratings Experts at Research Director, Inc. are available to help you grow your audience, grow your ratings, and grow your revenue. To learn more, please contact us at info@ResearchDirectorInc.com.

-Marc Greenspan, Partner & Charlie Sislen, Partner