Arbitron: A Premier Although Imperfect Ratings System.

Audience Numbers Affect Ad, Air-Time Prices

Having been in the business for about 10 years, media buyer Melody Epperson doesn't even remember the first time she heard the word "Arbitron."

The diary-based ratings system has been a staple in the radio industry for about three decades longer than Epperson, director of media at local ad agency Think Tank Inc. She oversees the commercial space in radio, television, print and other mediums that her clients purchase.

While there's no denying Arbitron has evolved over the years, questions of its accuracy still abound for both media buyers such as Epperson and executives in local radio who sell the time.

As a result, stations and buyers tend to use Arbitron as an indicator of a station's direction, but accentuate percentages, audience counts and rankings with more qualitative information, including a station's concept.

Surveyed and released in 12-week seasonal quarters, winter through fall, Arbitron calculates ratings such as a station having 4 percent of the market's active radios in an average 15-minute period, or rankings such as which station was second among the 25-54 age group in total audience during an average week.

* Surveys Mailed To Households

To develop the findings, Arbitron mails survey diaries to households to take part for a week, said Thom Mocarsky, vice president of communications for The Arbitron Co., which is based in New York City. Participants have been previously contacted and have consented by phone.

In San Diego, 3,270 surveys are collected by the end of each research period, Mocarsky said. According to Arbitron's estimations of what they consider the local, metropolitan market, the ratio is one diary per 741 people.

In the diaries, listeners write down the stations they listen to, the length of time and where they are as they do it.

For those involved in local radio, the process holds a lot of room for error.

"There are just some basic ingredients in the Arbitron equation that set up some real problems when it comes to ratings ... but we've come to live with them," said Peter Moore, general manager at KLNV-FM "La Nueva" and KLQV-FM "K-Love," the two local stations owned by Heftel Broadcasting Corp.

Bob Hughes, co-owner and general manager of locally based Compass Radio Group's KXST-FM, called "Sets 102," said though Arbitron is very meticulous at compiling the audience estimates that they use, the current system has some very serious drawbacks.

* Diaries Based On Recall System

One of Hughes' concerns is the diary system hinges on participants recalling the stations listened to.

People don't usually write down their listening patterns as they listen, and he's not sure that people always correctly recall exactly what they did, he said.

A bigger drawback is that Arbitron connects with most of its participants through telephone solicitation, Hughes said.

"There's been such an explosion of telemarketing that an awful lot of people, particularly people right in the middle of the demographic sweet spot of the market, are just too busy and too fed up with telemarketing," he said.

According to John Dimick, director of programming and operations for the four San Diego stations operated by Charlotte, N.C.-based Jefferson Pilot Communications, the system might be non-preferential but its methodology is outdated.

"Everyone's treated fairly. I just think everyone's treated poorly," said Dimick, whose stations are KSON-FM, KIFM "The Breeze," '80s station KBZT-FM, and KDDZ-AM, also known as Radio Disney.

* Survey Methods May Be Outdated

For instance, he said, "Arbitron's methodology that they use is, in some ways, almost a holdover from the early days of radio, where people would listen to the radio in 15-minute increments."

Moore's stations, like the 45 others owned by Dallas-based HBC, are Spanish language.

Moore said the survey needs to be careful about placing diaries where Spanish is the main language rather than simply Hispanic homes. It makes for rather volatile and less believable results for stations like his, Moore said.

"We can go from one extreme to the other, from one rating period to the next," he said, noting that Arbitron once reported a Spanish-language station in San Francisco had a 60 percent drop in listeners.

One of the most common criticisms of Arbitron from media buyers and station executives, however, is that the sampling is not large enough.

Any change created by a quirk in the system is greatly magnified, said Reed Nessel, executive vice president of Mission Valley advertising agency Woodend, Nessel & Friends, Inc.

It's a complaint that Mocarsky has heard many times.

"Bigger samples are better samples, that goes without saying," he said, "but the issue then becomes what it costs to sample more."

* Reliability Has A Price

In order to double the reliability of the findings, the sample would have to be quadrupled, which would make costs skyrocket for Arbitron's buyers, he said.

A new measurement system is currently being tested in Philadelphia, Mocarsky said. Called the portable people meter, it's the size of a pager, and by capturing airwaves, records the television, cable and radio stations to which a person is exposed.

The people meter will likely be launched in the general market between 2002 and 2005, Mocarsky said.

As a result, the diary surveys will eventually be stopped, he said. The ratings through the people meter system will cost the stations more, he said.

For now, stations or the companies that own them pay five-or six-figure amounts for Arbitron's current system, Mocarsky said. Because the various companies have different deals, he couldn't offer further details.

One station in San Diego is paying more than $200,000 a year for the Arbitron service.

Depending on their size, advertising agencies and other media buying firms either buy the ratings from Arbitron or are supplied information from stations' sales executives.

Although there are concerns with Arbitron, the ratings often play a role in how stations price their time or negotiate prices with potential advertisers.

For the most part, however, station executives say Arbitron is only one way that they decide how much to charge for time. While history and market specifics play roles as well, the biggest factor is supply and demand in the market, they say.

Selling the time, however, often involves mentions of Arbitron. Buyers say although they also question the ratings' veracity, it's often their first step when looking at purchasing time at a station. They depend on it more for larger-scale, national buys.

They find additional qualitative research on the stations and their listeners, buyers say.

"The best advertisers we know are doing a lot of their own research, in terms of finding out who those customers are and what the media habits of those customers are," Hughes said. Clients also use other syndicated reports, he said.

A few of KXST's clients are doing in-store time-of-purchase surveys with customers and using that to guide media selection.

"We know of one particular car dealer where they've got their system set up that you can't drive a car off the lot until you've completed a media preference survey," Hughes said. According to Lou Manso, president and CEO of local media buying firm Metromark Corp., Arbitron's ratings and rankings sometimes make for a good negotiating tool.

In fact, if a station that's ranked first in its demographic has a high rate, the No. 2 or 3 stations might be more feasible, Manso said.

Rather than fewer exposures on a top station, it might mean more runs on a station with a slightly smaller number of listeners -- which sometimes turns out to be more effective, he said.

"Once you have your creative done, the most important thing is making sure that you have the correct media buying strategy in place," Manso said. Relationships with the stations' sales teams also help in negotiating a price, he said.

For local radio executives, selling beyond the Arbitron ratings is essential.

Moore, who runs Spanish-language stations, said it's especially true for him.

"Ours is a concept sale'," he said. "We tend to sell a marketplace ... a distinct and unique group of listeners." Of the ratings, he said, "We spend less time talking about them."